I was presenting at the RanOne event in London last week; Marketing in an Online World. My topics were Cloud Computing and Social Media.

In the Cloud Computing session I shared my thoughts on how marketing for accountants can use the introduction of Cloud Accounting to fundamentally address client relationships and build a new value proposition. In the Social Media session I focussed on Linkedin and explained the move in marketing towards Inbound Marketing.

I thought I would write a few posts covering the key take aways from the event, starting with how accountants can use the introduction of Accounting to change the way they work with clients. 

The new way of working is based on the strategy I outlined in the white paper "Connecting for Profit" and was the thinking behind the MORE software development. This is a more collaborative approach to working with clients, more ethical, delivers a higher profit for the practice owners and clients experience an added value compliance service.
 
The new approach is simple but requires appropriate resourcing upfront, delivery processes and sound sales/marketing. Basically, the accountant gets hands-on involved in financial systems including consultancy and providing the technology as part of the service along with set-up, training and coaching. Here is an example of the economics behind the strategy.

Current situation - chargeable time £1,000, actual fee £900, costs £667, net profit of £233. Most accountants will recognize these numbers as they apply to large segment of clients. Clients are typically using spreadsheets or misusing entry level accounting software, either way the bookkeeping is poor. The result is that up to 15 hours of accounting resource is deployed delivering a fairly low value service of compliance.

However, if the client does the bookkeeping correctly (with a monthly bank reconciliation completed) the year end work and be completed in five hours. So, if you allow £100 for software and £100 for support (training and coaching) the price can be left at £900 and the costs becomes £222 for accounting resource (employee and overheads) and £200 for software and support, leaving a net profit of £478.

The new service include free bookkeeping software, training and coaching with a free bookkeeping helpline and will deliver faster turn-around times at the year-end with fewer questions.  This makes the firm more marketable because their proposition is stronger than the competition.

This is more than a 100% profit improvement and two thirds of qualified accounting resources has been freed up. This can be used with two new clients so the same 15 hours of qualified accounting resource is now producing £1,434 of net profit compared to £233. That is an improvement of over 600%!