China is an undergoing a momentous digital transformation and the entire accounting services industry is about to be disrupted. This is how to survive and thrive in a post-compliance world.
* This blog post is a follow-up on our previous article about cloud accounting in China. Read more here.Here is the second part talking about how to extend your business beyond compliance and progressively into higher value services.
In part 2, we look at the steps you can extend your business beyond compliance and progressively into higher value services.
Step 3. Financial reporting
Producing business reporting to clients is traditionally an important item in the accounting service catalogue. There are many types of reports requested by different clients.
– Customized internal management reporting
– reporting across China/US GAAP, IFRS,
– Consolidated statements among multiple business entities.
– Headquarter defined reporting (for those subsidiaries which has a foreign headquarter)
Monthly, quarterly or yearly reporting preparation occupies a major chunk of accountants’ workload, as they have to manually pull data from multiple source documents and spreadsheets and compile into a pre-defined format.
Cloud accounting software comes with a set of standard reports which enables clients to see the overview business performance in various dimensions and drill down to query the detailed transaction. (Remember source business transactions are imported into cloud accounting software as transaction forms in step 1, which enables client users to check the business transactions intuitively.)
Excel based reporting development tool enables accountant to build, for only once, the report template customized to clients’ definition. And users can regularly employ the template to pull up-to-date business data from cloud and generate up-to-date reports.
Business intelligence SAAS tools makes large volumes of raw data easy to interpret. It imports data from cloud accounting software and other add-on SAAS products, automatically creating powerful reports, dashboards, forecasts and multiple-entity reporting. Accountants can prepare fancy reporting and graphic charts for their clients by just drag-and-drop, and deliver clarity to them for enlightened business decision making.
Promoting more powerful and convenient reporting to your existing clients is an executable step to convert them to Cloud. Without significantly altering the way your clients are engaging with you, cloud reporting enables accountants add substantial value to them.
Step 4. Accounting system setup
Helping your client, especially new clients, to structure and streamline their operations, financials and controlling is another plausible step you extend your service scope and deepen the engagements. Cloud accounting software, and other integrated cloud productivity tools, is the platform where you can construct and configure your clients’ business imperatives.
Business setup calls for substantial vertical expertise, as you need to know what are the major operational and financial problems for a typical business in a certain vertical sector. You need to approach the clients to understand their functional business procedures and data structure. You need to see how they carry out the performance evaluation and what they need for tracking their management dimensions.
Helping your clients to set up the system properly creates good foundations for them to keep an eye on the most critical numbers and keep their financials under control on an ongoing manner.
Here are the major areas for systems setup.
– Master data
– Chart of account structure
– Business procedures and transaction data definition for major functional areas.
– Business performance tracking categories
– Management reports definition
Step 5. Data entry by clients
In China, it is a common practice of dual books, where business directors, who are serious about their financials, maintain their transaction data in Spreadsheet in a custom-developed format they are comfortable with, to track their numbers and control their business. And they throw the source documents to outsourced accountants for book-keeping, tax filing and statutory reporting.
Spreadsheet is a clumsy tool for addressing management books. And when those who are open-minded to innovative productivity tools are presented with the features of cloud accounting software. (* excel vs. Cloud), they would be thrilled and excited.
Wasted efforts from dual data entry can be completely eliminated when clients shift to cloud accounting software to perform the invoicing/fapiao tracking, expense claim, payroll and bank reconciliation, as general ledger entries and financial statements are automatically produced by the cloud software.
Clients have a better life as it is much more productive to carry out these tasks with a marvelous execution and management tool in the cloud. Accountants can totally abandon the lower value-added work of crunching numbers, and step back to watch and monitor if online business data are accurate and conforming to specifications and rules pre-defined in the setup stage.
What an amazing shift when everything goes to the cloud.
Step 6. Interpretation and explanation
In step 3, we explained the cloud reporting and BI tools allow accountants very little preparatory work to create reports and visually present the data to their clients. However, you can’t just give your client a management report or KPI dashboard and leave them to it. Does the data have any indication of a latent problem, or any implications about potential opportunities and risks?
Business owners are always eager to learn how the business is doing but not all of them have accounting background. It is important for the accountants to explain all those numbers and ratios on the financial reports to the clients in an easy-to-understand way, analyze the health of the business based on the data in hand, as well as spot key areas of concern. Here is where your professional expertise, which can never be commoditized, starts to come into play.
Professionally commenting on and providing the meaning for the business data instantly position yourself as trusted advisors in front of your clients. This step naturally leads to offering solutions to those critical issues identified, and help clients make better decisions and lift performance. From a certain perspective, interpretation and explanation can be viewed as a natural sales efforts toward business advisory service.
Step 7. Business advisory service
Many business clients need more than just your interpretation and insights. They also need your help. They want you to offer them solutions and want to know what actions will bring about the best results.
Business advisory service is where accountants can exert tremendous impact on the condition of their clients’ business. It offers accountant additional stream of revenue and deepen their relationship with their client base.
Here are the common items on the catalogue of business advisory for small business:
– Setup of accounting structure and controlling systems
– Introduce, set up/configure and train SAAS business applications/tools for clients
– Financial and management reporting
– Facilitating of business planning
– Budget preparation and actual vs. budget assessment.
– Business process reengineering and Internal control
– KPI assessment, Profitability and cost analysis.
– Cash flow analysis forecasting
– Contingency/what if analysis
– Business valuation and fund raising
– TAX advisory
Business advisory is the last step in the ladder of incremental change but is the step that brings you exponential advantage.
Business advisory service presumes you, as a trusted advisor, has in-depth expertise in the subject area and the profound understanding of business imperatives in vertical industry. You also need to grasp available SAAS tools to help apply and deploy them for your clients, so that your ideas and solutions can be substantialized into your clients business. And these skills are highly practical and involve highly professional judgment, which is not something you can obtain by just going through any sort of Certified Public Accountant program.
In the face of cloud accounting and technology massively disrupting the landscape of accounting profession, forward looking accountants take steps to proactively engineer themselves to embrace the trend and create opportunities and competitive advantage for their business. Those who choose to close their eyes and sleep in the conformable zone wait only to be engineered by their fast-moving peers, even to be completely driven out of business.