We’re also seeing portals emerge where accounting firms can publish financial statements and tax returns, as well as client-facing “dashboards” that allow clients to run the business with real-time access to financial information and key performance indicators. This is also huge because it brings a variety of new client services for accounting firms, software consultants and business management consultants.
Here are a few products that take maximum advantage of these “new world” technologies:
The first is Xero, a relatively new online accounting product from New Zealand that is about to hit the U.S. market. Xero takes us towards a whole new paradigm where we won’t enter transactions into accounting systems, but instead manage “data flows” on the Web where transactions are entered for us. Now, before you dismiss the idea of zero data entry, take a look at Xero’s vision.
The Xero philosophy is to move us away from data entry and towards connecting business processes with the accounting system via software connections and data flows. We realize the goal of zero data entry by connecting the Xero product to banking feeds, customer-entered data, vendor-entered data, employee-entered data and automated entries that free the “bookkeeper” from entering data. The bookkeeper role doesn’t completely disappear, but the role changes dramatically from being the expert on how to enter transactions efficiently to how to manage transactions and other “data flows” on the Web. There will be some data entry, but only a fraction compared to the way we do things today. This is another HUGE thing. It means all the skills we acquired in the bookkeeping space can now be used to “teach” these various systems to talk together and trasmit the data between the apps in ways that serve the particular needs of the clients. This stuff can’t be left to the techies because they are not accounting professionals and don’t have the broad range of skills that accountants have for managing different types of businesses.
Xero is a full online general ledger product that connects to major banks and pulls bank and credit card transaction data directly into the application. Through the developer interface, dozens of add-on developers also offer an impressive range of business process applications that feed data into Xero. So it’s quickly realizing the goal of providing a complete system with online invoicing, payables, payroll, ecommerce, fixed assets, employee expense management, and nearly all of the functions that most small businesses need from their accounting system.
Although it’s a relatively new product, the depth of functionality is impressive. Of course, customers who are used to mature desktop accounting products will no doubt have a long list of things they want Xero to add, but the speed at which those features are being added is quite impressive.
Mint is a similar product. Mint is Intuit’s free online personal financial management product that allows individuals to set up a complete personal finance tracking system on the web that maintains an always-up-to-date personal balance sheet, including all your account balances, retirement accounts, mortgages, home values and credit cards.
Wave accounting is another similar product for small businesses. Like Mint, it’s a free product. Wave also believes in zero data entry and allows small businesses to set up data feeds from banks and credit cards to eliminate as much data entry as possible.
Another example of the zero data entry philosophy is demonstrated in Bill.com’s Zen feature, where all vendor bills are faxed or e-mailed to a special address where the transactions are entered for you.
How Zero Entry Changes Everything for Accountants
For accountants, there are two big points you should consider about these new technologies. While I believe this is a move in the right direction, taking advantage of the opportunities might require some pain and retooling.
The first point is that these new technologies allow accountants to be collaborators with small business owners. For the first time ever, we can now help clients manage their accounting data in real-time. This is a key philosophical difference from the old desktop software world because it allows accountants to reclaim “control” of the general ledger, while at the same time providing a much higher level of service to their clients.