Don’t get angry, get even, says Vipul Sheth, as accounting practitioners ponder investment in an inflationary period.

There has been much reporting about accounting tech providers upping their prices – much to the consternation of accounting practitioners.

Some sympathy is due – it’s hard for practices to manage client pricing, particularly when their key software partners have taken a ‘fluid approach’ to pricing structures.

We are a tech-focused outsourcer, and therefore anything that might put doubt into accountants’ minds about the importance of technology – or that discourages adoption – is negative for us. That’s because we work with practices that have strong processes and, inevitably, that means they lean on technology to help them manage workflow and operations.

The harsh reality 

But there are some stark truths that practitioners must face. Firstly, software companies, as well as practices, are looking to make a profit. Price increases are a natural part of a functioning economy – sadly, they’re also inherently linked to an inflationary one, too. Another issue is that the tech providers often make ‘too good to be true’ offers to early adopting practices – and these offers never last.

We’ve also gone through what some might call a ‘wasted’ period, where the accounting tech industry has looked to drive automation and workflow to help practices and their clients surmount MTD – which has of course been watered down and delayed again.

Not only are tech providers having to cover their costs, but practitioners have encouraged clients to improve their record-keeping – which also needs paying for. So, practices have had to make several changes: they’ve increased prices for their clients; evolved the client offering; and possibly changed their pricing structure. Therefore, if software providers move the financial goalposts by more than expected, that has led to some difficult discussions between the practitioner and the client base.  

Look to the future

My worry is that accountancy firms will look in the short-term at the cost of adopting tech, without considering the longer-term view. And this longer-term view isn’t simply that ‘tech is important’, but appreciating what you want your firm to be in five years, and how it will offer a great service, will require IT investment.

I’d also hope that practitioners are working hard on both their pricing strategy and their client communication – there are two fundamental aspects to running a profitable firm. Having good technology and processes in place gives you the potential to broaden a client offering – whether it’s tax mitigation, cashflow or forecasting to name but a few examples.

And the more that’s automated and outsourced, the easier it is to set in place a value-driven pricing structure – you will also have more time to communicate with your clients. Finally, value pricing is an opportunity to split out client software subscriptions from your main billing.

None of this is easy or straightforward. But I hope that the software pricing discussion moves towards a more sober and value-driven assessment of your technology needs, rather than a knee-jerk dismissal of its benefits.

Vipul Sheth is MD of AdvanceTrack Outsourcing

If you’d like to talk to us about your firm’s approach to tech, outsourcing and offshoring, please get in touch by clicking here.

In our latest FAQ, we ask how pricing typically works from both an outsourcing and offshoring perspective – and what you should be mindful of when considering these structures.

It’s a great question – particularly as there are distinct aspects between outsourcing and offshoring.
Firstly, outsourcing involves a set amount of work being undertaken by AdvanceTrack within a set timeframe. Whereas offshoring involves our team members being dedicated to an accounting firm full-time.

Pricing is very much around the scalability of the solution. So, you could have ten sets of accounts per month or 100 sets of accounts that need preparing. As an important note, at AdvanceTrack we work hard to use our technology and skillsets to drive forward ambitious accounting firms. We have exited clients who chose to use us ‘very sporadically’, because we found that it becomes difficult to maintain a good working relationship or an optimal quality of work.

The firms we work with all have slightly different processes, ways of doing things – the more we work with them the better we are at understanding and managing those differences.

The pricing model for offshore team members is fairly straightforward. It’s similar to a salary scenario i.e. as a set cost based on the number of hours that our team member works with you – and that’s it.

Agreement will also be made on when that team member is available to work with your practice. The key, therefore, to keep them busy for it to be financially viable and successful.

At AdvanceTrack we always say: the most successful firms are those that treat our team members as part of their team. If you have that mindset and strategy then you’ll share things with them, socialise with them online and integrate them into your team. They become much more than just contingent support.

We’ve had practice clients who have flown their offshore staff over to the UK so that they can become more ingrained in the way the firm works and get to know the people they work with – they learn about each other. A genuine colleague relationship really creates value.

While we’re talking about value, we are finding ‘cheaper’ outsourcing and offshoring options where staff working solely from home (to maintain the outsourcers’ margins). While Covid saw working from home enforced, we would advise practices to carefully consider their potential outsourcer’s data compliance. We have also found that staff retention is higher when people work more closely together.

Read our FAQ on how your practice would begin working with AdvanceTrack by clicking here. If you would like to talk to us about pricing, or any aspect of how we work with practices, then please get in touch by clicking here.