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The Quiet Revolution: How online accountancy is transforming the accountant’s role By Mark Davies, UK Country Manager, e-conomic There is no more important time for accountants to rid themselves of the bean counter image than when they are servicing small to medium sized enterprises (SMEs). According to the Department of Trade and Industry, more than 10,000 SME businesses fail each year because of poor cash flow planning. Most SME owners are so bogged down with the day-to-day running of their company that accounting becomes an interminable headache for them – they just want it done quickly, easily and for as little money as possible. Unfortunately, this dismissive approach is neither beneficial nor rewarding for the accountant or the SME owner, as it doesn’t enable SMEs to take full advantage of the skills and knowledge accountants have to offer. Companies of all sizes need an effective financial management system that will enable them, in partnership with their accountant, to spot problems early and understand how they can make their business more profitable and successful. From the accountant’s point of view, being able to add value and provide business advice is far more satisfying and profitable than just number-crunching. How is it possible to transform from bean counter to business adviser when servicing SMEs? The greatest obstacle is time, or rather, lack of it. Accountants need to free themselves from basic administration tasks that don’t add value, such as data input, by making these processes more efficient and accurate. To facilitate this, the accountant, bookkeeper and business owner all need to be able to access and share varying levels of financial information. The internet is the obvious platform as it can be accessed anywhere, any time. Most SME owners are perfectly suited to this ‘freedom’ as they are often busy during the day dealing with the management of their company, so being able to log-on at unusual times suits them well. Once the three key players have access (see diagram 1), the cooperation between SME and accountant can work in different ways according to what best suits the company’s set-up. For many SMEs, the managing director will also be the bookkeeper; for others it is more cost effective to hire or train someone to input the data. Either way, the accountant needs to retain ultimate control over what is signed

© 2007 e-conomic. All rights reserved.

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off and goes through the books, and what isn’t. A good online accounting system will allow the accountant to tailor the degree of control according to the client company in question. In this way, data is inputted directly and quickly while the accountant can ensure that the books do not get ‘messed up’ by inexperienced business owners/bookkeepers.

Diagram 1

Another important stepping stone towards more profitable SME clients is easy integration of data. Data needs to be able to move in and out seamlessly and efficiently. Excel is one of the most popular tools for accountants, so a click of a button should be all it takes to import/export data between the online system and Excel. It should be equally easy to exchange data about customers, suppliers, documents, products, prices and stock by interfacing your online accountancy software with your other IT systems - CRM, ePoS, ERP, etc. This means there’s less risk of errors, less administration, more timely information and a better overview of the company’s operations.

© 2007 e-conomic. All rights reserved.

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The more efficient the process, the more time the accountant has to develop the management reports, analysis and interpretation that provides the value-add to the business, which builds and strengthens the relationship between client and accountant. This is the opportunity that online accounting presents and it will change the face of accounting services for SMEs. Although online accounting offers great potential to push accountants further up the value pyramid, the move to online accountancy is not so revolutionary. Next time you are on a commuter train, see how many people are using the internet to do business remotely through their laptop computers, blackberries, PDAs and mobile phones. It has become an everyday occurrence. The internet is available just about everywhere and it is fast and reliable. It is also secure. According to the Association of Payment Clearing Services (APACS), 17 million people did their banking online in 2006 – what better testament does one need? For SME businesses there is a very compelling argument for using an online accounting system such as e-conomic. The Software as a Service (SaaS) model means that the end user has access to the system through a web browser and an internet connection. There is no technical installation as it is hosted remotely. Upgrades and back ups consequently happen automatically and you always have access to the latest version. There are no upfront installation costs or upgrade fees, only a monthly subscription, which for e-conomic is just £13.50 per month. SaaS takes away a lot of the pain associated with IT management, which can only be a good thing for small businesses, especially those without an in-house IT team. KPMG Denmark uses e-conomic’s online accounting software to manage more than 1,300 of its SME clients. Steffen Andersen, Senior Manager of the SME practice, commented: “Online accountancy software is the ideal platform for SME companies as it is inexpensive, easy to use and very flexible. Do not be fooled into thinking that it is a basic package because the subscription costs are low. e-conomic has the breadth and depth of functionality of any proprietary software, without the headache of having to own and maintain it. With add-on modules for project accounting, stock management, document scanning and mass invoicing, it easily meets the varied requirements of our clients, from when they start up to when they become established businesses with several hundred employees.”

© 2007 e-conomic. All rights reserved.

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Is internet-based online accounting the future? It’s already here – the accounts for over 11,000 client companies are maintained using e-conomic already. In the future, e-conomic believes that bookkeeping will be much more efficient – all relevant data will be captured and processed automatically and the accountant will simply need to check the figures. Supporting this change are technologies such as XBRL, an EU standard for the communication of business and financial performance data that’s backed by regulators and government agencies.

Diagram 2

Does this present a threat to the accountant’s livelihood? There is little value to be gained from data inputting. Rather, it is the accountant’s ability to interpret the numbers and offer a unique insight to the company’s performance that makes the real difference. e-conomic supports accountants by increasing the efficiency and quality of data input and creating a collaborative environment in which to work with clients.

© 2007 e-conomic. All rights reserved.

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The end goal for accountants is increased profitability through the provision of highlyprized business advice and knowledge. Accountants who exploit the benefits of online solutions are discovering new ways of growing their client base and developing sustainable, profitable and high value income streams. About e-conomic e-conomic is an internet-based accounting system, designed for accountants by accountants. It is suitable for small companies who need external assistance with their finances and large companies who need cooperation across departments, borders and time zones. It exploits the technologies of the internet to provide flexible, user-friendly and efficient solutions. e-conomic was launched in 2001 and is headquartered in Denmark, with local offices in Norway, Sweden and the UK. Plans are in place to expand across Europe and North America. The company is self-funding and currently supports more than 500 accounting practices and over 11,000 client companies, with a growth rate of over 70% per annum.

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Š 2007 e-conomic. All rights reserved.

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A Quiet Revolution - Online Accounting