No matter the size of your accounting firm, it’s now easier than ever before to become a ‘connected practice’.
‘Connected practice’ is a relatively new industry buzzword, but it essentially refers to an accountancy firm that leverages the automation tools now available in transaction processing and compliance to take on a business advisory role.
With advances in cloud computing technology and partnerships between accounting software providers and their specialist ‘add-on’ partners, a role that was once out of reach for most firms is now a possibility. Complex solutions can now be implemented at low cost and with off-the-shelf software.
In February I had the privilege of traveling with the MYOB team around Australia as part of their Incite roadshow. In the roadshow, MYOB chief executive, Tim Reed, launched the company’s ‘connected practice’ vision.
What is the connected practice?
A ‘connected practice’ is an accounting practice that has built an efficient, connected software ecosystem to improve their relationship with their clients and put them at the centre of the profit drivers that direct a modern practice. These drivers include:
- Transaction processing
At their roadshow, MYOB presented a vision showing their potential for working with accounting and bookkeeping partners to drive efficiencies and profitability in the areas of transaction, processing, and compliance. In this vision, they engaged deeply with specialist add-on partners to drive the expert implantation of advisory tools and processes.
Why is the connected practice vision noteworthy?
The connected practice vision is noteworthy as it lays out a practical framework for accounting practices to transition to a new business model. Over the past two years in particular, accounting practices have felt the pressure from throughout the industry to move from compliance to advisory services in order to adjust to the business environments. What the connected practice means for businesses is you don’t need to throw the baby out with the bath water in order to make this transition. It allows many of the functions your firm currently excels at to keep a viable role in the new business model.
The two core functions of a modern firm will be:
- Fast, accurate financial data processing
- Fast, accurate compliance work
The value of these two functions will be determined by the speed, accuracy and cost the firm can deliver. In addition, accounting firms will need to leverage great technology within clients’ businesses to be competitive in these functions.
The resulting pool of accurate data will build the foundation of the other strategic arm of the business, advisory. The advisory arm of the business will be based on how firms can interpret this data to help their clients build business value, increase profitability and manage risk.
Firm advisory work will consist of some traditional functions, including tax planning, succession, asset management and company. Yet the biggest growth opportunity for firms in advisory will be taking a client’s existing financials and coaching and mentoring them to understand this data in terms of their future financial management.
The opportunity exists for firms to build a 24-month rolling cash-flow forecast with clients, then to use this forecasting tool to build in a monthly review process with each client. A monthly review should consist of doing a quick analysis of the results to date and comparing them to the current forecast. Based on this knowledge, accountants can build a forecast for the same month in 24 months’ time, review the same month in 12 months’ time and review the next three months.
This monthly process will keep the client looking forward and will help accountants develop a mutually profitable advisory relationship with their clients. The more data is gathered, the more the knowledge of the client and advisor will grow through the relationship.
The most important thing to note about the connected practice is technology will give every firm a competitive edge in the new world of accounting, where advisory is central. The move to advisory does not need to be big and dramatic; it can start with simple tools like a collaborative cash flow forecast. This low-cost, high-value tool can be used to move the client and the firm together into a new high- value, long-term relationship.
If your firm is looking for a low-cost collaborative cash flow forecast, why not try out the Reep? You can have access to a Free, 12 month subscription. Reep allows instant access to the cash flow and financial data of your clients.