Do you have the right advisory tools?

This article was current at the time of publication.

In the upheaval caused by COVID-19, there is a silver lining for public practitioners wanting to offer advisory services. Much of the technology adopted to maintain business continuity during the crisis provides the basic tools needed to develop an advisory model.

Rather than threatening the livelihood of accountants, technology can be a force for good by helping you go beyond basic number work to provide the value more clients want.  

Indeed, CPA Australia’s MY FIRM. MY FUTURE. Report confirms that around one in five small-to-medium enterprises (SMEs) would like their accountant to offer business advisory. 

Technology is one of the greatest stepping stones to delivering this. The key is understanding the tools you need – and those you may already have.

Start with an audit

Tyler Wise CPA, director of Perth-based Wise Accounting, says COVID-19 provided the “jumpstart” many businesses needed to implement new technology.

“Before the pandemic, a lot of businesses were still desktop-based, but they’ve had to unplug and modernise and implement technology to enable remote working,” Wise says. “I think COVID accelerated the uptake.”

While advisory software can help expand your service offering, he recommends starting with an audit of your current computing power to ensure the hardware can support it.

“Laptops can generally handle a lot of tasks, so you may need to upgrade from your current system if you’re adding new software,” Wise says. “If you’re just starting to move into advisory, you should have the ability to be running scripts and software in the background while still doing bread-and-butter compliance tasks.”

Review current systems

Before considering a major software change for your practice, Wise emphasises the importance of exploring the capabilities of your existing systems. 

For instance, Microsoft 365 has many productivity apps such as the Microsoft Teams collaboration tool and cloud storage service OneDrive. 

“All accountants want a return on investment and the same applies to the software you use,” Wise says. “Why outlay money every month on software you’re only using for one or two clients? It may cost you more than you make from it. 

“We use Excel for some advisory tasks. It may not look as polished as some other software but, ultimately, clients want the information – it doesn’t need to look pretty. They want facts and figures explained to them, so I suggest maximising what you’ve already got to ensure your budget doesn’t blow out.”

Use data as an advisory resource

Thorough knowledge of a client’s business is the foundation of advisory work. Alan FitzGerald, founder of Melbourne-based software advisory business Practice Connections, describes data as a “goldmine for accounting firms”. 

While BAS lodgements provide historical information about a client’s business, real-time data can be accessed via the cloud.

According to Xero’s 2019 annual report, more than half of small businesses in Australia and New Zealand now use cloud accounting software. Cloud-based technology is projected to have the greatest impact on accounting practices over the next five years, especially since remote working went mainstream with COVID-19.

“Compliance forms the motherload of information you need to provide advisory services,” FitzGerald says. “The more efficiently you can get through compliance work and [extract] the information, the better. That's where technology comes into play.”

Most cloud solutions provide real-time information, which FitzGerald says can be “dumped into an Excel spreadsheet and analysed”.

“As an example, if you have several clients in the hairdressing industry, you could benchmark the most profitable against the others in your database and explore why they may be doing better,” he says. “They have a higher rate per haircut, which might be due to their salon location. They might have more skilled cutters. They might have better product placement for sales in their salon. It could be down to debtor days [and] cost of goods sold.”

FitzGerald maintains that such data-based analysis can form the basis of advisory conversations.

“You could call a couple of your best clients and ask if they would be interested in doing an exercise to explore opportunities for their business based on your analysis,” he suggests.

Choose your provider wisely

There’s plenty of software providers in the market – from practice management enabler Practice Ignition to Microsoft’s PowerBI for data analytics. To help with selection, Fitzgerald recommends choosing a provider with an accounting background, such as ChangeGPS, Advisor-E or Clarity.

“Software providers with an accounting background understand what you need and what your clients expect,” he says. “They can provide templated ways of approaching advisory services, even for things like initial advisory conversations with clients. 

“If you want to start in the shallow end before moving into the deep end, these types of providers can guide you because they’ve gone through it themselves.”

Incorporating advisory can seem daunting and while technology can help, Wise says many accountants are already providing these valuable services. They just lack a formal structure.

“A lot of accountants are still guiding their clients through these uncertain times, so they’ve already stepped into an advisory role, whether they realise it or not,” he says. 

“Once the dust settles, you’ll have a better understanding of the cloud technologies that have given you access to real-time data during COVID, and then you can start putting some structure around it and formalise what your advisory services will look like.”

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