The small and medium enterprises (SMEs) sector plays an important role in helping alleviate unemployment and contribute to the growth of the South African economy.
Most of the failures seen in SMEs are due to poor financial management practices whereas successful SMEs rely heavily on the relationship with their bank and external accountant. Larger enterprises can afford to employ a fulltime accountant who prepares various management reports to assist the directors in managing the company. However, the lack of these skills in smaller enterprises forces management to be mostly cash and stock managers rather than enterprise managers.
In order to promote growth in the SME sector of the South African economy, SME managers need to be empowered to become better managers by having access to basic management information. Many small businesses are likely to have limited access to skills and information about markets and technology and in most instances knowledge about these issues are often provided by the external accountant. With the evolution of e-commerce a range of services can now be provided via the internet, including ongoing monitoring of the SME and its performance and the provision of management accounting services to the company. Internet reporting has the advantage of the distribution of financial information at a low cost and the ability to provide real-time financial reporting to support internal decision-making. Thereby SMEs can track their financial performance quickly and are in a better position to discuss any events in a timely manner.
With the availability of functional, feature rich, web-based accounting software in South Africa, the number of businesses using cloud computing is growing swiftly with nearly 50% of South African corporations already embracing this technology (SME Survey 2012). SMEs however have been slower to follow, but predictions are that their adoption of cloud applications will increase twofold within the next few years. Cloud computing will not only change web-based business applications but will also transform the way in which an organisation manages its data and administration through the way it shares data. Online accounting will result in a completely new way of doing accounting and professionals in the accounting industry will have to change the way they work to remain relevant. The benefits of being hosted online (with mobility, tax and legislation updates that automatically feed into the system, data that is regularly backed up and real-time report generation) mean that traditional accounting services will have to evolve. Driving to a client to collect boxes of slips or downloading system files in order to balance the books is rapidly becoming a thing of the past. Online accounting is making it easier for the user to access accounts and manage their books, with user friendly dashboards making it simple to understand the current financial status of the business.
Clients too are becoming self-sufficient through online accounting software. This creates the opportunity to reinvent the role of the accountant as a trusted advisor and business partner with extensive financial expertise to guide business owners and managers. Data entry in and of itself is not of much value to a business; its value is only unlocked when an advisor can extract valuable financial information from it, and pass this on to the SME owner. Online accounting applications are intuitive enough for bookkeepers to simply enter the data into software that feeds into the entire system, immediately updating key financial indicators. Accountants now have the time to create reports that allow them to review changes and immediately spot trends. Online accounting software allows remote access from anywhere and at any time which enables the client and the accountant to access the information simultaneously to make or review changes and updates, allowing both parties to have an interactive relationship. This gives the accountant increased scope to become more immediately involved in their clients’ businesses. Being able to access sound financial advice to make good decisions and solve issues as they happen is crucial to the success at every level of an SME.
Accountants need to understand how working online increases their own efficiency and thereby their ability to take on more clients, offering high-value services rather than billing for time spent capturing data. Connectivity makes everything predictable, allowing accountants to get into the minds of their customers. Some of the efficiency tools that have mostly not been available before include:
Specifically designed practice management tools that give you a real-time view of all your clients, along with pertinent information for each one. Reminders for the next VAT submission, notes, alerts, etc.
Mobility tools that allow clients to log on from wherever for fully up-to-date views of their business, their customers and suppliers. They can do quotes and invoices and email them directly to their customers and all of this using tablets or smartphones.
Keep track of accounting and bookkeeping tasks.
Uploading bank statements with auto-allocation rules.
Keep track of spending with budget features and real-time profit and loss reports with budget comparisons.
Keep reporting more streamlined than ever before.
By Lionel Higgo, Partner, Business Service Outsourcing, BDO