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Accountants in the cloud

Staples Rodway director Mark Kingsford says accounting software in the cloud is breaking down historical barriers between clients and accountants.

He says it has killed off friction cost: “the cost for clients to send information to us, us to receive it, load

it in our systems and then view it.” Accountants couldn’t interrogate the data in the past because they couldn’t “drill” into it. “Whereas with cloud we are all looking at the same data – there is one single source of truth, a single ledger. Previously we would be running a double ledger: they would have one and we would have one and they didn’t talk to each other unless you manually updated them.”

NZICA general manager technical and quality assurance John Hodge says chartered accountants in public practice see these technologies “as really enabling them to concentrate on what their clients want, which is good business advice. So the likes of Xero, MYOB and others can provide our members with fast and efficient relatively cost-effective information, whereas before what they had to do was take transactions and data and actually turn that into information before they could then start looking at what the information meant.”

Mr Kingsford says the new systems are automating or making very easy “what used to be the grunt work – the monotonous low-level processing tasks are being automated and there is a lot more electronic data interchange between cloud-based systems, so that is changing the nature of work the accounants are doing.”

“Compliance is something we do to meet obligations but being a trusted business adviser has always been the goal and what I am for many of my clients. So this just makes it easier to fulfil that role.”

“When a client calls me to ask me a question about their businesses and instead of me having to print out profit and losses or statement of position I can just go straight into say Xero, look at what they are looking at and answer their questions directly. What it also enables us to do is be a lot more  proactive in that we can go into their data, asses it and look for trends or look for issues and make them aware of it.”

Interestingly, Mr Kingsford, who heads his firms’ outsourcing practice, says the way businesses are being set up now is radically different from the traditional method. “A lot of businesses are now global from the get go. They have a very skinny overhead structure, not a lot of capex required to do things and they can have the functionality of a big player in the market but on a small player opex basis. So what I say to my people when I pitch to them is: I will drag you kicking and screaming into the second decade of the 21st century.

“People setting up business today are setting it up with online software online gateways payments, global niche products. They can sell to the world – the global marketplace is there. So you start to piece these things together and you realise there has been quite a fundamental shift both in the business environment but also in the environment by which you partner with your accountant to do it.”

He cites a widget-making company, which can now sell widgets online to the world “as opposed to in the old days when they would create a widget, wrap it, find someone to stock it, distribute it and put it on the shelf. “Think about the changes to the supply chain. In the global marketplace you are basically manufacturing to demand with no distribution partners and no channels required.

“Because the cost is minimal to deliver to market what we are seeing is a lot more niche software providers. For example, my wife runs a luxury property management company on Waiheke and she has sourced a cloud- based luxury management tool off the internet – based in Miami.”

But Mr Hodge says one thing that hasn’t gone from the accounting profession is “the value of the stewardship part, the accountability part. “There are and always will be probably some things business will have  to comply with and as it relates to the financial part of the compliance, tax and so forth.

“There is always going to be value in knowing that you have a proper professional taking care of that part of the business.”

What if....

What if…

Staples Rodway director Mark Kingsford says he wouldn’t be surprised if Xero started data mining. “They have a billion dollars worth of outward bound sales invoices originated from Xero files. So they are effectively capturing a large part of New Zealand’s GDP and I wouldn’t be surprised if  at some stage they start data mining that, in terms of using that information for trends and analysis of different cost codes and expense lines.

“Rod Drury is a smart man and, if you look at the Google and Facebooks, they don’t sell advertising, they sell knowledge of people’s buying habits  and behaviour effectively – so I wouldn’t be surprised if that isn’t Xero’s end game. I do think it is part of their play.

“Imagine being able across 250,000 clients to do analytics on, say, how much insurance people spend or how much accounting fees are or advertising. Then compare it to revenue and turnover – there is some pretty powerful information here.”

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