When talking to other accountants about the cloud and the benefits it brings to an accounting firm it is always interesting to ask if they started their practice in the cloud or if they transitioned an existing practice.

The benefits of having your accounting practice 100% ‘in the cloud’ are well-documented, but the big question is, how do you get there, especially if you’re an existing firm and have to deal with transitioning from existing systems?

Starting a brand new practice in the cloud is easy, by comparison. It’s a blank slate. You start out with a handful of clients who all share the same progressive pro-cloud mindset, then you build it from there with the approach that any new clients have to use your recommended cloud-based accounting system. Simple.

But what if your firm is not a blank slate?

3 questions to consider

An existing firm, on the other hand, has a few other questions to contend with including:

  • What about our clients who don’t want to move to the cloud?
  • What about our clients who can’t move because they are wedded to a franchise- or business-specific solution they already have?
  • And if I decide to stop working with some clients, what about my staff who are supporting them?

Ignore the ‘rah-rah’ advice to sack clients

It’s all well and good for the ‘rah-rah’ business coaches to tell people to get rid of any clients that are not your ‘ideal’ clients but the reality is that some of these clients may be good friends or could represent a large portion of your business. Yes, you can certainly take the opportunity to weed out some clients who are difficult to deal with and are not a fit for your firm, but the commercial reality is that you have an infrastructure in place to cater for all your clients.

Therefore unless you scale back your infrastructure—that is, let staff go—then you may need to maintain the client base to cover your overheads and make a profit.

Dealing with the reality

But does the reality that your firm might not be able to move all your clients across to the Xero platform mean that your business has to forego the benefits that the cloud can bring to your firm?

Thankfully, no, it doesn’t.

And our accounting firm, Poole Group, is proof of that. We still have less than 40 per cent of our client base on Xero, yet we were awarded Xero’s Accounting Partner of the Year in Australia 2013 and are one of the Top 5 Xero Accounting Partners in Australia.

How does that work?

The key is to understand your own business and then how you can maximise the benefits of the cloud.

Here are my top 5 tips to create an efficient cloud-savvy firm without ditching your clients:

  1. Get as many clients onto Xero as possible

    Okay, we’re starting with the bleeding obvious but I know from speaking with many firms that there are plenty who still struggle with this. If you need help to move and educate your clients across to Xero—that’s marketing expertise—then get it from someone who specialises in marketing for accountants like MC Carter at Practice Paradox for your marketing strategy and content, or use Wayne Schmidt of Karbon to help you run seminars. The more clients you move onto Xero the less time you spend transferring data back and forth with your clients, plus you know all the information will be there thanks to the bank feeds.

  2. Develop processes to deal clients who won’t—or can’t—move across to Xero

    Xero Ledgers are perfect for this. A ledger looks and feels like a normal Xero file but it is not connected to any bank feeds. What’s the point of that? Well, the efficiency comes from allowing you to standardise your internal processes for all your clients, plus you can then use a reporting system such as CrunchBoards across all your clients, not just for the clients on Xero. You will love that efficiency and standardisation. It simplifies everything.

  3. Choose a reporting tool

    Clients want more than a standard P&L and Balance Sheet and, let’s face it, setting up and populating Excel reports can be time-consuming. It’s time that is often hard to fully recover. Once all your clients have been set up on Xero (or Xero Ledgers) give them a CrunchBoards report. This is my favourite reporting tool. It’s easy for clients to understand and it naturally and ethically acts as a lead generation tool for more advisory work. It’s a great conversation starter for issues to address in the client’s business.

    The benefits and additional fees that flow from doing regular reporting for your clients will also motivate you to move any of your non-Xero clients across. Once you have set up the CrunchBoards report it takes only 5 to 10 minutes each month to add any non-financial information to generate a report that gives your client clear real-time feedback on their cashflow and a number of Key Performance Indicators (KPIs). As an advisor this is gold, and your clients will thank you for it.

  4. Control the quality of the data

    One of the biggest time wasters in an accountant’s day is sorting through the client’s messy attempt at bookkeeping. And they never recognise the effort you put in to sort out their mess. By controlling the data—that is, performing the bookkeeping—you ensure the information is up to date, timely and presented in a consistent, uniform manner. Then you’re able to set up your internal processes on that basis and achieve massive efficiencies. (See: our Triple Xero post) There are a number of ways to do this including:

    • introducing contract bookkeepers to your clients,
    • outsourcing your client bookkeeping to someone like Zerobooks or
    • doing client bookkeeping in-house.

    By having the information on hand you can then offer real advice, in real-time with real data. This is powerful for an advisor and it’s something we’re passionate about at Zerobooks and the Poole Group. Without accurate real-time client data, you cannot reach your potential for adding value as an advisor.

  5. Set the rules with new clients

    Earlier I mentioned that it’s usually difficult to drop clients that do not fit your ‘ideal’, but moving forward I highly recommend you only accept new clients who do fit your ideal profile. From Day 1, let clients know that you require them to be on Xero and that their bookkeeping must be up to date and accurate to enable you to do your job properly. It’s easy to communicate this in “what’s in it for you” terms for the client.

    Explain why you do not allow clients to go the D.I.Y. route with their own bookkeeping. Not all clients will want your full range of services but package them up and offer them anyway. Make it standard practice to always explain your full range of services and options to a prospective client. Bookkeeping, Receipt Bank and management reporting can all become additional standard features of your service and in the process generate more fees per client.

    And think about how much easier you make your clients’ lives. They love you for it.

Transitioning an accounting firm across to the Xero platform is not necessarily an easy or quick event, but if done properly and pragmatically—for example, by using Xero Ledgers in addition to Xero to standardise your firm’s operations—it is well worth the effort for you, your team and your clients.