Clients ask me all the time about the optimum way to run their finance function. Things have changed dramatically since I started my studies 100 years ago – where we had paper trial balances and a calculator. The stereo typing of accountants was so true! When I moved out of practice and into the corporate world, it was big teams with each one looking after a different area – receivables; payables; payroll. But now? All that has changed. And tech has played a big part in this.
I want to delve into the following:
- what does it look like to me
- what am I experiencing with my clients
- what am I putting into place for them.
The first cab off the rank is your cloud accounting software. I use Xero exclusively so I’m going to refer to Xero as that software, but obviously MYOB or QuickBooks etc all do exactly the same job. It’s all about getting the software set up properly and being able to use it. Now who is going to use it? You, as a business owner is absolutely going to be using it because it’s going to be your source of truth. Looking at your bank statements or looking at your bank online on your phone every day is not providing you with vital information. That’s simply telling you what cash is in your bank right now.
There are a lot of apps out there that we use for doing the heavy lifting in our businesses. The first couple of things that spring to mind is getting the source documentation into Xero. For that I use Hubdoc but we could use something like Receipt Bank; basically anything that’s using OCR to take all the data off the invoice that you’re uploading to Xero. It’s doing all the keystrokes and the coding for you.
You tell it where to put it in Xero every single time.
This alone is wildly reducing the amount of hours that people used to spend putting invoices into accounting systems. This is a great win.
Other things that people use will be an invoicing system. If Xero doesn’t do this for you in the way you like, you can use an app that does. There’s also loads of payroll apps that all plug into Xero that help do the things that you need to do e.g. very detailed timesheets and they do all the heavy lifting. Examples are Deputy and Employment Hero. There are POS systems that link straight into Xero, also, if you’re in retail.
It’s all about looking at the ecosystem, as Xero calls it, and making sure that you’re getting the most suitable app that you need if Xero isn’t covering it for you.
Getting the basics right
The next thing I’ve got as a must have is a bookkeeper. I love working with bookkeepers and I stick like glue to good ones! You might decide to get the bookkeeper in and they might do 1 hour a week or a month or 4 hours a week. It really is just depends on what kind of transaction level in your business. The important thing is that the building blocks of your management information are done competently and they include the bank reconciliations; payroll and accounts payable. As businesses scale and grow, this role will be replaced with bringing someone in house to look after the day to day operations.
Then the next level that we add onto the tech and the bookkeeping is where I step in -your virtual CFO. This is where you’re getting expert advice at a much more strategic and advisory level. But this is assuming that all the data entry is done and all the basics are in place.
This role helps with compliance; strategy, forward planning, dealing with the ATO, where are you going with revenue, what’s wrong with the accounts, what’s wrong with the numbers, what’s right with the numbers, how can we replicate that and all of the other things that go on. For bigger level clients, it’s going to be board reporting and external audits.
And finally, we have the tax accountant. They do your tax returns at tax time and provide taxation advice as needed. Clients may be profitable and tax efficiencies are needed at year end.
To recap what I’ve discussed, I’ll use an example of a client I have worked with: They are a tech company, a maturing start up with 35 staff across ANZ. We have a bookkeeping firm who do approx half a day a week; me; the tax accountants and the external auditors. And that’s it. We use Hubdoc and a customised sales invoicing system. It’s not over burdened and extremely streamlined. The way of the future!