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Is The Death Knell Upon Bookkeepers In 2019?

“The way we do bookkeeping has changed tremendously but the importance of the function of bookkeeping hasn’t changed.”

Mel Power-

Luca Bartolomeo de Pacioli (1447-1518), the father of modern accounting and bookkeeping, is celebrated for pioneering the first published work on the double-entry method of bookkeeping. Thus, revolutionising how businesses in Renaissance Europe oversaw their operations to promote improved efficiency and profitability. For over half a century the fundamentals of the method have remained largely unchanged, and today accounting practitioners, lending institutions, investors, business firms and all users of financial information still credit Luca Pacioli for his monumental role in the development of accounting.The erudite friar, mathematician and writer famously said: “Without order, there is chaos!” In the world of keeping and balancing books, practitioners live to create and instil order by implementing processes and designing systems to ensure that organisations’ commercial imperatives are met. For bookkeepers, designing productivity strategies for the books, and sustaining compliance by the book, is a passion and a matter of survival – for clients as well as for the profession. The way that business, and society at large, defines and derives value from professional accounting and bookkeeping services today must be considered in the context of how commoditised, convenience-oriented consumerism impacts on the industry. The present day Darwinian economic environment is challenging and changeable. Fast-paced and disruptive technological advances are redefining the way in which bookkeeping is done. In addition, how a balance between the functions of maintaining compliance and focusing on advisory can be achieved. Lastly, for practitioners everywhere to survive, bookkeepers must upskill and expand their professional competencies to address clients’ commercial needs and to facilitate the implementation of growth/productivity strategies. Owning long-term client relationships (in a transient milieu) means that the successful bookkeeping and accountancy firm is agile, and “owns the ecosystem”, providing an end-to end offering both essential and value-added services based on an agile, client-centric business hub model. Future-proofing strategies are imperative for both bookkeepers and clients to instil order and thrive within today’s digital age of chaos.

Pacioli’s axiom remains as true for present day online cloud-based bookkeeping as it was in the early days of lavishly scripted transcription into a ledger. Over the last 20 years there have been enormous changes in the way bookkeeping is done. However, despite radical systemic transformation, the importance of the function of bookkeeping, has not changed or diminished. In the digital age the successful bookkeeper is defined by and valued for possessing the most relevant, real-time data for clients. In this way, he/she can own the long-term client relationship. If a business owner does not have data available (and clean data at that) they are, quite literally, running blind. However, there is a light at the end of the tunnel. Working with a highly skilled bookkeeper who possesses the necessary financial information, in a readily accessible (or portable) and convenient visual format will illuminate the darkness. This will allow the business owner to see the present clearly and to predict the future with sophistication and confidence. This future-proof strategy represents a gateway to success, where a capable bookkeeper is a trusted advisor and gatekeeper, to guide the lifecycle/process of growth.

In recent years, the industry has been inundated (and in some cases overwhelmed) by calls to re-calibrate the functional priorities bookkeepers must uphold. There has been a general trend  emphasising the growing need for bookkeepers to focus on and to become ever more skilled and specialised in advisory; while applying technology to do low level, labour intensive work. Accounting and bookkeeping firms have long employed offshoring teams for the work of data entry. This model of holistic service provision is both efficient and cost-effective in an age where compliance is increasingly being commoditised (and per hour, billing will become outdated, as the work of reporting is automated and provided in real time). With the proliferation of cloud accounting, the use of big data, distributed ledger technology and other external disruptors have been radically transforming the industry.

Accounting, bookkeeping and a growing amount of technological integrations into business operations – in the context of globalisation and digitisation – is the new normal. Computers and algorithms increase accuracy, and can process vast amounts of information at increasing speed, while advancements in the field of artificial intelligence and machine learning – within the accounting vendor and ecosystem – has reduced labour intensive processes to almost zero. Frankly, there is no value in highly specialised bookkeepers doing data entry work when all of the tools to do the job efficiently and effectively are readily available. As relevant, and effective advisors in the fast – In a fast-paced, competitive digital age embracing technology serves to future-proof bookkeepers’ advisory role ensuring the professional is far from irrelevant. Technology cannot replace the human aspect, interpersonal interaction or learned advice, nor should it.

The industry has been awash with sensationalist claims of, “the death of compliance” but the stark and simple reality is that tax is not going to stop. However, the race towards zero is on for practitioners to deliver on this outcome for business owners. Compliance is a non-negotiable commercial imperative. In addition, while business do not uniformly consider it an achievement, research shows that business owners do not want to have to bear a large cost burden and they want the financial data reported in real-time. Small business owners are especially concerned about bridging the gap between the functions of data cleaning and tax compliance. They want a practitioner who is a skilled and trusted adviser that they can form a relationship with. An industry professional that understands their business, a gatekeeper who can provide support, mentorship and guidance on the business journey, whilst saving on tax as a growth strategy is implemented.

In the current business landscape, companies that do not keep pace with technological advances – and the new way business is conducted in a digital age – are condemned. Moreover, bookkeepers who rigidly adhere to the methodologies, mind-sets and procedures they are accustomed to following , and which they relied on in the past, are not helping their clients in this new paradigm. Past systems may seem safe but, in truth, they can be deadly. In the QSR franchise context, disruptors like Uber Eats and Mr D are taking their slice of an ever growing the pie. Meanwhile as franchise owners forgo alcohol sales and customer data; it is becoming self-evident that the staid approach, traditionally followed by companies, no longer addresses these ever-changing business needs.

There is one player in the South African context that is guiding clients through these tumultuous times to help them future-proof their businesses: RAiN. This professional services firm adopts a collaborative mind-set to ensure our clients not simply survive but that they thrive. RAiN recognises that each client’s trajectory is unique. One-size-fits-all solutions do not work to address the precise challenges specific to each business. That being said, in this increasingly complex environment, businesses are all faced with a potentially grim outcome: loss of revenue and sometimes even a complete demise. At RAiN, the ultimate goal for our clients is always growth. However, the tailored process mapped to achieve this is dependent on the nuances of each business case. The approach that RAiN takes to fully understand a client’s needs is to partner closely with it, as opposed to selling standardised board-approved products that address the concerns and needs of most (but not all) businesses.

This growing, niche market is a space where bookkeepers can really shine. There is a significant opportunity for successful practitioners to use their knowledge base, hands on experience and insight to provide value to the business owner. Nevertheless, it is vital that bookkeepers and accountants do the training – and become proficient- on double entry ledger. A sound understanding of T-accounts is the knowledge financial professionals must cultivate to start a career. It is a necessary learning curve, that cannot be forgone and without which the advisory function and ability of upcoming partners and bookkeeping professionals is jeopardised. While bookkeepers do not need to do this kind of work in their ongoing daily professional careers, as they have the tools to do so, they must future proof their advisory capacity s new, improved and more widely integrated, and vertically specialised, cloud accounting and bookkeeping services.

Embracing technology allows practitioners the freedom to deliver on advisory as related to digital strategy and provide spin-off value add services. Firms that invest in SaaS technology represent the gatekeepers to business success in an age of digital dominance.

RAiN has pioneered this field with a two-pronged approach to embracing technology. As the practise has grown and evolved, in tandem with changes in South Africa’s business and technological environments, RAiN formed a partnership with Xero. What began as an internal move to boost business productivity for RAiN, by offering cost-effective, end-to-end cloud accounting has grown in to a stand-alone product/service offering, of notable significance in the South African context. Being a Gold tier Xero partner has given bookkeepers at RAiN experience and insight in to the vendor/supply ecosystem.

As a consequence RAiN has leveraged access to the vendor – through cloud accounting service delivery – to create a School Tree, a pioneering and bespoke student management system, and e-learning portal which is both unique to the practise, and a one-of-a-kind innovation in South Africa’s emerging digital arena. School tree is a three tiered, fully integrated and managed SaaS platform. This new business model at RAiN is truly revolutionary in South Africa. While the cloud accounting software delivers the grunt work, it also provides lead generation for RAiN, and its network of small business customers through the larger Xero, Edsby and Microsoft Edge networks.

More importantly, it is an opportunity for bookkeepers to upskill and stand out in the innovative niche of advisory services on digital strategy. The uptake of School Tree is predicted to be gradual, owing to relatively low internet penetration in South Africa’s emerging market economy, regulatory constraints on spectrum, well constrained domestic consumer spending, in the wake of a technical recession, and low growth and global. Hence, the software is due to be rolled out initially at independent and private schools. RAiN will also collaborate with two of South Africa’s biggest retailers, to pilot the School Tree projects at designated urban and rural schools that are part of the aforementioned groups’ CSR projects on improving education.

Low-value data entry work is not something business owners see of value anymore, and neither should bookkeepers. The bookkeeper’s advisory function and specialised expertise, in the face of diminishing returns on “per the hour” billing for compliance-related services, in favour of embracing technology represents the new role for bookkeepers and accountants as gatekeepers along their client’s business journeys. In deploying technological solutions to facilitate growth and offering other consultative value-add services places the advisory role and capacities of successful bookkeepers and accountants is being redefined. In the South African context, as exemplified at RAiN, digital strategy and marketing/sales competency or services (i.e. lead generation) will be game-changing strategies, using disruptive technologies, to future-proof the bookkeeper’s advisory role and function. The bookkeeper of the digital age is no longer a grey suited, human number cruncher. The new normal for the profession is an agile, social influencer at the cutting edge of accounting technology. A trusted advisor to business owners, who embraces the values of intellectual curiosity and rigorous adherence to professional standards, and embodies the cosmopolitan erudite worldly spirit of our founding father Luca Pacioli. Welcome to the digital revolution and the Renaissance of bookkeepers everywhere!

Sources:

https://www.accountantsdaily.com.au/columns/12642-is-the-death-knell-upon-bookkeepers-in-2019

Melanie Power, founder, Bookkeeper Revolution

Melanie Power has not been financially remunerated nor is currently affiliated with any vendors or companies mentioned in this article.