What family businesses need to know about the evolution of accounting

Like the taxi, banking, retail and media sectors, the accounting profession has been disrupted by new technology.

The challenge for family businesses is to ensure they realise the benefits from this disruption.

Disruption in accounting services

The introduction of cloud-based accounting platforms is streamlining compliance processes for many businesses, reducing the cost and increasing the speed of compliance-related tasks.

But the real opportunity here is the transformation in the timeliness that key business information is now available.

Pre-cloud, your internal team would start collating data once the financial year had ended. After some time, the data would be forwarded to your accounting advisors, who – after more time – would report back on the company’s financial performance.

Typically, you'd be seeing reports on profitability, sales, costs, etc for activity that happened up to 18 months ago.

Real time data

Today, a cloud-based service like PwC’s Next enables access to real time data in your business, giving you instant insight on key performance measures.

If you see a rise in costs or a drop in sales, you can now take action immediately.

Instead of seeing the impacts in historical reports, you can see them live on the Next dashboard and use this information for critical business decisions.

You don’t need to wait for your accountant to give you a report on what happened in your business. Now you have at your fingertips all the current information to ensure you take the most beneficial actions for your success.

Better business decisions

When I use the Next dashboard, I am continually amazed at the range, depth and quality of the information that the platform can surface.

Once it’s configured to the precise individual requirements of a business, you – and anyone else who needs to – can see all the key performance measures in one place.

You can track sales minute by minute and decide if you need to make changes to your current marketing campaign.

You can monitor staff costs and adjust staffing levels accordingly.

If an opportunity for a purchase pops up, you can get an immediate report on your position to give you the maximum leverage in negotiations. 

A shift from compliance to strategy

The disruption for accounting professionals like me is that we now need to shift our focus from reporting historical data for compliance to interpreting the vast amounts of current data that is surfaced by cloud platforms like Next.

It’s a change from ‘what happened' to ‘what’s happening’

Now we need to be working with our clients to review the data together, to shape strategy and position the business for maximum success.

We also need to be mining the data for less obvious information.

While it’s great to have immediate things like better cashflow management, I can also use Next to spot an early indicator of a future problem, like a rise in absenteeism in a certain location or a reduction in safety consumables.

It means we can know what’s happening while it’s happening, and work with our clients to prevent problems occurring, and to take advantage of opportunities.

Your relationship with your advisors

This is the relationship that family businesses should now have with their accounting advisors. Information should be freely available and shared with all decision-makers.

The focus should move from backwards-looking reports to forward-thinking ideas.

We’re just beginning to see the power of a platform like Next. I can see that soon we’ll be able to look at anonymised information from similar businesses in an industry sector and benchmark your performance against your peers.

We’ll be having a continuous conversation about ways to adapt to external changes and drive internal changes, so that your business stays agile.

What do you think about this new disrupted model? Let me know in the comments. 

If you’d like to know more about PwC Next, go to next.pwc.com.au or, if you’re already a PwC Private Client, please ask your advisor.

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About Mark Soulos

As the Lead Partner for PwC’s Next, I assist privately owned businesses to leverage the cloud to drive their growth and success.

I am committed to working closely with business owners and families to improve the financial performance of privately owned businesses.

Please feel free to connect with me on LinkedIn.