All too often, accountancy practices have to part company with some of their most ambitious and valuable clients just when those clients are really going places.
The decisive moment can come when the client outgrows the finance software that has underpinned its relationship with the practice so far. If the accountancy practice is not able to offer a system more suitable for a mid-market organisation, that can be the end of the relationship.
Many practices have clients whose needs are beyond the capabilities of finance software designed for small businesses.
Matt Lewns has seen the situation from the accountant’s perspective, having practised with Mazars before becoming iplicit’s first Partner Manager.
“What tempted me to move to iplicit was that I felt there was a huge gap in the market,” he told an event at the recent Digital Accountancy Show in London.
That gap consists of “people that have outgrown your Xeros, QuickBooks etc but maybe can’t afford or don’t see the value of your Sage Intacct, your Microsoft Dynamics”, he added.
There is also “an abundance of clients” using on-premises software that “don’t know where to go”, Matt said at the session, which was titled Serving Mid-Market Organisations With Digital Transformation.
“That might be because they’ve got certain reporting requirements – consolidation, for example, or multicurrency. Or maybe they want more than two tracking categories, maybe they’ve got partial VAT requirements, VAT groups, multiple tax jurisdictions, or it’s a UK entity that’s got a euro base currency – all these things that we know Xero isn’t quite perfect at doing but we sometimes try to use it to get a workaround.
“Maybe there are other things: project job costings, irregular accounting periods, approvals all built into the software so you’re not using too many apps. Or it might be something as simple as transaction volumes. That’s what iplicit has been designed to do. We fit in that space where Xero’s too basic and the other players in the market are too complex and too expensive.”
Other specialists agree that the growing complexity of a mid-market organisation tends to require more powerful software.
Simon Woodhams, Software Advisory Manager with Moore Kingston Smith, told the event: “For us it’s the complexity. People on Xero, QuickBooks and Sage are doing lots of workarounds to get to their reports.
“You might want to go above two tracking categories, for instance, and slice and dice the data more and don’t want to do it manually.”
While limits on transaction volumes are a less common problem, he said, “we are seeing as you start to push the likes of Xero and QuickBooks to extremes, it starts getting slower and slower”.
Kevin Dunn, Solutions Director at Finzo and Macalvins Group, says he has seen many clients running up against the limits of “small tier” accounting systems.
“Maybe they’re getting 500,000 records a year and they’re having to build a new data set because they can’t run reports,” he says.
Both agree that the number of apps bolted onto an entry-level software system can be a problem.
“I think there is a tipping point between cost effectiveness and efficiency in the number of apps you've got,” said Simon.
If something goes wrong between two connected apps, it can be difficult to establish where the problem is and who is responsible, he added.
While the world is full of impressive apps, Kevin also advocates the benefits of “being able to do it in one solution and control what’s being done with a solution as well”.
Without a product to recommend to its mid-market clients, a practice is likely to lose some.
“We’ve got an outsource department and the majority of clients would be on Xero, QuickBooks and Sage – and normally, if they’ve gone mid-market, they would have taken it more in-house,” said Simon.
He said adding iplicit to the firm’s offer meant the client could continue to the outsourcing relationship. Key members of the client’s staff would be able to log into iplicit and view the information they were authorised to see, including necessary dashboards and reports – “which is what you don’t get at entry level”.
He said “people like working with people” and parting company with an outsourcing client would sever valuable connections for the customer.
“Being able to say ‘Right, they’ve outgrown QuickBooks, we’ve moved them to iplicit, we can still do the work, we’ve still got that contact, we can still give them the advice around that and we’re still seeing the data and being able to be proactive’, that’s a win for us,” he added.
Accountants who are able to introduce mid-market clients to better software can benefit from a continuing and growing relationship.
The accountancy practice can help the client via services such as finance reviews and implementation services, generating revenue for the practice.
Simon Woodhams said it used to be a question of introducing the client to the provider of another system.
“We’d say, ‘Well, this is the system you need – go and speak to one of the partners we’ve got a relationship with’,” he said.
Now, the practice is able to advise the client on all its options but offer implementation, training and go-live support.
“Whereas previously it was ‘Here’s a report, that’s the end of it’ – that’s two weeks’ work – we’ve now got potentially three or four months’ worth of implementation work and beyond,” he added.
There is also value in the accountancy practice being responsible for the implementation of new software, he said. “If you give it to someone else to do the consultancy and it goes wrong, it comes back on you.”
System reviews can be an important part of an accountancy practice’s offering.
Simon said most opportunities for reviews involve clients who are using legacy on-premises systems such as Sage 200 and Access Dimensions.
“We normally spend a whole day with the client, going ‘What do you do at the moment? What don't you like about it? What can we do to improve that?’.
“On the back of that, we have a report that says ‘This is what you do, this is what you want it to do, is there anything else that’s a nice-to-have?’ You're never going to get 100%; if you can get 95% you’re onto a winner.
“We always do demos of different products because it isn’t just about price; it can come down to what it looks like in some cases and also what else it integrates with.”
Kevin also spends time examining the integrations the client might need.
“We’ll go into the client, look at the app stack that they’re looking to do, just seeing what improvements we can make, whether that’s within the app stack already or whether there’s some AI stuff that might need to be integrated there separately,” he said.
Moore Kingston Smith is noticing increasing interest from clients in improving their digital systems. Its software advisory offering had had its busiest ever start to a year in 2024.
“I think there’s more appetite now than there has ever been,” said Simon.
“I think at the start of Covid everyone wanted to be cloud-based. There was a lot of movement from desktop.
“It’s sort of come back around that people want to be in the cloud, with hybrid working becoming more acceptable.”
Find out more about how iplicit helps accountants in practice to service mid-market clients. And you can sign up for our webinar, Cloud-Accounting for the Mid-Market.