How Technology Broke Public Accounting
When it comes to making choices about technology, the key to success is embracing the right tools, which accountants have been largely reactive in doing.
During his energetic AICPA Engage talk, Ford Baker and his colleague, Joe Abesamis, discussed a major hurdle faced by accountants: the fact that accounting is a largely reactive profession.
Not only do accountants spend more than 80 percent of their time ensuring last year’s numbers are inserted correctly into last year’s forms, but technology, which generally simplifies workflows and makes processes easier, has had the opposite effect on the industry. According to Joe, “The more technology we’ve absorbed, the less efficient we’ve become.”
Rather than experiencing the major benefit of technology, which usually makes complex things simple, accountants have found themselves struggling with some major tech-related issues over the last few years, when the push to adopt new technology and change the profession became too great for even the staunchest pen-and-paper proponents to ignore.
So, what’s the problem? Ford recounted his days as a CPA for a moving and storage company to find the answer. The key to efficiency, he learned, was to “touch it once.” In other words, put things in the right place the first time.
He used the moving company as an example as they had a number of different warehouses where they kept customers’ belongings. But rather than shifting crates and boxes between various locations multiple times, which would have been both inefficient and expensive, they strove to put everything in the correct place the first time. This simple principle saved the company both time and money.
While moving and storage might not seem like it has much to do with accounting, the “touch it once” principle is actually crucial. In fact, Intuit has called it “one of the most fundamental principles of productivity and time management,” while acknowledging that “in the world of tax preparation, it is hard to do.”
How Can Accountants Apply These Principles?
Ford advised that accountants must first realize where most of their time is spent. According to Thomson Reuters, “a CPA will spend 40 percent of their time gathering data from clients.” Since so much of your energy is focused on this part of the process, it’s crucial to ensure everyone is using the same software.
Encourage clients to adopt a tax software that you’ve found easy to use, and create a simple onboarding process that funnels everyone down the same path. Think of Amazon’s “buy it now” button. While you’re not expected to be as technologically sophisticated as the retail giant, remember that it’s most efficient to have your software doing the data-gathering work for you.
Second, figure out where there are issues in your workflow. Some major industry-wide problems all accountants share include long hours, high job-related stress, high turnover rates and low client satisfaction.
While not all of these may apply to you and your firm, some of them will. The same Thomson Reuters data found that 98 percent of accountants reported daily stress in their jobs, while 40 percent of CPAs classified their stress levels as “high.”
Furthermore, low satisfaction is among the chief reasons accounting professionals lose clients: 70 percent of clients look for a new CPA due to dissatisfaction. Finally, remember that re-examining your workflow could actually lead to greater profits: 75 percent of clients have said they would pay more if their accountant also offered advisory services. In other words, looking for ways in which technology will make you more efficient will literally pay off, as it’ll free up your time and allow you to expand your service offerings.
Touch it Once
Once you’ve identified where there are issues, it’s time to make changes. Ford suggests the following easy formula: Simplify + Standardize + Automate = “Touch it Once.”
1. Simplify
Make sure all your clients are giving you the same information in the same way. Before technology, clients with accountants had balance sheets, income statements, trial balances, and other useful information, while those without accounting professionals merely had checks and statements. After technology, all clients have these data. Tell your clients exactly what you’ll need from them beforehand; in fact, create a checklist they can follow.
2. Standardize
The most efficient firms work using consistent standards. They have a master sheet, the necessary filings, and signatures from each client. Do a quick sweep of your firm to make sure everyone is using the same software, and include both clients and staff members in this. Nobody should have different formats for the same tasks.
3. Automate
Ford has found that it’s best to use software that puts each client’s account number on their forms automatically, as well as populates the right fields with the correct financial information. You’re looking to save yourself time and energy, and filling in forms is likely one of your most time-consuming tasks. There is software out there that will do this job for you.
By following these steps, you’ll ensure you touch each piece of data once and can spend more time both on your well-being and other profit-generating parts of your business.