How cloud accounting software is changing the business model of accounting firms.

1. Clear Books Must reads | August 2014
How cloud accounting
software is changing
the business model of
accounting firms
The benefits of switching to
cloud accounting software are
numerous for accountancy firms
Additionally, this technology is changing the business
model of accounting practices.
Up until relatively recently the accounting industry
had a rather stuffy image consisting of firms holding
thousands of physical client files, charging high fees
for bookkeeping and relying on legacy clients to
generate fees.

2. Clear Books Must reads | August 2014
One model, which has prospered with the rise of cloud
accounting, is that of the franchise. CheapAccounting.
co.uk was started by Elaine Clark in 2007, and first
developed its franchise arm in 2009. The company
now has in excess of 2,500 clients and 24 franchisees
across the UK.
Clark was motivated to pivot to a franchise model
as she “saw a huge opportunity to work with clients
in whatever location by using technology to deliver
professional accountancy service[s] at an affordable
fee.”
The name Cheap Accounting, was derived from a
desire to be both eye catching and search engine
friendly.
Franchise
The process to become a franchisee of CheapAccounting.co.uk is rigorous. Clark interviews prospects personally,
and all applicants have to be a member of a recognized accountancy body such as AAT, ICAEW, CIMA or ACCA.
Once franchisees are accepted they are put on a training course. This is taught with the expectation that not all
new franchisees will be familiar with cloud systems. In addition, new franchisees are given one-to-one mentoring
sessions, based on their needs and respective backgrounds.
Clark says, “all of our franchisees are different and we do not believe that having a “one size fits all” training
programme would be beneficial to use or the franchisee.”
Cloud software like Clear Books has enabled a new generation of
accounting firms to emerge who are thinking more entrepreneurially.
Common features of such firms are that they have no set physical location, outsource services which are not
part of their core competencies and utilise the power of the internet and social media to be proactive in winning
new business.

3. Clear Books Must reads | August 2014
Outsourcing
Rasa McClure, one of CheapAccounting.co.uk ‘s
franchisees, chose to purchase a franchise with the
company due to her desire to access marketing skills
and establish a firm from scratch.
Despite access to marketing know-how being an
obvious benefit of franchising, Clark does not believe
that this function is any more or less important for
more traditional accounting firms.
Cloud accounting software makes it easier for
accounting firms to outsource parts of their work
by enabling partners to access data from anywhere
with an internet connection, without the burden of
transferring data back and forth.
One firm, which has done this successfully, is Adroit
Accountax. The company outsources admin-based
services such as book keeping, client engagement
letters and VAT registrations.
Mahin Khawaja, director of Adroit Accountax says,
“Without online accounting software outsourcing is
difficult and complex.”
“Other practices need to
keep staff fully utilised and
hopefully recruit new staff as
they expand and grow. No
business stands still.”
She says, “Marketing allows us to move forward [by] recruiting more franchisees. Other practices need to keep
staff fully utilised and hopefully recruit new staff as they expand and grow. No business stands still.”
Whilst Clark does not believe that cloud accountancy software exclusively facilitates the smooth running of a
franchised accountancy firm, she thinks that systems such as Clear Books are “essential” for online accountancy
practices.
In the future Clark believes that cloud accounting systems will become the backbone of accounting practices, in
a similar way to how online filing has been adopted over the last few years.
She says, “practices that are able to adapt and change their models…will survive but I expect to see some [firms]
go by the wayside who are unable to accept a technologically driven business model.”

4. Clear Books Must reads | August 2014
She believes that cloud software such as Clear Books
is symbolic of the modernisation of the accounting
industry, and that as a result this enhances the image
of accountancy practices.
Adroit chose to integrate Clear Books into their
outsourcing model due to it enabling data to be
updated in real time and its ability to make accurate
information available on demand to clients.
Alongside Clear Books, other pieces of software allow
Adroit to integrate outsourcing into their business,
including using document transfer software and a
Virtual Private Network (VPN). These help the company
to communicate and share data with their outsourcing
partners.
Khawaja lists competitiveness in price, and the firm’s
ability to do more constructive consultative work as
being key attributes of adopting an outsourcing policy.
She believes that we are now seeing a shift in
the industry with more accounting firms utilising
outsourcing services. “Accountants want to evolve like
everyone else, with more online accounting systems,
better connectivity than we had 20 years ago, and
[the] ability to work remotely all [being] contributing
factors.”
In spite of this, outsourcing still carries an element of
risk. If outsourcing partners do not complete work to a
high standard within a set time period, this can reflect
badly on the accountancy firm commissioning the
work.
Adroit mitigates this risk by issuing strict Service Level
Agreements with outsourcing partners they work with.
Khawaja says, “Our client has an expectation from
us for delivering accounts, VAT and management
accounts within [a] certain period of time [this also
applies] to our outsourcing partner. We receive
advance warning [from them] if there is any delay so
we can let the client know.”

5. Clear Books Must reads | August 2014
The mobile firm
Alongside adoption of cloud accounting software,
choosing to have no set physical location for an office
is another way of reducing costs.
As software like Clear Books keeps all client accounting
data in the cloud, this makes it easier than ever before
to work remotely.
Barnes & Scott is a forward thinking accountancy
practice set up by Tasnim Mustafa. When starting
up the company, Mustafa thought it made sense to
work from home and share workspaces in order to
minimise the company’s overheads.
He chose to adopt Clear Books due its speed and ease
of use when collaborating with clients.
Currently the business has a presence at Central
Working’s Shoreditch space. Mustafa lists winning new
clients as one of the key benefits from spending time
at the shared working space.
He says, “[Central Working] are really good at
encouraging you to meet others and talk about what
you do… Sitting in a co-working space with one
hundred other startups helps.”
Mustafa splits his time working fifty per cent of the
time in shared working spaces, twenty five per cent
meeting clients and twenty five percent working from
home.
He believes that it is still vital to meet clients face to
face in order to establish a relationship with them.
Barnes & Scott’s general onboarding process for new
clients includes conducting a meeting in which key
engagement procedures are run over. In addition,
clients are given training on Clear Books. This is then
followed up at the year end with a meeting to run
through key business and tax planning information.
Mustafa stresses that in some instances it is not
always necessary to meet face to face for one off
engagements. He says that “specialist tax work” such
as SEIS applications can be completed over the phone.
In spite of the many pros, there are some downside
to working remotely. These include managing and
communicating with your team. Tasnim says, “building
and motivating staff is much harder… It takes much
more effort to schedule a phone call when you want to
speak to somebody rather than just have a quick chat
when you are sitting next to each other in an office.”