Too often we see accounting systems viewed as pure compliance systems. This may be the case where the accounting system is only being used to produce BAS remittances or gather the info to prepare the tax return. However, as advisors, if you recommend purely basis this need you miss a fantastic opportunity to have the business owner benefit from other tasks accounting systems do for them.
Accounting systems are sometimes business systems. They do much more than just the accounts. They create workflow efficiency which leads to reduced operational labour costs. They can also help move the business toward straight through processing where customers do the data entry through their buying and ordering.
When compliance is the only consideration advisors drastically lesson the quality of service given to clients. I think you can come to this conclusion yourself by asking this question. Is my recommendation respectful of their business workflow needs and costs or is just about me and my cost of service?
Accountants and bookkeepers give varying levels of thought to this in my experience. Some are very good, considerate, and even go through a research phase before recommending any system to a client. They are quite agnostic on software vendors. They ask the right questions of the business owner and also the candidate software vendors to fill knowledge gaps. The decision is an authentic one that supports the business owners business workflow needs which may amount to hundreds or thousands of workflow hours.
The worst decisions are evangelised ones. Mostly the industry doesn’t fall for evangelising a particular software product but a surprising amount of firms do. This type of decision is religious rather than scientific. It’s when ego or the status within an accounting software tribe rules their decision process. “I’m an ABC firm” type of thinking. I think it (and I think business owners would agree with me) should be about the numbers. Leave the software vendors interests aside and make a decision in the interest of your clients business model. Nothing else matters in the long run.
Business accounting systems perform other tasks beyond compliance such as customer management, scheduling, time capture, inventory management, channel management (such as retail, partner and e-tail sales channels). It is also the system acting as a contact list for marketing purposes in many cases. Most importantly in the era of straight through processing from e-commerce or POS into accounting software it facilitates payment tracking in real time.
When I meet business owners I often ask them what process their advisors went through to pick a accounting system or did they just select one themselves. The answers I get back suggest that Micro businesses usually rely on their accountant or bookkeepers advice but small to medium business more often make the call themselves. They know their business better than their accountant so most often don’t even ask their accountant.
In my view business owners fall into two main client groups.
(a) Those that see accounting systems as a business system. They see it as part of their technology stack that they have personally selected.
(b) Those that are advised or told what to go and buy.
I ask the second type of business owner what made the advisor select the system. Mostly it’s what their practise uses. Often it’s about lowering the cost of producing a tax return and set of accounts which they suggest reduces the clients bill. Many firms explicitly admit it’s not about the client but about them. They say “we don’t provide services unless you use ABC”
This is very interesting in many ways. It implies that there are small to medium businesses that dominate their accountant and view them as a compliance or tax advice service provider and there are submissive business owners (generally micro business) who seek and accept advice given to them by their accountant on how to run their business.
The vast majority of my friends who own business are in the former category but when I talk to friends who are in sole trader situations or small <5 people businesses I do see lots of them seek and accept the advice as to what software to choose. They trust their accountant, and they should. So in response the industry should reciprocate and ensure selfless advice as to which software the client should use.
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Marc Lehmann | CEO | Saasu.com