Making Time for Better Business Decisions: Getting Accurate Data Faster with Cloud-Based Accounting
There is a paradigm shift happening in accounting today, possibly the biggest shift in our industry since Mesopotamian times when the first records of accounting were discovered. Many of us still live in a world where our ideas of generalized accounting go back thousands of years. It’s a world where highly trained accountants do menial tasks pushing paper—or digital paper—for 40 hours a week. They do it this way because humans are creatures of habit and these accountants have always done it this way. Within this world, there’s often a tradeoff between speed and good, reliable data.
A little over two years ago, we at realized we had to rethink what we were doing, because there was another world available to us. Our younger clients, who are in their thirties and forties, were not only open to cloud-based accounting, they demanded it. They told us: “I want you to build me the most automated accounting system you possibly can.”
The automation of accounting in the past five years counts as a paradigm shift because it marks a change in thinking: Speed no longer undermines reliable books. In fact, the fewer humans touching the data, the better.
What’s interesting about the accounting industry is that if your firm is good at what you do, you become your clients’ trusted advisor. Your clients will trust you when you say this is how accounting is done. They listen to you, even if you propose an inefficient system, like scanning and emailing invoices. That’s often the reason so many clients get stuck in the past.
Our industry is at a turning point where many clients don’t know what they don’t know, and this works to some firms’ advantage. But once those clients see the value added by firms using cloud-based accounting, they will ask you how to do it. That’s because cloud-based accounting is the more reliable, efficient option. For us, it gives our firm the time and trust of our clients. So now we can focus on helping them make better business decisions, rather than filing invoices.
Serving Up Receipts
When you’re an accounting firm with an eye to innovation and you get into the guts of an industry, you realize how much room there is for improvement. We’re tearing apart the restaurant industry right now because there are so many processes to be automated. What got us started on this journey was a restaurant client of ours who had three locations. We faced two big problems putting their books together.
The first problem is that restaurants are the most complicated accounting clients out there because they have so much going on. There are lots of employees, with high turnover. They have multiple bank accounts and you have to keep a good handle on your cost of goods as well as your petty cash. Restaurants with multiple locations have multiple POS systems.
High-end restaurants have massive accounts payable demands because they deal with so many vendors. A high-end restaurant might deal with 50 vendors, and each of those vendors better be paid on time or else they’re not going to get the food or supplies they need to keep the restaurant running every week. It’s insane.
The second problem is that we now have all this paperwork. It’s not even digitized. So then we have to send in one of our new bookkeepers to handle it all. The problem with this is we’re all human—we make mistakes: A decimal point in the wrong spot. A forgotten “0.” The wrong invoice number.
As accountants, we all know these honest mistakes. The more times a human has to handle a receipt, the greater the opportunity for innocent human error to enter the equation. The ideal is for full automation of the inputting process, with a human checking over the work. The way things stood, it was a lot of pain for the client and us both.
Don’t Become a Fossil
We are a firm that never stops looking for solutions. We’re always on the hunt for a better way to do things. If there’s something new out there, we want to run it through a trial to see if it works. It’s that constant desire to innovate that differentiates us from so much of the accounting industry.
The problem with a lot of accounting software is that it might do one thing really well, but it only does that one thing. If you use it, you have to use it in such a specific way. We need a product that does everything.
When we tried to solve all these complex problems with our restaurant clients, we were using Hubdoc. We searched through a lot of accounts payable software, and we kept bumping into this same problem we had with Hubdoc: the software still required humans to decipher receipts. If your algorithm can’t read and input receipts without the help of a human, it’s not fully automated. To me, that’s just old-school accounting. It’s not where things are going.
Four or five years ago, we asked —the automated receipt platform—if their process was completely automated. They admitted they were still working on it; that they had a team in London working to ensure the algorithm would read the receipts properly. The fact that they saw that full automation was the way of the future told us this was a company worth returning to.
Then a little over a year ago, we talked to Receipt Bank again and asked how many humans need to touch a receipt for it to be inputted into the system. They replied, “None, we’ve fixed that.” That’s when we knew we had something to work with.
With Receipt Bank, there was also less lag time in receipts being processed than there was with Hubdoc, and the interface was cleaner and easier to understand. The interface is a big consideration, especially for onboarding clients. It needs to be intuitive to both the accountant and the client. Half of our clients prefer text messaging, so to get that text from Receipt Bank and set it all up via text was music to my clients’ ears.
The Algorithm Isn’t Everything
When it comes to accounting software, the algorithms are not the problem solvers. While they can be, it takes years of constant improvement to make them better. That’s where the human side come in. Receipt Bank does a very good job of reading receipts and inputting the data, which means we can focus on checking the work. It’s cut down our work hours immensely.
For the restaurant client I mentioned earlier, there were so many inefficiencies in our previous way of doing their books. There was travel time, a time lag to collect the invoices from all the restaurant locations, and time spent inputting all those invoices. One restaurant location might forget about an invoice right before a weekend, so sometimes we wouldn’t see an invoice until it was 10 days out already.
Since adopting Receipt Bank, there’s no lag, because the system is standardized. Receivers at each location have an iPad to take a photo of each invoice that arrives. The second that invoice come in, it’s in the system. Within about four hours, it’s deciphered. We put some of the vendors on auto-push, so the invoice goes straight from Receipt Bank into Bill.com and the owner can pay that invoice straight from their phone. Every invoice is paid within a day.
It used to be that we spent a good 24 hours a month on that one client. Receipt Bank cut that down to 10 hours a month—all while improving data accuracy. In business, you often make a tradeoff between time and quality. Thanks to Receipt Bank, we can have both.
Building Systems for Everyone
So many people in the accounting industry stick with the old systems they’ve always known because they feel threatened by technology. The reason they feel threatened is that they think cloud computing will put them out of a job. Some will look at the example I just gave of cutting 14 hours of work per month from a single client, and they think of those 14 hours as lost income. But they miss what I can now do with those 14 extra hours to expand my firm’s services, as well as our client base.
From a design standpoint, I approach systems and tools from the perspective that they should work under both the toughest and the easiest conditions. If you can design a pair of shears that work for both a commercial landscaper and your grandmother, those shears will work for everyone in between.
It’s the same with software. When I’m looking for accounting software, I look at the needs of my most complex restaurant client as well as those of my simplest client who barely has any receipts. I checked Receipt Bank with both those clients and it worked great for both. That told me I could use this system for any new clients I took on, not just our restaurant ones.
We practice what we preach at Salt Lake City Bookkeeping. We also use Receipt Bank for our own accounting internally. We love it from an operational perspective, and that helps us from a sales standpoint because we can tell clients that we know Receipt Bank’s capabilities.
The reality is you’re doing a disservice to your client if you’re not giving them the best system out there. The firms that embrace technological change—and see it as an opportunity to expand—are the firms that will be left standing in the end.
Ultimately, it’s about helping business owners. Saving them money in their accounting department opens up opportunities for me to provide other services to my clients. Clients have peace of mind that the books are correct because there have been two pairs of eyes on that invoice now: Software did it once and then we did it once. Now those business owners have the time, willingness, and funds to talk to me about strategic decisions.
Accounting Can Be Personable
Accounting might have a reputation for being impersonal, but I see that as a missed opportunity. Cloud software like Receipt Bank saves me time, and guess where that time now gets spent? With the customer. Instead of being in their books doing data entry, I can now think of my role as customer service.
With the old accounting systems, I could spend countless hours in a client’s books entering debits and credits. But I couldn’t have answered a question about the business’ financials because I didn’t know what those numbers meant to that business. Now, I help my clients solve problems I likely wouldn’t have known about if I hadn’t sat down to talk with them once a month—or even once a week.
With these fast, accurate reports, I can now meet with a client and say, “Let’s take a look at this together and understand the good, the bad, and how to move forward. What pivots can you make right now to be better off next month, next quarter, next year?” Now, I’m not just the bookkeeper. I’m adding value to that client’s business. We have amazing clients, and it feels great to be a major part of their success. By arming them with the accurate financial data needed to run their business, we’re more than just their accountants—we’re their partners.
Using Receipt Bank means I can take something that seems so impersonal—accounting—and I can turn it into something personable.
We are at a pivotal moment in the accounting industry right now. Either you adapt, make quick business decisions, and embrace the new technology, or you will be left behind in the next few years.
At Salt Lake City Bookkeeping, we are very concerned about never becoming that dinosaur firm stuck in its ways, which is why we’re always looking for better solutions. We want to stay open to new processes and software. Our clients demand a lot from us, but we demand even more from ourselves.