The “future state” of 100 per cent digital accounting has already arrived, quickly reshaping relationships, industries and the economy at large.
The 100 per cent digital accounting practice has been a futuristic concept for some time now.
I say “futuristic” because while cloud accounting has been accessible for years – and many accountants already embrace the benefits it brings – other tools required to run a complete digital practice have been slower to catch up.
As a former CPA and the MD of Xero Australia, I’ve watched – with the dual interest of technology innovators and practicing accountants – as the industry moves closer to a new interactive reality. Finally we can stop asking, “Is the 100 per cent digital practice finally an achievable reality?”
Yes, it is.
It’s all in the research
With better bank feeds, more connected apps and a rich ecosystem of partners, the 100 per cent digital practice is not only achievable, but many of them already exist. Thanks to a slew of innovation happening all around us, there is no reason to use archaic systems for any aspect of practice management.
It doesn’t make sense to, either. According to our research, the small businesses that use an accountant grow net profits up to 23 per cent faster than those that don’t. This is in no small part due to the powerful new cloud tools that accountants now have at their disposal, empowering them to give even better client service and guidance.
In fact, 40 per cent of our customers have now connected their cloud accounting to a third-party app, leveraging the linked-up nature of technology to add specialist services to their system. We’re starting to see significant take-up here, and it’s a great win-win for accountants and their small business clients.
There is one key barrier every accountant and small business has to overcome in order to be 100 per cent digital: their practice cannot rely on any one system that does not speak to all of the others. When systems don’t talk to each other, you need to start creating manual processes (or proprietary tools) to connect them. It’s a nightmare for everyone involved.
On the other hand, the vast majority of legacy incumbent practice management solutions attempt to do many things from client management, to document management, billing and more. The reality is that they do many of these poorly when compared to many of the new cloud-based specialist tools in the market. The consumerisation of IT is starting to have an impact on the practice tools market.
We’ve seen some companies try to tie practices to their software by building monolithic beasts of clunky code. It’s a sure fire way to become a jack-of-all-trades and master of none.
The approach we have taken, to help enable the truly digital practice, means that no one has to be locked down or shackled to a siloed system. We focus on doing one thing really well, and integrate that with everything else that is great out there.
Cloud accounting has not single-handedly enabled the 100 per cent digital practice. That’s not the way it works. This new reality has emerged from a combination of better bank feeds, a powerful financial web, seamless integration with other platforms and a growing ecosystem of the world’s best tools. That’s what makes it so powerful.
In that respect, the “future state” of 100 per cent digital accounting has already arrived, quickly reshaping relationships, industries and the economy at large. It’s both brutal and impressive to realise the true consequence of this new inflection point – that any business unwilling to be a part of its connected world will likely find themselves isolated from insight and stuck in the past.
Trent Innes, Managing Director, Xero Australia