Accounting Firms - Data Advisory - The Year In Review
As the calendar year draws to an end, we all reflect on what went well, what we have achieved and what we want to achieve for the next year.
For the accountants out there though, we are only coming up to the half-way mark with another six months to go before the real end of year.
2018 has been the year of data analytics, with it emerging as an enabler for clients of accounting firms. We have had more discussions with firms about reporting and analytics for their clients in the last six months than the prior three years.
But what stops firms being able to analyse data? Most commonly we think skill sets, that our teams don’t have the ability to analyse data in any meaningful way. I think this is a cop-out, accountants are born analysts and all the skills needed to run a meaningful analysis session with your clients is well within your grasp.
What I think the real thing that stops firms from analysing their clients’ data is the lack of clean structured data to analyse (and mindset)!
We’ve run several data analysis workshops for firms this year (where we teach them how to start analysing data as a service for their clients), where we start with the firms’ data from their practice management systems (APS and MYOB AE predominantly). We start with their own data as it is a known quantity and gives the team a leg up to start analysing, i.e. they know something looks to be correct.
But here is the thing - when we start the data analysis exercise with most firms, we notice a disturbing trend of client information being out of date, wrong, or just plain missing. In fact, there have been a few firms with hundreds of thousands of issues in their database and they thought it was fairly clean!
“But why does this matter, Dan? It’s OK really, we know some of it is incorrect but the overall message is still good!”
Well let me give you the implications we often see:
Data privacy laws have ramped up this year. Incorrect client information could see you sending the wrong information to the wrong client and open up your duty to disclose.
Automation does not work effectively - there is nothing worse than getting a letter that starts with “Dear <client>”.
You waste the time of your team. Every time they need to source data directly from you is doubly wasted - there is the collection process and then the time it takes you to get back on track. We all find it hard to find good team members (and it’s only going to get harder), why waste their time with non-value ad-hoc work (after all that’s what we trained them to do right??? right??).
Nobody trusts the data, so nobody updates it, we get the ultimate self-fulfilling prophecy...our data is crap because our data is crap.
You can’t analyse your client base - there are segments of your database that perform well and others that underperform. If you don’t keep your client details up to date how can you segment, analyse and build your business effectively?
How do you expect to offer advisory services to your clients if you can’t keep your own database in reasonable condition?
Your database (well at least a copy of it rather than the live one), is a great sandbox to learn data analysis skills, you can liberate your team with little effort if they can trust the data!
And finally, we see some firms change practice management system (an exercise that costs at least 10 times the actual physical cost) just because the old system is so bad that a fresh start is often better. Honestly, there are better ways to spend your money than changing practice management systems for little gain (but massive cost!), and finally,
It takes too long to get the list of who is getting a Christmas card (hint, hint)
For those who have worked with me, this has been a passion of mine for the last four years. We’ve even gone to the extent of writing an integrity tool that finds missing and erroneous information in your database and shows you exactly where it is (it is imaginatively called the “Integrity Tool” - it does what it says on the box) - Available for MYOB AE and APS.
In fact, we’ve had some firms reduce the errors in their database by over 80% in just six weeks and then go on to keep a clean database going forward.
So let’s look at some of the cool things you can do with clean data:
Be less worried about the privacy of your client data (big one for me).
Automate a lot of your back-end processes - please still be careful about this people, after all, the wrong thing automated will just do bad stuff quicker.
Analyse your client base, know which customers are making you money and which ones are costing you money.
Get your staff engaged with some of the tools that have been released that tie together all your systems (e.g. Xeppo).
Start enjoying (within reason) your practice management system.
Reduce the interruptions to your team (reduce the ad-hoc fixing of client information).
Give your staff a clean and friendly place to start analysing data!
Offer data advisory services to your clients!
And so on ….
Henry Ford once said “Whether you think you can, or you think you can't--you're right”. This statement is true whether we talk about offering new services or maintaining our data integrity. If you think it is too difficult to maintain your systems, you will fulfill that prophecy whether or not it is actually true.
So, to help you change your mindset that it is "all too hard", the PT 2.0 team is available to help you not only clean up your database and practice management systems, but improve your processes, see what technologies are emerging (we talk to software providers daily so you don’t have to), and start building some much needed data advisory skills in your team. Please email firstname.lastname@example.org if you would like more information.
Make 2019 your year of success, your year for growing your practice and a year for engaging your team in new skills.
From all of us at PT 2.0, have a Merry Christmas and a Happy New Year!