Clear Books Must reads | August 2014

How cloud accounting software is changing

the business model of accounting firms

The benefits of switching to cloud accounting software are

numerous for accountancy firms

Additionally, this technology is changing the business

model of accounting practices.

Up until relatively recently the accounting industry

had a rather stuffy image consisting of firms holding

thousands of physical client files, charging high fees

for bookkeeping and relying on legacy clients to

generate fees.

Clear Books Must reads | August 2014

One model, which has prospered with the rise of cloud

accounting, is that of the franchise. CheapAccounting.

co.uk was started by Elaine Clark in 2007, and first

developed its franchise arm in 2009. The company

now has in excess of 2,500 clients and 24 franchisees

across the UK.

Clark was motivated to pivot to a franchise model

as she “saw a huge opportunity to work with clients

in whatever location by using technology to deliver

professional accountancy service[s] at an affordable

fee.”

The name Cheap Accounting, was derived from a

desire to be both eye catching and search engine

friendly.

Franchise

The process to become a franchisee of CheapAccounting.co.uk is rigorous. Clark interviews prospects personally,

and all applicants have to be a member of a recognized accountancy body such as AAT, ICAEW, CIMA or ACCA.

Once franchisees are accepted they are put on a training course. This is taught with the expectation that not all

new franchisees will be familiar with cloud systems. In addition, new franchisees are given one-to-one mentoring

sessions, based on their needs and respective backgrounds.

Clark says, “all of our franchisees are different and we do not believe that having a “one size fits all” training

programme would be beneficial to use or the franchisee.”

Cloud software like Clear Books has enabled a new generation of accounting firms to emerge who are thinking more entrepreneurially.

Common features of such firms are that they have no set physical location, outsource services which are not

part of their core competencies and utilise the power of the internet and social media to be proactive in winning

new business.

Clear Books Must reads | August 2014

Outsourcing

Rasa McClure, one of CheapAccounting.co.uk ‘s

franchisees, chose to purchase a franchise with the

company due to her desire to access marketing skills

and establish a firm from scratch.

Despite access to marketing know-how being an

obvious benefit of franchising, Clark does not believe

that this function is any more or less important for

more traditional accounting firms.

Cloud accounting software makes it easier for

accounting firms to outsource parts of their work

by enabling partners to access data from anywhere

with an internet connection, without the burden of

transferring data back and forth.

One firm, which has done this successfully, is Adroit

Accountax. The company outsources admin-based

services such as book keeping, client engagement

letters and VAT registrations.

Mahin Khawaja, director of Adroit Accountax says,

“Without online accounting software outsourcing is

difficult and complex.”

“Other practices need to keep staff fully utilised and hopefully recruit new staff as they expand and grow. No business stands still.”

She says, “Marketing allows us to move forward [by] recruiting more franchisees. Other practices need to keep

staff fully utilised and hopefully recruit new staff as they expand and grow. No business stands still.”

Whilst Clark does not believe that cloud accountancy software exclusively facilitates the smooth running of a

franchised accountancy firm, she thinks that systems such as Clear Books are “essential” for online accountancy

practices.

In the future Clark believes that cloud accounting systems will become the backbone of accounting practices, in

a similar way to how online filing has been adopted over the last few years.

She says, “practices that are able to adapt and change their models…will survive but I expect to see some [firms]

go by the wayside who are unable to accept a technologically driven business model.”

Clear Books Must reads | August 2014

She believes that cloud software such as Clear Books

is symbolic of the modernisation of the accounting

industry, and that as a result this enhances the image

of accountancy practices.

Adroit chose to integrate Clear Books into their

outsourcing model due to it enabling data to be

updated in real time and its ability to make accurate

information available on demand to clients.

Alongside Clear Books, other pieces of software allow

Adroit to integrate outsourcing into their business,

including using document transfer software and a

Virtual Private Network (VPN). These help the company

to communicate and share data with their outsourcing

partners.

Khawaja lists competitiveness in price, and the firm’s

ability to do more constructive consultative work as

being key attributes of adopting an outsourcing policy.

She believes that we are now seeing a shift in

the industry with more accounting firms utilising

outsourcing services. “Accountants want to evolve like

everyone else, with more online accounting systems,

better connectivity than we had 20 years ago, and

[the] ability to work remotely all [being] contributing

factors.”

In spite of this, outsourcing still carries an element of

risk. If outsourcing partners do not complete work to a

high standard within a set time period, this can reflect

badly on the accountancy firm commissioning the

work.

Adroit mitigates this risk by issuing strict Service Level

Agreements with outsourcing partners they work with.

Khawaja says, “Our client has an expectation from

us for delivering accounts, VAT and management

accounts within [a] certain period of time [this also

applies] to our outsourcing partner. We receive

advance warning [from them] if there is any delay so

we can let the client know.”

Clear Books Must reads | August 2014

The mobile firm

Alongside adoption of cloud accounting software,

choosing to have no set physical location for an office

is another way of reducing costs.

As software like Clear Books keeps all client accounting

data in the cloud, this makes it easier than ever before

to work remotely.

Barnes & Scott is a forward thinking accountancy

practice set up by Tasnim Mustafa. When starting

up the company, Mustafa thought it made sense to

work from home and share workspaces in order to

minimise the company’s overheads.

He chose to adopt Clear Books due its speed and ease

of use when collaborating with clients.

Currently the business has a presence at Central

Working’s Shoreditch space. Mustafa lists winning new

clients as one of the key benefits from spending time

at the shared working space.

He says, “[Central Working] are really good at

encouraging you to meet others and talk about what

you do… Sitting in a co-working space with one

hundred other startups helps.”

Mustafa splits his time working fifty per cent of the

time in shared working spaces, twenty five per cent

meeting clients and twenty five percent working from

home.

He believes that it is still vital to meet clients face to

face in order to establish a relationship with them.

Barnes & Scott’s general onboarding process for new

clients includes conducting a meeting in which key

engagement procedures are run over. In addition,

clients are given training on Clear Books. This is then

followed up at the year end with a meeting to run

through key business and tax planning information.

Mustafa stresses that in some instances it is not

always necessary to meet face to face for one off

engagements. He says that “specialist tax work” such

as SEIS applications can be completed over the phone.

In spite of the many pros, there are some downside

to working remotely. These include managing and

communicating with your team. Tasnim says, “building

and motivating staff is much harder… It takes much

more effort to schedule a phone call when you want to

speak to somebody rather than just have a quick chat

when you are sitting next to each other in an office.”