By Mark Davies of Twinfield

Corporate confidence may be returning. But the climate for SMEs has changed. Organisations survived the recession by imposing far greater financial controls, attaining real insight into cash flow position and taking a proactive attitude to day to day financial management. As these organisations now look to expand, they are increasingly demanding far more than the traditional accounting practice which offers no more than an annual meeting to sign off year-end accounts. They recognise that successful business now demands regular updates and financial advice, preferably supported by real time information on cash flow management and forecasting.

And SMEs are increasingly willing to break with tradition; questioning accountants’ fees and comparing firms on the basis of the quality and extent of services offered. In this increasingly competitive marketplace, there is now a clear demand for accountancy firms to transform the way in which they interact with clients and evolve rapidly from the delivery of annual book-keeping services to true financial consultancy that delivers quantifiable value.

Mark Davies, UK Country Manager, Twinfield, explains how Software as a Service (SaaS) is set to transform the way accountancy practices operate and enable business transformation for SMEs.

Financially Savvy

Any SME that has survived the tough economic conditions of the past 18 months will undoubtedly have emerged fitter, leaner and far more financially savvy. Having endured a cruel recession by imposing tight financial control, as these organisations look forward they are now looking to achieve far greater visibility over financial performance and cash flow.

As businesses tentatively plan expansion, MDs and FDs are now painfully aware that the traditional financial audit processes do not support the need for real time insight. The annual accountants meeting and tortuous sign off process for end of year accounts is a necessary chore, not a service that delivers any corporate value.

Waiting for several weeks after year-end to discover whether or not the books balance is an outdated and unsustainable approach in what remains an edgy economic situation. To ascertain the risks associated with business growth, SMEs need at a minimum a monthly briefing with the accountant based on a snap-shot of the current financial position. Even better is real time access to online information that provides MDs with immediate access to the financial situation anytime, anywhere, and the ability to drill down to the underlying detail including bank statements, invoices and receipts.

It is the provision of this level of financial insight that will be key to minimising the risk associated with business expansion; to imposing far tighter control over spend and cash flow and to ensure the management team has an accurate, trusted and detailed insight unto underlying performance factors at all times. And it is access to this depth of information, supported by strong expertise that is increasingly expected by SMEs now willing to question the quality and value of services on offer.

New Model

So how well are accountancy practices responding? Until recently, a customer was for life. Now, squeezed by growing numbers of book-keeping services at the lower end and still experiencing the recession inspired reduction in fees, most firms are looking at opportunities to add value and build loyalty amongst an increasingly fickle customer base.

However, while there is no doubt that the accountancy model needs to evolve; traditional processes and technologies have combined to constrain any true innovation. Today accountants are either reliant on SMEs posting receipts on a regular basis or spend up to 50% of client time wrestling with data and software inconsistencies from incompatible client files. As a result there is little room for new service delivery.

However, innovative accountancy practices are now beginning to leverage a new business model that supports information sharing in real time. This model is based upon a simple to use system that enables SMEs to enter financial data online on a regular basis, providing accountants with complete transaction visibility and avoiding any problems of data inconsistency or software version control.

By working with an accountancy practice that has embraced the online accounting model, SMEs are able to receive a much better quality of service. Data can be updated from any location and, once processed, information can then be made available in real time, with key resources such as bank statements automatically downloaded and consolidated into financial reports that can be accessed by MDs on demand.

For the SME, the benefits are clear. From faster, lower cost filing of year-end accounts with Company’s House and HMRC, to the provision of accurate day to day information on financial performance, including the critical cash flow management. Sharing a single online accountancy software solution with the accountant also provides a platform for other services, which can range from a monthly update, to the provision of advice in areas such as taxation and cash flow, to a proactive approach that leverages real time access to client data to monitor performance and provide early warning of potential issues.

Critically, this co-operative approach creates a strong relationship between the two organisations and provides SMEs with the access to financial expertise required to minimise the risk associated with business growth.

Financial Consultancy

SMEs have emerged from the past 18 months with far more financial insight. They are more demanding and clearly aware of the role excellent financial information and expertise can play in boosting corporate agility and minimising risk: real time access to information, and associated expertise, is becoming a must-have, not an expensive service option.

Adopting the online model enables accountancy practices to move up the value chain and evolve from the role of annual auditor undertaking a necessary but uninspiring task to a true financial consultant with the expertise and experience to deliver quantifiable corporate value.

This model delivers huge benefits in efficiency and productivity by automating repetitive tasks and removing the need for rekeying that can result in errors, enabling accountancy practices to offer a far more competitive rate for standard book-keeping and accounts processing services. At the same time, highly experienced personnel are released from mundane tasks and can leverage their experience, knowledge and qualification to deliver real value to SMEs as key business advisors, meeting the needs of this increasingly financially aware marketplace.