With the rise of cloud accounting, business intelligence (BI) is becoming ever more accessible to business owners and accountants alike. As a result of the advent of BI, the role of accountants is changing dramatically. They are increasingly present in the boardroom as key contributors to the strategic decision-making processes, no longer looking on from the sidelines.
How can accountants take advantage of this trend? One way is by adopting value pricing and bundling BI and cash flow forecasting services.
Want to generate more predictable revenue? Build more trust and loyalty with your clients? Prove your worth beyond number-crunching? Read on to find out how you can turn industry change into opportunity.
Why is business intelligence now more important than ever?
According to Xero, “Business intelligence (BI) is the analysis and use of data for better decision making.” It involves taking large volumes of raw data and interpreting it, turning it into a source of competitive advantage.
Many accountants still shy away from this area in favour of sticking to what they know – tax and the production of accounts. Often this is due to accountants’ fear that they lack the experience necessary to deliver business intelligence and that clients wouldn’t see the value in paying ‘extra’ for this service. Quite the contrary.
Accountants can provide even more value by using their unique skillset to consider and report on the business as a whole, rather than focusing on producing accounts that can quickly go out of date.
Where accountants can prove indispensible is in the analysis of the data provided by business intelligence tools. Their natural knack of interpreting figures and extracting KPIs and insights is of paramount importance to any business intelligence strategy.
This is all wrapped up in the need for accountants to turn what they have always done but never charged for – providing business advice – and turn it into a billable service. Clients need advisors to think commercially, which is something most accountants already do.
There is a growing need for accountants to adapt their traditional business models, and focus on demonstrating to clients their commercial acumen in addition to their numerical skills. Accountants have a central role to play in providing the business intelligence to aid in commercial decision making and evaluating the financial implications of future business strategies.
Not only is providing this service an excellent client retention tool, but it’s now so much easier to provide business intelligence these days than ever before. Cloud accounting software packages and their associated add ons can help you turn raw data into actionable business intelligence.
Cash flow as a core part of business intelligence
According to a CIMA Report – Unlocking Business Intelligence, business intelligence can enable management accountants “to provide a wider range of information in more accessible formats. In addition to reporting and monitoring, they could provide more forward-looking analysis.”
Far too many businesses make decisions without seeing the full picture. The full picture must include a view of the business’s future cash. Simply relying on a profit and loss report, or even worse – assuming what happened last year will happen this year – can hide all manner of problems. After all, a business can seem profitable at the P&L level, but the day to day cash flow forecast might tell a completely different story.
A cash flow forecast should be a core component of a suite of business intelligence reports provided on a quarterly or monthly basis. By building cash flow into your client offering, you will help your clients understand:
- Whether they can afford to hire more staff
- Whether they need to source funding to bridge a cash gap
- How upcoming VAT and other tax payments will affect their cash position
- See the impact of late payers and improve credit control
- Scenario planning for different possible futures
- Trim operating expenses to increase gross profit
An easy way to begin offering a cash flow service is to incorporate a cash flow forecasting add-on or app to your cloud accounting software. Float integrates with Xero, QuickBooks Online and FreeAgent and provides easy to use cash flow forecasting software that automatically updates each day with your actuals.
How can accountants capitalise on this trend?
Savvy accountancy firms have already moved into the so-called ‘advisory’ arena, beyond pure compliance. But not every firm has truly embraced the ideology of providing solid business intelligence in addition to the necessary compliance.
A way to move in the right direction is to ‘bundle’ your services. Bundling makes life a lot easier for your clients and for your firm. It means grouping services together into packages, which are then billed at a fixed monthly price. This lets your clients choose a package that best fits their business. It also means they don’t have to pick and choose services from a long list, without really knowing what they need.
Bundling starts with a major shift in the way you view and price your services. It means moving towards value pricing. For a great explanation of value pricing, read more here.
Put simply, value pricing provides predictable revenue from each new client, it can increase loyalty, it provides more transparency, and it builds greater trust between client and accountant.
How to bundle BI and cash flow into tiers of value pricing?
The best place to start is offering increased value for higher-priced packages. This enables you to upsell your existing clients and provides clear benefits for paying a bit more. You could structure it as ‘good, better, best’, or ‘minimum, typical, and open ended’.
However you choose to structure it, business intelligence and cash flow services should be in your mid or highest priced bundle to encourage that all important upsell. The ‘typical’ or ‘good’ package should include the compliance basics, such as end of year reports and VAT.
Figuring out what price points to use will require a good deal of thought, and it’s crucial to get this right. This article explains what to keep in mind when pricing your packages.
This is a guest blog by Float cash flow forecasting, intuitive cash flow forecasting software for Xero, QuickBooks and FreeAgent users.
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