Australian Car manufacturing will disappear in 2017.
Typists are no more, online travel bookings are the norm, teller banking is going, or priced out of the mainstream..
Where will the typical, local accounting practice, be in 2017, or even next year?
Its seems like a life time ago, way back in 2005, that we released our Web Office fully integrated solution for Australian SME's.
At the same time net suite was just starting out, but very few would pay several $1k per year, and $10k, to $20k to setup a "total solution", which did not even do Australian payroll, sales force aimed at the least setup, with a small part of the net suite offering.
So here we are in 2014 almost 10 years latter, very few if any Practices have a best practice solution, most have a set of disjoint applications, on various platforms.
A few things we have learned over this period, about Accounting Practices..
- Most offer a range of client accounting services the most common being
a) Company setup, BAS/IAS services
b) Company Tax returns
c) Tax Agent services, and advice.
d) SMSF year end accounting, audit and tax returns. - Of the over 480,000 funds almost 80% are held in Accounting Practices typically 20 to 50 funds.
- SMSF's make up only 20 to 40% of a typical Accounting practice client base.
- Most SMSF's do other business with their accountant.
- The majority of existing SMSF's were setup by an accountant.
The Specialist SMSF Admin Myth..
SMSF's are still, a "cottage" industry, there are No economies of scale, few if any SMSF admin specialist firms make money, and they individually manage a very small proportion of the total SMSF funds..
One can count the number of MSSF admin firms with greater then 1,000 fund on ones hands.
AMP after consolidation of several admin firms is reported to have some 11,000 funds.
Why is this so?
Specialist SMSF admins miss the point, that an SMSF is just a part of the relationship they have with their local accountant.
While the Industry tries its best, to make SMSF's very "complex" and wave the ATO compliance "red flag", the reality for the majority of SMSF's are that they are very simple.
The typical fund, has a set of Managed Funds, some Australian Equity shares, Fixed Interest and perhaps some property or unlisted investments, which don't churn, the other significant group are fully in pension mode, also simple; with a a range of funds in between these.
So the problem is actually fairly straight forward, after all this is a "SELF" managed super fund business.
What about Back Office Outsourcing?
There has been a steady growth in overseas suppliers of back office providers, but the largest of these has less than 15,000 funds..
I believe the future of BPO's is to "in-source" directly into an local Accountant Practice
What about Accounting Practice groups?
These tend to be a set of independent Practices, with little or no common systems, mainly though the lack of scale able system solutions in this space.
What about Accounting Practice groups?
These tend to be a set of independent Practices, with little or no common systems, mainly though the lack of scale able system solutions in this space.
The SMSF Admin Software Myth..
The reality of any "non monopoly" market, is that there is a tendency to converge service offerings and price.
While there is a lot of hype at the moment between a few players, about how their solution is "far" better than anyone else..
The reality, is that all offer mostly the same solutions, the differences are very minor and tend towards personal preferences, rather than technical capabilities.
Debates about what is a cloud, and comparing very technical aspects like remote access to browsers access in a modern day environment is rather useless from an Accounting Practice perspective, it simply does not matter.
From an SMSF accounting software perspective, SMSF365, Class Super and BGL360 all are very similar, and to be honest almost impossible to make a case for one over the other at this basic level, all will meet the typical accounting requirements. Also Software prices are now tending to the norm of ~ $100 per fund per year as almost all software providers off a online service.
So what about the future of Accounting Practice Management?
Non SMSF accounting has become a commodity, Xero is an example of this.
But as SMSF's make up only a small percentage of a typical practice, the issue is not about SMSF accounting software, but rather about how it integrates in to the "Accounting Practice"..
Many practices have gone from the high cost specialist services, to the current set of "bolt" on applications.
The last thing a practice needs is yet another SMSF Software "island".. it all gets tooo hard..
The SMSF side of the business must integrate into the "business".
The typical Practice does not have a "big" problem to solve, a typical practice is quite small so the "fees" for a "Practice Management" solution should be "fit for purpose"..
Document Management?
Physical paper documents are like the dodo bird, they disappeared years ago..
All service providers supply electronic documents these days, Banks Telco's ect, it will cost you extra, to get paper. It has become socially unacceptable, bit like smoking, to store and distribute paper,and other than small set of very specific cases paper is not legally required.
Having said this, I did get a call the other day to say his SMSF Admin firm, had just sent him a "box" of color printed Fund documents; his comment was even the Invoice was printed in color!
The bit he really liked (sic) was pulling the documents apart and scanning the pages to a PDF file, for his own use, yes there was zero electronic documents. And yes trees are still being cut down in 2014.
It is archaic practices like these that killed off the Car industry.
Document management, at the practice level is almost non existent, at best it is a set of "folders" on a local server, at worst it is stored within public services located in the USA, i.e "dropbox" etc and yes, the client data is stored unprotected in these foreign data centers.
In almost all cases there is zero encryption applied, and a Practice often stores "sensitive" data for their clients. At a minimum all stored documents "should be encrypted at rest" as even "local servers" are now connected to the internet. Once again simply best practice.
It will be interesting to see the effect of new Privacy Laws which come into practice in March 2014 regarding APP8 cross boarder controls over client data, and how some of the Accounting Practices will meet this requirement. APP8 also applies to use of foreign based Back Office service suppliers. Several cloud based service providers use very low cost "Rackspace" hosted in Texas in the USA
Having said this, I did get a call the other day to say his SMSF Admin firm, had just sent him a "box" of color printed Fund documents; his comment was even the Invoice was printed in color!
The bit he really liked (sic) was pulling the documents apart and scanning the pages to a PDF file, for his own use, yes there was zero electronic documents. And yes trees are still being cut down in 2014.
It is archaic practices like these that killed off the Car industry.
Document management, at the practice level is almost non existent, at best it is a set of "folders" on a local server, at worst it is stored within public services located in the USA, i.e "dropbox" etc and yes, the client data is stored unprotected in these foreign data centers.
In almost all cases there is zero encryption applied, and a Practice often stores "sensitive" data for their clients. At a minimum all stored documents "should be encrypted at rest" as even "local servers" are now connected to the internet. Once again simply best practice.
It will be interesting to see the effect of new Privacy Laws which come into practice in March 2014 regarding APP8 cross boarder controls over client data, and how some of the Accounting Practices will meet this requirement. APP8 also applies to use of foreign based Back Office service suppliers. Several cloud based service providers use very low cost "Rackspace" hosted in Texas in the USA
Enter SMSF365 Practice Manager
Give that we already have our own Web Office solutions, we decided to provide a complete Accounting Practice solution as part of our "SMSF365 Accounting Practice" service, and to provide it for no additional fee.
As most Accounting Practices are using Xero for many aspects of their practice, we decided to integrate SMSF365 with Xero workflow max, to allow a practice to get an immediate gain, and preserve their investment, mostly time and effort, and not require yet another "new" set of practice software.
This allow allows a fully integrated solution from day one, plus get immediate productivity gains.
An while we believe SMSF365 is the best cloud based SMSF software available, it simply does not matter, for the typically 20 to 50 SMSF funds within a typical Accounting Practice, and while we would love to have a single account with 100,000 funds this is simply not the reality of the Australian SMSF market.
As the only SMF sofware to support ATO SBR SMSF tax returns we are uniquely positioned with the addition of Xero integration to support a integrated Accounting Practice Solution.
The Next Step
Given that the practice now has a cost effective and simple to use solution, what next?
Xero accounting has quite reasonable fees, but Xero workflowmax is quite expensive..
Hence our strategy:
See details at
http://www.villagemall.com.au/content/WebSuperFund/Service/smsf.htm
Conclusion
Unlike, Australian based Car manufacturing, there is a bright future for the Modern suburb based, Accounting Practice, providing a range of "trusted" services to their clients.
But like all industry segments, there is always a need to ensure world best practice, in every thing we do..
Disclaimer
The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.
Give that we already have our own Web Office solutions, we decided to provide a complete Accounting Practice solution as part of our "SMSF365 Accounting Practice" service, and to provide it for no additional fee.
As most Accounting Practices are using Xero for many aspects of their practice, we decided to integrate SMSF365 with Xero workflow max, to allow a practice to get an immediate gain, and preserve their investment, mostly time and effort, and not require yet another "new" set of practice software.
This allow allows a fully integrated solution from day one, plus get immediate productivity gains.
An while we believe SMSF365 is the best cloud based SMSF software available, it simply does not matter, for the typically 20 to 50 SMSF funds within a typical Accounting Practice, and while we would love to have a single account with 100,000 funds this is simply not the reality of the Australian SMSF market.
As the only SMF sofware to support ATO SBR SMSF tax returns we are uniquely positioned with the addition of Xero integration to support a integrated Accounting Practice Solution.
The Next Step
Given that the practice now has a cost effective and simple to use solution, what next?
Xero accounting has quite reasonable fees, but Xero workflowmax is quite expensive..
Hence our strategy:
- Allow integration with existing Xero WFM clients, to preserve their investment.
- Integrate directly with Xero Accoutning: Inventory items, Invoice, and payments.
- Offer a simple version of WFM, using our Web Office feature set, included in the SMS365 base fee
- Extend our ATO SBR offerings to support non SMSF sevriecs, like company, BAS/IAS tax returns
- Develop a set of stanardised Job templates to suite SMSF Admin, and Financial Planning aspects of a Accounting practice..
See details at
http://www.villagemall.com.au/content/WebSuperFund/Service/smsf.htm
Conclusion
Unlike, Australian based Car manufacturing, there is a bright future for the Modern suburb based, Accounting Practice, providing a range of "trusted" services to their clients.
But like all industry segments, there is always a need to ensure world best practice, in every thing we do..
