A lumberman heads into a nearby town to see an accountant. With him is his pet woodchuck. After a brief introduction in which the lumberman tells the accountant that he needs some financial statements to take to a local bank so he can get a loan to buy a new saw for his mill, the Accountant begins to ask some basic questions. First, is the old quip, “How much wood could your woodchuck chuck if a woodchuck could chuck wood?”
Immediately the lumberman’s woodchuck responds, “30 cords per day.” The accountant can’t believe his ears, here is a talking woodchuck. Not only that, but the woodchuck can actually elaborate on exactly how much wood he can chuck per day. So then the accountant asks, “well, if the woodchuck can chuck 30 cords per day, then why do you need a loan to buy a new saw?” The woodchuck responds, "with a new saw we can reduce my work hours by 50%, while at the same time increasing the mill’s overall efficiency by 50%."
Then the woodchuck poses a question to the accountant, “if you could buy new software and reduce your work hours by 50% while at the same time increasing your overall productivity by 50%, wouldn’t you think that was a good investment?”
“Why certainly I would, I could spend half my time playing golf and enjoying life” said the accountant. He then asked the woodchuck, “what will you do with 50% fewer work hours?” The woodchuck responded, “study accounting.”
Why are we learning lessons from a woodchuck? Because there are lessons to be learned and sometimes it takes the lowest man on the totem pole to teach us a lesson (even if that is a woodchuck).
As accounting professionals, we tend to think that we are ‘the masters of the numbers’, but the reality is that we can get so focused on this, that and the other that we forget, not only the fundamentals, but the basics. Traditionally accountants have been seen as ‘compliance’ enforcers who are only slightly more friendly than an IRS agent (the ultimate compliance enforcer). Too often, people seek out accounting professionals when they absolutely positively need one, which is frequently, only when they find themselves in trouble one way or another.
Now I ask you seriously, do you think people would rather go see an accountant for the first time, or go see a dentist? I would bet that the majority of small business owners might pick the dentist over the accountant.
Those small business owners who have migrated from shoebox accounting to some type of software, perhaps as simple as a spreadsheet or maybe an on-line software program, tend to think to themselves, “I have taken the step to avoid a trip to the accountant”, in the same way that you or I might buy a new toothbrush to delay a trip to the dentist.
But the reality is that by the time we recognize that we need something, anything (but an accountant) to get us out of our shoebox, that is exactly when we need an accounting professional. But we are also deceived by too many software options into believing that the solution they offer is ‘dentist avoidance’, oops I mean ‘accountant avoidance’. They market their applications as ‘answer these few questions, then plug this number in here, and that number there…by the end you have a set of financial reports (that only an accountant can interpret) and a tax return ready to file.’
Accounting, bookkeeping or financial recording software, no matter what form it takes, needs to be centered on the principle that it is the tool that connects users with not only their data, but their trusted advisor. Over the years of evolution of desktop software, those trusted accounting advisors have been at arms distance because they had to wait on their client to give them a copy of the data, but with ‘the cloud’, the data can be at the hands of both users and advisors simultaneously, but only if there is an advisor.
Even with the cloud, and the advent of cloud based accounting software, and apps that almost magically gather the raw data and format it into what seems to make sense, the end result can still be ‘garbage out’ because the essentials of accurate and uniform configuration is left to chance, or a set of relatively limited questions posed by the software that try to paint broad strokes among all users. So I pose, “how many questions must any accounting software ask to know what chart of accounts really should be configured for a woodchuck who could/can chuck wood?”
While one might argue that the software can be sufficiently programmed with a decision tree that can not only ask the questions, but interpret the replies, and come up with the answer, my the point is, wouldn’t it be better if a trusted advisor performed those steps?
Personally, I was very impressed at XeroCon this week, to find that nearly 90% of Xero’s user base are actually linked to an accountant via the software, and that essentially Xero takes the approach of asking every new customer if they ‘have an advisor” (accountant, bookkeeper, etc.) in the initial steps of signing-up. Rather than take the marketing standpoint that “software provides you with ‘accountant avoidance’ assurance”, they are actively promoting the user-software-advisor relationship in a win-win-win relationship. Because, in my mind, if software can do the job without an advisor, then woodchucks will be the next accounting professionals, and we will be ‘chucking wood for a living.’