It would be interesting to get opionions on a) technology reducing the amount of bookkeeping b) the bookkeeping market being flooded c) bookkeepers doing year-end accounts/tax to increase profits and d) more accountants offering bookkeeping using offshore resources.
a) I have done a few bookkeeping health checks lately on some local businesses who keep their own books using some of the commercially available software that says anyone can do their books. I think the adverts are correct to a point, anyone can enter figures, whether these are the right figures are debatable. Paying for the services of a bookkeeper doesn't get you a data entry clerk. It gets you someone with an understanding of allowable expenses for one, I find that most of these small businesses try to put everything through and are probably getting themselves in such a mess that instead of reducing their year end fees they are actually increasing them.
b) There have been a noticeable increase in bookkeepers over the last few years. With so many people being made redundant the home learning providers are selling the supposed benefits to anyone with a few grand on the hip. We've spoken about these promises before, so I wont go into them again. That said, I haven't noticed a huge increase locally. I think there's still a lot of wiggle room if you can offer something a bit different or focus on a niche market.
c) The lines between bookkeepers and accountants (as if anyone really knew where they were) are becoming more blurred with moves afoot from the professional bodies offering greater training and bookkeepers themselves demanding greater professionalism throughout the industry. So long as you are qualified and competent, I don't see any issues offering year end accounts. The danger is to pretend to have knowledge that you don't.
d) I have noticed that local accountants are far less likely to outsource bookkeeping locally. However, I have noticed an increasing number taking on their own bookkeepers. I don't feel that, for me, there is a great risk of accountants I deal with outsourcing offshore. From the discussions I've had with local accountants there is a belief that when you outsource offshore it can become increasingly difficult to control the quality of the work, and creates difficulties when relationships turn sour.
I have always been around, just listening and watching.
Your comment does help because it backs up what we have picked up which drives our new strategy for 2012. Crunchers are repositioning as accountants and one of our target segments is bookkeepers who want to improve profits by rolling in accounts/tax and cutting out the local accountant. We offer a central accounting office and training support to empower bookkeepers.
I am sure you have worked it out but accountants can afford to make low/no margin on bookkeeping just to get the accounting fee and the margin here will be very high if they have done the books.
I 100% agreed with you, bookkeepers do need to offer something a bit different.
-- Edited by BobHarper on Monday 12th of September 2011 11:05:50 AM
This sounds similar to the direction The Local Bookkeeper took recently re branding as The Financial Management Centre. It makes sense. One of the problems I should have mentioned earlier with bookkeepers doing year ends and tax returns is that it makes it very difficult to build the traditional reciprocal relationships with accountants. Although this does present new opportunities if you look for them.
Yes, I saw what the local bookkeeper have done, they seem to be going for the management accounting position.
We are providing branded accounting/tax support to bookkeepers so they can make money out of these services and market them direct to their local market and compete with accountants.
From what i have heard/seen, i think there are more people taking up bookkeeping, probably due to redundancy etc. I think people have used redundancy payments to retrain.
However, i do not think this has been followed through with successful bookkeeping practices. I do not see many more people advertising, or more pressure when competing for work with price etc.
Nick
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
I have no experience of Xero, to be honest. But i do know about accountants providing bookkeeping services. In my experience an accountant will not be able to provide an as cost effective service as a really good bookkeeper, due to the large overheads an accountancy firm has. This leads to charge out rates that are not competitive.
However, a poor bookkeeper is a false economy and any money saved is quickly lost if you are paying an trainee accountant at £40 per hour to reconcile a bank.
Your system may work by removing the overheads from the bookkeeper, whilst still offering the qualified support only when it is needed (if i understand your business model correctly).
Generally the advantage of having the accountant do the bookkeeping and the accounts is not as great as expected, as you either have one person doing the bookkeeping and then another doing the accountants. Or one person who is capable of doing the accounts, is on a decent salary, but is charging their time out doing bookkeeping.
I think bookkeepers, who have little overheads and can do basic tax returns are a good idea for alot of small businesses, but obviously each case is different, as is each bookkeeper.
Nick
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
Accountants and Bookkeepers are in my opinion distinctive areas. However, there does tend to be a fair amount of crossover.
The reality is there are also lots of bookkeepers who are just basic data entry clerks! most notably are often the ones that are 'forced' into doing something due to redundancy etc.
I often get asked to do bookkeeping work which I will take on but I ensure it is known that either my staff (one member) or a sub contractor will be undertaking that element of work.
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Phil Hendy, The Accountancy Mentor
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Check out Xero, I could be wrong but I think this is the future of financial systems and they will talk to each other. They have bank feeds coming in so there is no data entry for banking!
How about the growing number of accountants who are off-shoring the processing to India through the likes of IRIS who bought an operation in India a few years ago.
IRIS have traditionally supplied back-end software to accountants around year-end accounts/tax but they are pushing their outsourcing facility. The model is accountants are able to offer affordable bookkeeping along with accounting.
I have found this to be a traditional view. A barrier that will prove difficult to completely break down. However, if you are looking to build a relationship with an accountant this is what they love to hear.
The biggest problem facing bookkeepers, in my opinion, is the lack of understanding. When you speak to a new business owner, they believe they need an accountant. Many don't even understand what a bookkeeper is. One even thought I was some kind of librarian.
I think offshore bookkeeping may work in a number of cases, but due to the frequency that a bookkeeper works for a client, there would be stuff flying around every month. If this could be done electronically then i see no reason why not, as long as the accountant is there to provide the human contact.
I have also noticed Iris have been pushing outsourcing as well. They have introduced a less than easy iXbrl system, and now can do it for you when you can't figure out their software!
I have had a look at Xero and it looks good. Although £19 per months seems quite high for a small business, the £12 per month option seems a little useless. I presume there is some discount for bulk buying or some accountants bureau option? I must admit the future is definitely in the cloud. I have just moved all my online storage to skydrive, and i have used the online version of sage which is very good but very expensive.
Although you will always have the problem of business owners going to a local accountant for what they think is a local service getting disappointed.
Also a lot of clients will just want someone to come in on site, do their VAT and leave. In which case only a bookkeeper will do.
It all hinges on the needs/wants of the client.
Nick
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
I have found this to be a traditional view. A barrier that will prove difficult to completely break down. However, if you are looking to build a relationship with an accountant this is what they love to hear.
The biggest problem facing bookkeepers, in my opinion, is the lack of understanding. When you speak to a new business owner, they believe they need an accountant. Many don't even understand what a bookkeeper is. One even thought I was some kind of librarian.
Kris
Totally Kris. In the last seven days I have been called 'just a bookkeeper'. Twice. Not that I'm feeling at all miffed about that you understand.
The difference that I notice with customers is that they work on the basis that you have chartered accountants for big businesses and 'complicated stuff' and if you're just a little business, or have a property or two you rent out you just need a bookkeeper as the costs are less. (Back to 'just a bookkeeper').
This definately seems to have increased over the last few years so there seems to have been a shift in public perception that bookkeepers are lesser accountants. Which I guess has advantages and disadvantages.
I find the term just a bookkeeper insulting at this point, not just personally but also because bookkeepers are a very important part of business, but that's another rant!
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
