Shakeup in small business accounting
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Shakeup in small business accounting
by Tony Novak, CPA, MBA, MT March 11, 2015
In case anyone hasn’t already noticed, let’s point out that small business accounting is going through a dramatic transformation. The changes in the industry emerging in first ten weeks of 2015 are arguably more significant than the evolution of the industry over the past decade. Consider these five big trends:
#1. Product Choice
The proliferation of accounting products and platforms is overwhelming. In January 2015 a CPA writing for Forbes magazine reported that there were more than 60 products available. While researching this article in March 2015 I compiled a list of more than 200 multifunction accounting products and many more that provide single functions. The list includes names like QuickBooks, MYOB, Sage, Freshbooks, Vend, Xero, Jurnal, Cloudbooks, Peachtree, Kashoo, LessAccounting, Outright, Wave Accounting, FreeAgent, Yendo, FinancialForce, NetSuite, Intacct Financials, Zoho Books, and many more.
I’ve only had the opportunity to use perhaps a dozen of these products for various specialized situations and it seems unlikely that many accountants would have much wider exposure in this rapidly growing field.
To help deal with the this complexity, I think it still makes sense to start with a consideration that 80% to 90% of the small business accounting market is one product. QuickBooks remains, by a wide margin, the benchmark to which all the other accounting systems are compared. Until and unless a reason to look beyond the benchmark product we should focus discussions there.
#2. Pricing
Prices are low and dropping further. QuickBooks just implemented anew pricing policy where the highest monthly price for its “Plus” product is $20 per month when purchased through a ProAdvisor. That’s a 50% discount over the retail price. That discount pricing is for the life of the product, not a promotional offer as accounting software firms have offered in the past. Others products with fewer features are priced at even lower rates. It certainly seems that price is no longer an obstacle or barrier to the industry.
#3. Migration from Desktop to Online
We see the switch from desktop-based software to cloud-based services in all areas of technology. Accounting is no exception but the industry is simply late to join the trend. We will see millions of firms making the switch over the next few years.
This article does not cover the manyadvantages of hosted accounting services. Yet it is important to recognize that some older professionals have not been so quick to join the conversion bandwagon. I mean no disrespect for the value of diversity of professional opinion, but market forces dictate that this attitude will soon disappear just like the dinosaurs.
#4. Integration of data
No longer do we enter a new client’s contact information on our cell phone, for example, and then duplicate the effort on our business accounting system or tax software. Applications are integrated to share data and automatically update. Most of my small business clients use industry specific software as their primary tool in running day-to-day business operations. The accounting system taps into the primary management software. Sales, management, accounting and electronic tax reporting processes all merge into a flowing work process.
#5. Remote service providers
In the past small businesses hired a bookkeeper or accountant in their own local community. There is simply no reason to limit your resources based on geography. Accounting is now an online service. Off-site workers are the new standard. It is likely that a firm can gain access to more expertise and better value simply by expanding the pool of available talent.
Along with this change, we see a shift toward value-based accounting pricing. Today’s providers don’t charge on an hourly basis since this antiquated billing system has no bearing on the value the accounting service adds to their client. Business owners are now empowered to control accounting costs in ways that were never before possible.
Relationship, experience, credentials, training, security, screening and monitoring are all just as important to hiring an accounting service provider as ever before. The real change we see happening now in all professional fields is that we interact more frequently with providers online and less frequently on a face-to-face basis.
To help small businesses consider the changing techology I offer aflat rate mini consultation that can be used to delve into the options, details of conversion and an overall strategic approach to gaining the most value from the firm’s investment of time and resources into an accounting system.
In addition, firms that make the switch to the new QuickBooks platform can lock in the 50% pricing plan simply by signing up through my ProAdvisor subscription. There is no obligation to use other accounting services, but realize that the ability to promote additional accounting services to existing customers is the intent of this offer.
This Web site is independently owned and operated by Tony Novak operating under the trademarks “Freedom Benefits”, “OnlineAdviser” and “OnlineNavigator”. Opinions expressed are the sole responsibility of the author and do not represent the opinion of any other person, company or entity mentioned. Tony Novak is not a representative, agent, broker, producer or navigator for any securities broker dealer firm, federal or state health insurance marketplace or qualified health plan carrier and has no financial position in any stocks mentioned. Novak may act as and be compensated as an accountant, agent, adviser, writer, consultant, marketer, reviewer, endorser, producer, lead generator or referrer to the companies listed on this site or other commercial companies and non-governmental insurance exchanges. Information is from sources believed to be reliable but cannot be guaranteed. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues or a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.
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