Adrian pearson is A VETERAN UK CHARTERED ACCOUNTANT AND the founder of ledgerscope - A SOFTWARE COMPANY MAking great tools for accountants in practice.

Does SaaS accounting software set a collaboration trap?

There's an accountant. She runs her own accountancy firm, looking after the tax and financial needs of small businesses. Most of her clients have simple affairs and, other than some telephone support from time to time, they just need her help with the annual chore of producing accounts for the authorities.

Now, our accountant is a very lucky one. Her office is in a small corner of a large open-plan office; and in the wider office are the desks of all of her clients. She can wander over to talk to any of her small business owner clients - and look at their computer screens - as easily as she can look at her own. No travelling time, no fuel costs - just the ability to provide instant, personal service on demand.

Sounds too good to be true? Of course it is, but bear with me, so I can make my point.

Our accountant is talking to one client who she typically only works with with at his year-end, when she "does his books" from his Sage file and charges him £900. He is asking if she would do monthly accounts instead.

If she checks his information more regularly, 12 times a year instead of once, he says he will be able to manage his finances much better and use the more up to date information to change the direction of his business when he still has time to do so.

Now, as you'd expect, our forward-thinking accountant agrees wholeheartedly. This absolutely makes sense. She would much rather be close to her client's business, to be better able to give him "proactive" advice (although neither of them can quite decide what that means) and this will be much better than her simply reporting on numbers long after the event. It's no practical hassle to her, since they are in the same room. She can wander over and use his Sage software in a matter of moments, any time.

Great, says the client, thanks for that - let's do it.

"Ahem ..." says our accountant "we just need to discuss the fee first". "The fee?" says the client, "surely it will be the same, you are doing the same work, just in little bits, rather than one lump?". "Not quite" she says.

If you instinctively believe that, regardless of how easy it is for the accountant to work on the client's live bookkeeping data, the value of the monthly service (and cost to deliver it) must be higher than the original annual service was, unless the price is increased all of the benefit of the new relationship flows to the client - and the profitability of the accountant is reduced.

Back to the real world - and accountants are currently rushing to embrace the new, online accounting systems. They are doing this for many good reasons, in my opinion, but in particular as a way to a collaborate with their clients in real-time. The new SaaS software allows them to "be in the same room" as all of their clients. They can provide a much better service - and, of course, the clients love it. They would, wouldn't they?

If we accept that in the scenario outlined above 12 times 1 does not equal 12 then it's important for accountants to realise that the new technology should be an enabler for them, as well as their clients. If the client gets a far superior service, the provider should get superior compensation. If the £900 fee above does not become £1,200, I would say the accountant has fallen into a trap of her own making.

Cloudy thinking on accountancy firm profitability

Roadmaps please