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Common Ledger – a solution to a common problem

Current business trends place increasing emphasis on value-add activities and services. This is especially relevant for accountants who frequently resort to the archaic practice of manually keying client data into their practice accounting software. This process has a number of issues, apart from being time consuming; it is horribly inefficient, only reflects the client data at a single point in time and provides little opportunity for in-depth analysis.

Whilst cloud accounting software has broken down some barriers in that accountants can access client data anywhere anytime, it does not necessarily resolve the compliance obstacles. Several years ago Xero coined the phrase ‘single ledger’ which is where both the business and accountant work are able to work simultaneously on the company file. This solution is ideal where both the business and the accountant use Xero, but what if the business does not use Xero?

Many accountant general ledger tools have a one for one relationship between them and business accounting software packages – e.g. Reckon APS and Reckon Accounts, Accountants Office (AO) and MYOB Account Right. The accountant can thus accept a client file directly into their software via a mapping process without rekeying. And modern file transfer products enable fast access even where there are no cloud products involved. But this is a one for one relationship, that doesn’t readily allow files from different business software to be imported through this process which leaves businesses and accountants with three options:

  • Client changes to software supported by the accountant
  • Client finds another accountant
  • Accountant manually keys in the client’s data to their software

None of these solutions is ideal for both parties but from the country that gave us Xero, we now have Common Ledger; a product that sits between the client’s data and the accountant’s software providing a translation service between the two enabling journals from the client’s software to be migrated digitally into the accountant’s software.

Common Ledger diagram-02

The product is still very much a work in progress. Right now:

  • It can’t post year end journals or corrections back to the client’s software.
  • There are a number of business software products that are still on the road map.
  • The client will still need to send supporting documentation for Sub ledgers such as Accounts Payable, Accounts Receivable, Inventory and unreconciled bank transactions.

However – this is a promising start, the concept has has been tested and accepted, so hopefully it will be relatively easy to roll out with additional products and hopefully we will soon see a bi-directional mode.

Using a product such as Common Ledger does take away the inefficient rekeying for compliance but many accountants are reinventing themselves from being the go-to compliance professional at year end to the ongoing trusted advisor working with the client throughout the year. To competently deliver in this role, the accountant really does need to access the client’s software directly to gain a complete insight into business operations. But given most cloud accounting software products provide a comprehensive customisable dashboard it isn’t an unsurmountable issue.

In pre-cloud days, small businesses mostly used one of two desktop packages – MYOB or Reckon Accounts; the advent of cloud has seen a plethora of small business accounting software products and there always seems to be room for more – e.g. in May we saw both the launch of Sage One and the re-badging of Reckon One. So many accountants can no longer enjoy the luxury of being single product focused – to remain relevant they need to be across multiple products and the Common Ledger solution enables them to provide the traditional compliance services at a non-product specific level and then use the flexibility of the cloud accounting user interface to access key data via an intuitive, user friendly and comprehensive dashboard.

So at $15 per month per ledger – this is a product worth considering both in terms of cost savings, efficiencies and provding better client engagement.

 

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One comment on “Common Ledger – a solution to a common problem

  1. Great article, I sent it to a few accountants I work with.

    Thank you!

    With regards

    Judit Nagy

    0413 353 938

    eTrack Logo FINALxero-logokerekes email signature SMALL.pngBas agent logo 96184006email logo linkedin logo.jpgMYOB approved partner

    DISCLAIMER: This e-mail and any files transmitted with it are confidential and intended solely for the use of the individual or entity to which they are addressed. If you have received this e-mail in error please notify the sender immediately and delete the message from your system. Confidentiality and legal privilege are not waived or lost by reason of mistaken delivery to you. The sender does not accept any liability for the contents of this message including but not limited to any computer viruses

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