From XU Magazine, 
Issue 30

Scaling your practice – it’s all about the books

The world of bookkeeping has changed so much in the time since I started my professional career.

This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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The clients I met as a trainee, once above a certain size, all had a bookkeeper.  When I think back to the tasks those bookkeepers undertook, it was a combination of administration, tea-making and talking to their colleagues[KR1] . Some did their job well, some less so.

Bookkeeping software was really in its infancy when I was training and it was only larger clients, or subsidiaries of listed businesses, that used software to manage their finances. Of course, it was desktop software and only for those businesses that could afford a computer!

So, what’s the role of the bookkeeping industry today? You’ll notice I referred to it as an industry just now - And that’s  because it now is.  Some of the markets we work in, like Australia, have a real distinction between the bookkeeper and the accountant. 

What this means is the bookkeeper is regarded as having a very different skillset to those in the cottage industry that perhaps existed before - one in which bookkeepers travelled from client to client performing a rather similar role to the one I described above.

The challenges of scalability and process

Accountants worldwide had got used to working with bookkeepers like this.  Once they found a good one, they often recommended them to other clients.  The challenge then became the good ones had no capacity left to do any more work.

As you can see, the world of bookkeepers in years gone by was one that wasn’t scalable.  I recall a few bookkeeping businesses that managed to develop some scale but often a bond would develop between the individual undertaking the bookkeeping and the client, creating the risk that staff would leave and take the clients with them.

The challenge for accounting firms and bookkeepers has always been the need to standardise processes.  Previously the smaller the firm the greater the flexibility of processes compared to a larger firm.  Having worked in two of the Big Four, it was very clear to me how standardisation made those firms less reliant on any individual, but more on the process and technology in delivering the service.

Paper-to-screen revolution

Many of you reading this today will be using Xero and other cloud bookkeeping software.  This has certainly transformed the way that we’re able to work with client businesses. Covid has just accelerated that shift.  The bookkeepers of old would have found it very difficult (impossible!) to operate as they did before, following the Covid outbreak.

Bookkeeping software, on its own though, wasn’t sufficient though to really mark a shift in the bookkeeping industry.

AdvanceTrack previously didn’t offer a bookkeeping service when it was desktop-only.  Even when cloud bookkeeping software started to make inroads, it became a watching brief.  What really started to pique our interest in delivering a service to the firms we worked with was the success of optical character recognition (OCR) solutions like Receipt Bank (now Dext), AutoEntry and Hubdoc, to name just three.

You’ll ask yourself, why didn’t we do it before? The biggest challenge was always collection of third party data.

Bank feeds (or CSV files) meant that bank data was relatively reliable and could be collected quickly or automatically.  Sales data was typically in a standardised format for each business. 

The challenge was always the array of different shapes, sizes and location of the myriad of suppliers’ receipts.  When you walk past that builders’ truck and look on their dashboard at the receipts they collected on the way to their job that week… How do you get those into the bookkeeping software?

This is where OCR solutions, or automated collection, is really impacting the real-time ability of firms to deliver bookkeeping services.

Technology today is now capable of delivering a real-time scalable bookkeeping service.

How do you use it?

Previously, what was important was producing a set of year-end financial results.  For some businesses, that remains the case.

In most instances though, whether it’s to ensure they can pay their staff and suppliers on time, or they want to make sensible business investment decisions, having access to up-to-date financial information is now essential.

I discussed at the start of the article how larger businesses had access to good financial information.  With the support of the accounting and bookkeeping businesses, and the use of technology, this is available to any business that wants it today.

Bookkeeping more important than ever

We’ve discussed the move to digital tax submissions around the world.  Governments all need more cash to recover from Covid.  This need has accelerated the need to bring in regular reporting.

In the UK, Making Tax Digital (MTD) is expanding its scope.  Businesses like our own had already migrated our financial records to cloud software.  As a result, it just became a different button to press to remain compliant. 

As the scope of these digitisation programmes expands, the need for quality, regular bookkeeping is only increasing.

Bookkeeping, however, is just the enabler for a much more sophisticated and embedded relationship with their accountant and bookkeeper. Why do we say that?

It’s not all tech

Technology will increasingly take on some of the workload.  However, quality and regular bookkeeping will give the accountant the ability to operate as a virtual FC/FD for the client business.

Credit control services are easier to deliver using regular bookkeeping.  How many times do you receive a reminder for something that has already been paid?  Keep it up-to-date and automation of the chasing really drives regular cash collection; and then it’s exception-chasing by people. 

One client in my audit training days always told me, every year, that he hadn’t paid a supplier because they hadn’t chased him.  Today, there is no reason for that ever to be the case.

Being embedded as an FC/FD brings immense value to the business; more so than, say, an audit giving a historic report.  You’re less likely to be removed from the post if you’re sat at the boardroom table every month showing how you’re helping the business owner run a more disciplined business with quality information and professional input.

How does offshoring/outsourcing fit in?

Scalability is where offshoring and outsourcing help a firm to deliver a regular bookkeeping service.

AdvanceTrack, for example, has built-in cloud technology that allows our client firms to scale their delivery of any service.  Having built our first cloud software way back in 2005/06, we naturally are able to work with cloud applications used by our client businesses.  With our enhanced cloud platform, we really are able to drive higher value and consistent service from our offshore delivery teams.

During Covid, and despite our teams being scattered across the globe, we were - and are - able to continue delivering exceptional customer service. This was only possible because we understand and use technology to help our client firms.

Why security is vital in a post-Covid world

Covid has enabled a new type of business to operate.  One that only requires a laptop, with no overheads, and often from a home environment. 

The danger with this approach is that personal and business data does not have the appropriate safeguards in place.  This places a real burden on the accountancy firm to make offshore suppliers to be compliant with appropriate security and privacy laws in their home country.

AdvanceTrack achieved its first security accreditation (ISO27001) back in 2013. We underwent a robust audit process, and one that is monitored on an ongoing basis alongside a tri-annual recertification. 

Not happy with just the ISO27001 certification, following new laws being introduced across Europe in 2018, AdvanceTrack achieved BS10012 - which showed how we dealt with personal information.

Having moved our entire operation to working from home before the lockdowns of 2020, AdvanceTrack made the decision to achieve ISO22301, which is the International Standard for Business Continuity.  This process really made us look carefully across our business to see how we can continue to operate in testing circumstances.

None of these, on their own, can be achieved without the underlying business having robust processes, great people and trusted infrastructure to help manage the data processed in the business.

In January 2022, we were also recommended for ISO27701, which represents an upgrade of the personal information system accreditation to an International Standard.

The world of offshore delivery is returning to ‘working from the office’.  We are of the belief that, provided we continue to keep our people safe, working from the office raises both professional and security standards.  Having people operating with nothing other than a laptop with no controls in place puts a professional firm at real risk of penalties and reputational damage as a result of poor data compliance. Our staff, even when working from home, had strong protocols in place which limited the risks of data loss and breaches.

Choosing a provider that manages that risk for you is very important. 

Offshoring or outsourcing?

With AdvanceTrack, you don’t need to choose.  We’ll work with you to deliver the service that’s right for your firm.  With trained staff ready to go, the timescales are shortened than with other providers.

Even now, we have firms who started with outsourcing and are now moving to dedicated offshoring staff.  This also allows clients to access additional resource, through a hybrid of offshoring and outsourcing all managed effectively through secure systems.

Better client books mean a better accounting practice

Bookkeeping services are essential to delivering quality real-time information.  A quality offshore delivery process, with scalable systems, is often the only way to free local personnel to deliver the service that clients now demand. Technology such as Xero and the use of OCR are part of the delivery mix.

Why leave it there?

If you want to speak to the AdvanceTrack team about scaling your bookkeeping and management accounting service

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