Corporate confidence may be returning. But the climate for SMEs has changed. Organisations survived the recession by imposing far greater financial controls, attaining real insight into cash flow position and taking a proactive attitude to day to day financial management.

As these organisations now look to expand, they are increasingly demanding far more than the traditional accounting practice which offers no more than an annual meeting to sign off year-end accounts. They recognise that successful business now demands regular updates and financial advice, preferably supported by real time information on cash flow management and forecasting.

And SMEs are increasingly willing to break with tradition; questioning accountants’ fees and comparing firms on the basis of the quality and extent of services offered. In this increasingly competitive marketplace, there is now a clear opportunity for accountancy firms to transform the way in which they interact with clients and evolve rapidly from the delivery of annual book-keeping services to true financial consultancy that delivers quantifiable value.

Financially Savvy

Any SME that has survived the tough economic conditions of the past 18 months will undoubtedly have emerged fitter, leaner and far more financially savvy. Having endured a cruel recession by imposing tight financial control, as these organisations look forward they are now looking to achieve far greater visibility over financial performance and cash flow.

As businesses tentatively plan expansion, MDs and FDs are now painfully aware that the traditional financial audit processes do not support the need for real time insight. The annual accountants meeting and tortuous sign off process for end of year accounts is a necessary chore, not a service that delivers any corporate value.

Waiting for several weeks after year-end to discover whether or not the books balance is an outdated and unsustainable approach in what remains an edgy economic situation. To ascertain the risks associated with business growth, SMEs need at a minimum a monthly briefing with the accountant based on a snap-shot of the current financial position. Even better is real time access to online information that provides MDs with immediate access to the financial situation anytime, anywhere, and the ability to drill down to the underlying detail including bank statements, invoices and receipts.

It is the provision of this level of financial insight that will be key to minimising the risk associated with business expansion; to imposing far tighter control over spend and cash flow and to ensure the management team has an accurate, trusted and detailed insight unto underlying performance factors at all times. And it is access to this depth of information, supported by strong expertise that is increasingly expected by SMEs now willing to question the quality and value of services on offer.

New Model

For accountancy practices this new model is compelling. Until recently, a customer was for life. Now, squeezed by growing numbers of book-keeping services at the lower end and still experiencing the recession inspired reduction in fees, most firms are looking at opportunities to add value and build loyalty amongst an increasingly fickle customer base.

However, while there is no doubt that the accountancy model needs to evolve; traditional processes and technologies have combined to constrain any true innovation. Today accountants are either reliant on SMEs posting receipts on a regular basis or spend up to 50% of client time wrestling with data and software inconsistencies from incompatible client files. As a result there is little room for new service delivery.

What is required is a platform that delivers information sharing in real time; a simple to use system that enables SMEs to post financial data online on a regular basis, providing accountants with complete transaction visibility and avoiding any problems of data inconsistency or software version control.

By embracing an online accounting model that utilises a Software as a Service (SaaS) delivery methodology, accountancy practices can transform service provision. Clients can update data from any location, a process that provides huge benefits in efficiency and productivity by automating repetitive tasks and removing the need for rekeying that can result in errors.

Client information can then be made available in real time, with key resources such as bank statements automatically downloaded and consolidated into financial reports that can be accessed by MDs on demand.

For the SME, the benefits are clear. From faster, lower cost filing of year-end accounts with Company’s House and HMRC, to the provision of accurate day to day information on financial performance, including the critical cash flow management. Critically, sharing a single online accountancy software solution provides a platform for other services, which can range from a monthly update, to the provision of advice in areas such as taxation and cash flow, to a proactive approach that leverages real time access to client data to monitor performance and provide an early warning of potential financial problems.

Critically, this co-operative approach creates a strong relationship between the two organisations and provides SMEs with the access to financial expertise required to minimise the risk associated with business growth.

Financial Consultancy

In this post recessionary economy, the opportunity to build a closer relationship is key. With growing pressure on fees and fast diminishing concepts of customer loyalty, accountants need to be far more closely involved with clients. But accountants also need to be able to meet client needs for far better, cost effective access to information, and real time understanding of key financial performance indicators, such as cash flow.

Indeed, whilst technology based on the hosted model – from Application Service Provider to SaaS – has been available for some time, it is the shift in SME attitude that is fuelling demand for these added value services that leverage anytime, anywhere access to up to date financial information.

Adopting the SaaS model enables firms to move up the value chain and evolve from the role of annual auditor undertaking a necessary but uninspiring task to a true financial consultant with the expertise and experience to deliver quantifiable corporate value.

This is a tough marketplace for any accountancy practice. SMEs have emerged from the past 18 months with far more financial insight. They are more demanding and clearly aware of the role excellent financial information and expertise can play in boosting corporate agility and minimising risk: real time access to information, and associated expertise, is becoming a must-have, not an expensive service option.

But the opportunities are now in place to leverage technology to meet the needs of this financially aware client base. By minimising the mundane tasks and improving productivity, firms can offer a far more competitive rate for standard book-keeping and accounts processing services. At the same time, highly experienced personnel are released from these arduous valueless jobs and can leverage their experience, knowledge and qualification to deliver real value to clients as key business advisors. Not only do these services command a premium but they also boost customer loyalty and provide a tangible opportunity to gain significant market traction.