Accounting without Technology….
The accounting world is moving to the cloud. More than two-thirds of Australian accounting firms already use online accounting software, and expenditure on cloud services is growing rapidly. The trend is clear and compelling, but when I talk with fellow accountants, they want more. Don’t sell us on cloud stats, they say — articulate why we should shift our business and our way of working to the cloud.
So I talk about clay tablets and 7,000 BC.
Some of you may know that several thousand years ago, accounting was heavily focused on crops and cattle. Babylonians, Sumerians and Mesopotamians needed to count bushels and cows. This is relatively easy when you’re part of a small settlement but becomes more complex and difficult as civilisation grows. Imagine some poor Sumerian working a 16-hour shift, stomping around a muddy fi eld yelling “there must be a better way!”.
Our accounting ancestors — brilliant innovators, as all accountants are — developed solutions to their challenges. Clay tablets, strung beads and numerical and pictorial recording systems emerged. Counting capacity leapt from dozens to thousands. Professional hierarchies — effectively the first accounting firms — arose.
Technology shifts, then and now, start out by making existing things easier. Cloud integration lowers infrastructure costs, massively reduces data entry errors and future proofs your business against the monetisation of compliance services. Basic functions get automated. The days of clunky business processes and the mad scramble at tax time can be over.
Just on those initial points, moving to the cloud offers compelling advantages, especially given that your competitors are doing it too.
But beyond that, once the basics are in place, the real possibilities open up. And this is what truly excites me about the shift our industry is facing.
Accounting didn’t stay locked in the crops-and-cattle racket. As kingdoms grew and supply ecosystems exploded in variety and scope, the whole game changed. It turns out accounting isn’t a primitive luxury but an absolute necessity if you’re trying to do anything ambitious.
Technologies that had been developed in response to particular problems started to drive wider shifts in behaviour. There are strong arguments that the development of full-featured written languages by people such as the Phoenicians was driven by accounting requirements. Ancient accountants went from tabulating plants on their fingers to being masters of communication and connection, the glue that held empires and trade together.
That glue is us. That’s what we can live up to. And the shift in behaviour that cloud integration supports is the way forward.
Modern accounting businesses are focused on providing value through knowledge, not just lower level services. Cloud integration puts you in an ongoing relationship with your clients’ financial positions, allowing you to add insight and help them perform better. Practices can now spot a signifi cant cash fl ow issue as it arises or make more informed decisions as to when is the best time to pay debtors.
Because of the availability of data, practices can even model and test specific elements within the business, making for smarter structural choices. Bringing things up a level in this way opens a whole new world of more valuable and interesting work.
Cloud integration isn’t just better automation of existing services — though it does that superbly — it’s a range of new opportunities for your business and an enhanced role for you as a connected adviser. If you haven’t already made the transition to the cloud, I encourage you to take the first step on this journey and embrace the many possibilities the cloud can bring to your business and the way you work with clients.
At Xerocon 2015, AFR Editor & Accounting Industry writer Agnes King asked me about my thoughts on the issues plaguing…jamessolomons.com