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Accounting Technological Changes: Fear, Abuse, or Embrace?

At my first job (as an accounting intern for a midsized corporation), we ran reports in Excel and did manual daily bank reconciliations. When I got to college, my accounting practice sets were on paper ledgers; it was a thrill to go to my part-time job in a CPA’s office where the original version of QuickBooks Pro was available for me to use. 5 years ago, when I left my job as a Budget Officer with the North Carolina state government, we were finally upgrading our accounting software out of DOS.

Needless to say, I love and appreciate all of the new accounting technologies available today.
However, as the industry changes, so must those of us within it change and improve, or risk being left behind. Firms tend to fall into one of three categories when facing these changes.

Those who fear change.

retro computerSadly, I have found that roughly half of the CPAs and tax preparers with whom I interact are highly resistant to new technologies, with the majority of them refusing to use cloud-based accounting software in any sense. I am frequently told, “I learned on desktop, and that’s what I’m comfortable with.” Having a preference and continuing to use desktop is fine, of course; many businesses are still on desktop accounting solutions, and it is still the best option for many businesses. But by refusing to work with other software packages, these professionals are either a) closing themselves off from a large portion of the market or b) forcing their clients into a solution which might not work best for them.

Cloud-based accounting allows multiple professionals (tax preparer, bookkeeper, and client) to work in the same set of books simultaneously, without the need to transfer a file back-and-forth. It also allows the client to perform some of the lower-level accounting tasks that might be more efficient for them to do (i.e., invoicing), without the need to outsource it and pay more unnecessarily. By refusing to adapt, either due to fear or stubbornness, the accounting professional is doing their client a disservice, and costing them more money. Over time, they will also cost themselves business, as more and more clients move to newer softwares.

Those who abuse change.

on phone while drinking coffeeAccounting programs have come a long way, but there is still a real need for a high level of professional oversight. Sadly, there has been a push in the accounting world towards “100% automation” and “a business which runs itself”. While the work certainly has gotten easier (or at least, less manual), trusting the machines to do everything, without your involvement, is still a recipe for disaster.

Take, for example, the integrated bankfeed in QuickBooks Online. This is a very nifty feature that allows bank accounts and credit cards to feed directly into the accounting software and be added from there, greatly speeding things up from the manual entry of days past, and helping to ensure that transactions are not missed. It also has some additional interesting functions, such as machine-learning that allows the software to recognize bank descriptions and default transactions to how they were last entered, and a “rules” feature that allows a user to program certain descriptions to default to certain transactions.

90% of the time it works very well, which is what makes the 10% of the time it doesn’t work so disastrous.

For example, the feature that recognizes and assigns transactions based on the bank’s description of the transaction is a nightmare when it comes to assigning checks. Let’s say you write a check to a subcontractor, and assign it correctly in QuickBooks. The next time a check comes through the bankfeed, it will automatically default to that subcontractor. If the person assigning it is not paying attention, multiple checks can be assigned to one individual or business, throwing off the financials, future 1099s, etc.

Bankfeed rules can cause similar problems, as there is an option to create rules which add transactions to the ledger automatically, bypassing human review. We never use this option at The Bookkeeper, but we have seen companies do so. Again, this can be disastrous on those rare occasions where the computer algorithm makes a mistake.

New technologies can only be trusted to work up to a point; overreliance on them is inexcusable when it results in results in inaccuracies in the financials.

Those who embrace change.

smiling while on computerOne of the things that makes me very proud of our company is how we have integrated new technologies in ways that better serve our clients, without using them as a substitute for genuine human oversight and customer interaction.

Things like cloud accounting, app integrations, bankfeed rules, and the like have allowed us to serve a greater number of clients more efficiently. It’s also allowed us to work with clients who might not have yet been able to afford a fully outsourced solution, by training them on some of the tasks which have been made easier by improvements in software.

However, we have no fear of being replaced by technology. In fact, new technologies have freed us up from manual tasks so we can focus on the part of the work we really love; working directly with clients on analyzing their financials, examining the market, making plans for improvement, and educating business owners on best courses of action for their companies.

And even as computers get better at aggregating and analyzing data from various sources, they will never be able to replace a human connection. A machine may recognize that retail rent prices are better a zip code over, but we can understand that a client wants their storefront in walking distance of their child’s school. Or, it might make more sense, by the numbers, for a business to adjust hours seasonally, to save money in the slow periods. But a person can recognize when an owner wants to keep his employees at full-time wages, even if it means a little less money in their own pocket. And the more that computers can handle the data entry, or “number-crunching” aspects of our job, the more we can focus on solving these more complicated, human problems.

Technological changes are unavoidable. But from where we sit, that’s not a bad thing.


Why "Cheap & Easy" Online Bookkeeping Services are Neither

Online "full-service" bookkeeping companies have been on my mind a lot lately. Mostly, it's because we've recently had to do so much clean-up work for clients who have previously used these services to keep their books.

Over the past week alone, we've started working with three different clients who previously employed three different online accounting services. All three have told us, separately, how the solution that was supposed to save them money and make their life easier ended up costing them hundreds or thousands of dollars for incomplete, inaccurate financials.

So, if bookkeeping is really just a matter of putting the right numbers in the right spots, how is it that these companies are falling so short of the mark? Let's look at a comparison of how an internet bookkeeping company works versus how we work.

Love TechnologyUtilizing technology vs. relying on technology.

I won't be a hypocrite; I love technology, and we use it at The Bookkeeper to make our work faster and more accurate. (We even have clients in other areas of the country, with whom we've never met in person.) However, trusting technology to make the correct judgment calls, without checking behind it, leads to errors. Online bookkeeping services enter transactions based on vendor defaults; for example, this can lead to a $10,000 bank transfer being labelled as a "bank service charge", because the bank is listed as the vendor in the downloaded transaction description, and that's where it defaults. An expert familiar with the account is going to be well aware that the $10,000 is not a service fee, and will assign the transaction appropriately. And speaking of experts...

Young WorkersHiring the best people vs. hiring the most people.

One of the things I am most proud of in the growth of my company is the team we've assembled. We have some very experienced people, and everyone is focused on constant education and improvement. We offer better benefits than our direct competitors, and do a lot to ensure that our employees have a clear path to growth within the company.

When I first started seeing the product being put out by these online bookkeeping companies, I was curious about what it must be like to work there. I went to Glassdoor and read some reviews by current and former employees, which confirmed a lot of my suspicions. Even the positive reviews spoke of their company as a "great stepping stone" to employment in a more traditional firm. Several employees spoke of it being their first job after graduation. I'm glad that there are good employment opportunities for young bookkeepers, but I don't feel that I would want them to be the point person responsible for a client account.

Inclusive service vs. charging for "add-ons".

Possibly due to the fact that their employees have less experience, online bookkeeping services do not offer full bookkeeping to the degree that a traditional company would. Most do not allow for entering invoices, bills, line of credit, fixed assets, nor payroll; if they do offer these services, it is at steep surcharges. (One company offers payroll for up to only three employees for $100 a month!) We recognize that things like bill-pay, tracking receivables, filing sales, recording depreciation, etc. are all necessary for truly accurate financials, and should be included as a part of the original agreed-upon rate, without being snuck in as a costly "add-on". Speaking of pricing...

Money GrubbingCharging for the work done, instead of how much you think the client can afford.

I am always suspicious of companies which offer pricing based on monthly expenses or revenues in dollar amounts. Here's a secret: larger companies aren't always more work. Imagine a client who is a business broker; this client might make $20,000 in one month, but it might be on only one sale! Now imagine a client who is a dry cleaner; the dry cleaner might make less than half of that, but it could be in hundreds of transactions. Which one do you think takes more time for the bookkeeper to enter? One transaction, or hundreds?

Businesses who charge based on amount of money passing through the client's account are often just trying to see how much they can get away with charging. They know that a client who only spends a few thousand dollars a month will not want to see a large proportion of their budget go to a $450/month online bookkeeping solution. Likewise, they know that a client spending $100,000 a month will not notice that amount to the same extent. It is, in my opinion, a deceptive marketing practice.

Proactive vs. reactive service.

Most online bookkeeping companies ask clients to submit bank statements at month-end, and then just download the transactions into the system at that time. As we've discussed before, we get into client accounts, at minimum, twice a week, to help monitor cash flows, identify potential problem areas, and review areas of improvement. This allows for timely and therefore relevant information, as well as allowing us to compile period-end financials much more quickly, since most of the work is already done by the time the month closes.

This is not to say that online bookkeeping services can't be helpful in select situations. If a client has a high number of very basic transactions, with no fixed assets nor liabilities, and no interest in tracking invoices nor bills, no payroll, and no sales tax, an online solution might be more cost-effective for them. However, I would highly encourage anyone else to get a second consult before signing an agreement with an online-only bookkeeping company.