Service You Can Count on—Building a Cloud-Based Accounting Firm for the 21st Century
For me, accounting is more than just numbers on a page. Without our field, businesses wouldn’t have the insights they need to run, adapt, and grow. But I didn’t always feel this way about my line of work. My original plan wasn’t to become an accountant—the profession didn’t call out to me like it did for some of my colleagues. All I knew was I wanted to go into business, and I knew without accounting, I couldn’t understand a company. It’s an important subset of knowledge to have.
If I hadn’t started 542 Partners, I might have left accounting. My co-founders Craig, Adam, and I started our firm out of mutual frustration. We had spent about a decade at a mid-tier firm, and we didn't like what we saw. The industry was changing. A technological shift was in progress, and our employer wasn't paying attention. It didn’t help that the firm was bought out. Priorities changed and the rebranding brought a new direction we didn’t agree with. It was time to move on.
There was a perfect storm of opportunities happening at that time. The industry was shifting from time-based billing to fixed fees. Cloud-based accounting was still an emerging and evolving field, but showed great potential. We saw a chance to deliver better service to existing and new clients. We could do it without the politics and bloat of a big, old-fashioned accounting firm.
Startup costs were also an important factor. In the past, you needed hundreds of thousands of dollars to start an accounting business. But thanks to cloud-based tools, all we needed was a desk, a computer, and an internet connection. We were able to set up an entirely new practice with very little effort. But cost and ease of implementation were not our primary considerations. We wanted to be on the cutting edge, and we were one of the first accounting firms in Australia to be 100% cloud based.
For us, the immediate benefit of the cloud was infrastructure cost savings. But how would a move to the cloud impact our clients? We knew the technology was almost there, and we realized there were gaps in the available tools. We figured, in the interim, we could use some traditional tools that would eventually move to the cloud. Still, we believed cloud-based accounting would offer tremendous benefits to our clients.
Moving to the Cloud to Focus on Growth
When we started 542 Partners, the first shift our clients felt was in our focus. Instead of preparing and maintaining compliance, we could help them maximize efficiency. Instead of crunching numbers and entering receipts, we could focus on strategy and growth. The value proposition is tremendous.
One of the first cloud-based solutions we offered, right out of the gate, was Receipt Bank. The platform handles paperless invoice entry. It lets our clients photograph invoices and receipts, and then upload them to the system. They can be used within the app itself, or integrated into Xero—our primary accounting platform.
There are no more boxes of invoices to store and no more scrambling at tax time. Clients can track expenses and revenues in real time. We can examine up-to-the-minute data and offer advice about current or emerging concerns.
At its most basic, Receipt Bank saves our clients money by reducing data entry time. This benefit is not even worth discussing. It's that obvious—everyone wants to save time. I’d rather tell our clients how much more they could benefit from Receipt Bank. Once they automate this process—once they’ve gone paperless—they’ll want to automate other aspects of their business. This is the biggest byproduct. And this is where we can help, by serving as expert business advisers.
Not entering receipts on our end means more time to advise our clients. I can go into their accounts payable, or inventory system, and I can see what they're doing, step by step. We know we now have reliable data. Without that information, I can’t imagine how we’d give our customers the level of partnership they deserve.
Taking Data Entry to the Next Level
When we initially rolled out Receipt Bank, we were time poor and had no staff. We didn't have the resources to invest in educating our clients about the app and its full potential. We wanted them up and running right away. As long as they snapped receipts with their phones, and uploaded them to the cloud, we were happy. It was the bare minimum.
Since then, we've learned best practices. Receipt Bank works best when clients filter their data. They can feed raw data into Receipt Bank, and then review and edit it in Xero. This process may seem easy on the surface, but can be more efficient. Instead, they can set up rules in Receipt Bank and process the data before it gets to the accounting platform. This gives them more control, and better value.
Of course, if they keep things simple, they're only using 30 or 40% of Receipt Bank's power. Our most successful clients clean up and classify their data within the app. They set up access levels for specific individuals and teams; generate expense reports; and create rules for transactions, suppliers, and payment methods. Five years into using Receipt Bank, I can tell you the benefits are huge.
The greater opportunities for impact is why we need to go back to those early clients and walk them through Receipt Bank's advanced features. We have to explain that it may be working, but they're not using the software to its full capacity.
Can they streamline accounts receivable with Receipt Bank? How about inventory control? What about pre-approving invoices they're feeding into Xero? A few simple tweaks can go a long way, but clients can't apply them if they don't know all the app's features.
The Five-Year Plan
We don’t have to go the extra mile for our clients. But taking everything one step further is one of the attributes of our firm. We care about our clients, and we are small enough to give them personal attention. Most of them are on a fixed-fee service plan for their compliance needs, but we can still work as their advisors. If they do need bookkeeping services, we have an affiliate deal with another firm. We'd rather focus on their higher-level business concerns. Receipt Bank has helped position 542 Partners as a new model accounting firm, and I'm proud of what we've pioneered here.
Closing in on the five-year mark of our business, we all recently sat down and envisioned the next five years. Over that time, we’ll train our staff to deliver the services originally provided by the three directors. We want to equip our employees with the tools to roll out Receipt Bank and Xero with confidence. We want them to help our clients succeed even more.
This will free me to focus on the policy and framework side of the firm. I’ll be building our future direction. Part of this will involve filling the gaps in our IT infrastructure. I'll also look at new software and cloud solutions to better serve our clients—and empower our team.
It is a two-way road. We use Receipt Bank to help our clients streamline their business processes. They, in turn, use it to feed us the accurate data we need to do our work. This positive feedback loop pushes both of us forward. Receipt Bank can be an entry-level tool that makes processes easier for us, and for our clients. But if we build on it, and use all of its features, there's no telling where the platform can take us. Maybe it’s a good thing I stuck with accounting. I know my clients think so.