A bit of a hero in certain circles, Will Farnell is recognised as a pioneer of digital accountancy. The Founder and Partner of Farnell Clarke hosted two talks at Xerocon London 2018 but, while both were dripping with insights, his talk on ‘live accounting’ really resonated with the Soldo team.
He spoke about the advantages of having a complete set of up-to-date data. Through a solid tech stack and well-defined processes, firms can optimise the way they work, adding value for clients, and profitability for the firm. Here’s a summary of his talk but you can read his white paper on live accounting here.
Race to the bottom
Using efficiency-boosting tools like Xero, Receipt Bank and Futrli, a new generation of practices are pushing down the cost of compliance services. Price pressures come from both sides, with accountants recognising that they can be ultra-competitive with automated workflows, and businesses realising that their apps reduce the compliance workload for their accountants.
If it sounds like compliance is being commoditised, that’s because it is. But, as Will noted in his talk, this doesn’t mean practice profitability should be squeezed – quite the opposite. Through intelligent processes and tools being handled by the right people, practices can add value and achieve greater profitability, all while doing more fulfilling work.
What clients want
Will’s talk mentioned the changing attitudes to process-driven work among millennials, who’ll form 75% of the workforce by 2025. Despite wanting real-time visibility across the business, automation alone won’t meet this generation’s needs. And different expectations and lifestyle priorities will outweigh price for many of these businesses.
It means traditional accountants will need to revise their offerings, changing the way they work to meet the needs of this growing audience. Deeper relationships, more timely advice and digital-centric approaches will be crucial to winning with this generation.
A smart toolkit paired with progressive processes and – most importantly – the right people, will help practices to capture and retain this audience.
Will introduced the concept of live accounting, an approach that brings huge advantages for both practices and their clients. It’s all built on the foundation of daily bookkeeping, meaning that accounting data is as close to real-time as possible.
This means that, when it comes to offering the more valuable advisory services their clients want (and deserve), Farnell Clarke is referencing fresh accounting data. But, before the practice can deliver daily bookkeeping, there are a few missing pieces that need to snap into place.
The last pieces of the puzzle
In terms of accounting data, some information substantially lags behind others. Thanks to products like Xero and Receipt Bank, it’s now possible to see up-to-date sales invoices, purchase invoices, business current account transactions and payroll data. But company card statements only arrive every 30 days, and employee expenses are only visible when the employee reports the expense.
It means it’s impossible to deliver daily bookkeeping. And, as a result, practices can’t provide the valuable advisory services enabled by live accounting. The remedy is to create visibility of expenses across the business. When up-to-date company card and employee expense spending is also available, daily bookkeeping can take place.
How it’s done
Will noted the power of connecting products like Soldo to Xero. Soldo is the multi-user expense account that enables real-time visibility and control over company spending. It means that both company card and employee expense spending can be seen in real time.
And, because Soldo connects seamlessly to both the accounts information and bank feed APIs in Xero, it’s easy for firms to provide daily bookkeeping services. The result is the first complete and up-to-date view of business cash flow, enabling live accounting for the first time,
Using live accounting data, firms can maintain a weekly dialogue with the majority of the firm’s clients, it means no month-end rush, better relationships and, ultimately, improved profitability.
Here’s the kicker – Will said that Farnell Clarke are now providing bookkeeping services to their clients with an average of four minutes’ work per day. (Yes, minutes.) But it’s live accounting advice that will create enhanced revenue opportunities.