According to a recent survey conducted by Bill.com, millennial business owners are requesting a wider range of accounting services than previous generations. Although taxes ranks at the top of that list, millennials are turning to accountants for bookkeeping, invoicing and cloud accounting services. Even more interesting, a growing number of millennial business owners, 23% to be specific, are turning to internet searches to find accounting firms. The accounting firms of the future will need to adapt to these changing demographics by using the latest technology and cloud accounting software to provide value to their future clients.
Cloud accounting software is similar to traditional accounting software but with the added benefit of internet connectivity. By syncing your traditional accounting software to the cloud you can store your financial records on a remote server that can be accessed anywhere around the world. Although this may seem dangerous and open to hacking, cloud accounting is often safer than traditional accounting software because it does not have to be maintained by an in house IT professional. Online accounting services provide hosting, updates, and security that is cost effective especially for small business owners.
Automation of Accounting Services
Another great benefit of cloud accounting is the automatic update feature that replaces traditional accounting services. Small businesses have turned to cloud computing in lieu of in house bookkeepers to keep their books and records up to date. Check writing, customer invoicing, accounts payable can all be automated or outsourced to accounting firms through the use of online accounting platforms. For example, a salesman can invoice a customer on a tablet and that information will be automatically updated to the accounting software. At the end of the month the accountant can remotely log in to the software and reconcile bank accounts, prepare estimates for taxes or file monthly and quarterly sales tax reports.
The Accounting Arbitrage
The term arbitrage means the simultaneous buying and selling of commodities in different markets in order to take advantage of price differences. For example, if an asset is being sold for $20 in one state but is also selling for $25 in another state then an arbitrage of this commodity would be buying the asset for $20 and selling it for $25. The accounting arbitrage comes in the form of offering traditional accounting services at similar or reduced rates but using significantly less capital. In essence, you are buying a clients time and selling it back to them in the form of accounting services.
For example, lets say a small business owner spends 10 hours a week invoicing customers, paying bills, entering checks into an accounting software and reconciling various accounts. This task is becoming daunting and is taking away precious time from his family and his business. He has two options, either hire a bookkeeper to perform this function for $15 an hour at 10 hours a week or he can outsource this accounting work to an accounting firm. Through the use of cloud accounting, an accountant can offer to perform these services at a fraction of the time making the project feasible with high billable rates. Vendor payments, invoicing, data entry and account reconciliation could be done in less than 10 hours a month but charged at a rate of 40 hours a month at a bookkeeper’s rate.
The accounting firms of the future will have to adapt to new technology to meet the needs of millennial business owners. Accountants will have to find ways to incorporate traditional accounting services with changing technology to save their clients both time and money. We are starting to see the beginnings of this shift so it is still early enough for accounting firms to jump on the bandwagon of cloud accounting and other technological accounting trends.