Accountancy is changing. But at what speed and at what cost to accountants and SMEs alike? As accountants face up to the challenge of declining margins and SMEs look not only for lower cost audit services but real-time advice to improve business performance, traditional services are fast becoming redundant. In this article I’d like to outlines the importance of information transparency, proactive collaboration and system integration and the role social media will play in the accountancy firm of the future.

Changing model

It is not news that the role of the accountant has got to change. Margins are dropping and SMEs are increasingly exploring a raft of alternatives – including online accounting services such as Crunch – in order to not only reduce costs but also gain faster insight into financial performance.

This latter point is key. While SMEs are increasingly unimpressed by the costly annual audit and tax return service still offered by the vast majority of accountants, it is the lack of real-time financial information and time-critical advice that is undermining the role and status of accountants within business.

Every SME is now facing a more complex operating environment. With economies in the eurozone static at best, organisations are being encouraged to look further afield for business growth. But such ventures are risky; organisations need to understand the impact on the business from cash flow to debt recovery and currency management.

Under traditional accounting models it is simply impossible to assess the risk of business change in real-time – companies have to wait until the annual audit and return is produced in the next tax year to gain insight into performance. As a result, any opportunities to make changes that may improve the tax position, for example, have been lost.

At the same time, margin erosion is constraining accountancy firms’ ability to provide advice. Any cost sensitive SME is shopping around for accountancy services and opting for the cheapest option each year. While this drives down SME overheads, it provides no opportunity for the accountant to build the customer relationship that should underpin the added value advice services. The model is no-win on both sides.

Improving efficiency

To address the pressure on margins, growing numbers of accountancy firms – admittedly more in mainland Europe than in the UK – are exploring the benefits of online accounting solutions to improve efficiency and reduce costs. By integrating bank statements directly into the accounting system and exploring self-learning technology that recognises trends in expenditure, the entire accounting process can be streamlined, reducing costs by an estimated 50%.

However, while this is great news for the accountancy firm looking to become more competitive, price reduction alone is not enough: SMEs will simply readjust price perceptions and continue to move each year for the best deal. The only way to rebuild a profitable accountancy business is to create a strong platform of added value services that exploit the expertise and experience of accountants, from tax planning to export.

Accountancy firms need to be able to build on this efficiency improvement by delivering not only access to real-time financial performance information but also relevant advice and collaboration in a way that suits the new generation of business leaders.

Building relationships

At the heart of this model is transparency; accountancy firms need to be able to demonstrate the activity that has been undertaken, from uploading a sales invoice to producing a quarterly VAT return. One way to provide this critical transparency of process is to exploit social media such as Facebook Timelines.

Just as timestamps are applied to each accounting transaction, the same process could be applied to Facebook Timelines which tracks profile entries, providing collaborative notifications of essential changes. Alternatively, to reach a generation that increasingly fails to respond to phone calls and emails, a personal message via Twitter or Facebook with an embedded link could prompt a business owner to sign off the quarterly VAT return.

While this model may seem a leap to traditional accounting firms, social media is transforming the way companies do business and the way they attain business. From LinkedIn recommendations to customer reviews on Facebook, organisations need to be social media savvy.

Switched on accountants are tracking tweets, responding to requests for tax advice or complaints about incumbent accountancy firms – and winning business as a result. The next step is to take this model forward and exploit the ‘always on’ nature of social media to become a constant business companion.

For any accountancy firm looking to provide real-time insight into financial performance and offer proactive, relevant advice on international tax issues, cash flow and payment strategies, the real-time collaboration offered by social networking is compelling. Critically, it provides a chance for accountancy firms to exploit the lower cost model while also building the relationships required to offer added value services and retain longer term customer loyalty.


In the Netherlands, which is ahead of the UK market in online accounting, this model has gained significant traction. Two of the leading banks already facilitate the direct integration of bank statements into online accounting solutions to deliver greater transparency; while the tax authorities proactively certify online solutions.

As a result, SME organisations can now confidently embrace online accounting in the knowledge that the processes have been verified and the tax authorities will not pursue any organisation taking this approach for further audit.

In the UK neither the banks nor HMRC have shown any willingness to embrace such transparency to date. However, a number of factors are combining to create real momentum for a shift in approach. The European Union’s drive towards e-Invoicing and the transformation in information sharing and collaboration are rapidly creating a business environment dependent upon real-time financial insight.

The challenge for accountancy firms today is not about driving down costs to become more competitive; it is to demonstrate transparency, deliver that real-time information and exploit the new models of communication and collaboration to provide relevant and timely added value services and advice.