The fundamentals of firm technology

September 25, 2023 9:00 AM

As the global economy becomes increasingly technology-driven, so too has the accounting profession. In today's era, every firm from the smallest of sole proprietors to the largest international networks make extensive use of IT resources in virtually all aspects of their practice. But how should firms prioritize their technology spending?

We asked accounting technology thought leaders what they think are the essentials for any firm in terms of not just hardware and software, but policies and procedures around its use. Here are some of the things they said.

Basic office applications

Essential basic office functionality — things like word processing, spreadsheets and presentations — are usually bundled in a suite of solutions, so it is important to consider what does and does not integrate with it, with major providers usually having the most integrations.

Add on to this something that can read, edit and create PDF documents, which accounting firms deal with on a regular basis. Certain applications allow for e-signatures on PDF documents as well, which can be useful for smaller firms that may not have access to a dedicated e-signature solution.

Finally, firms should have a document management system that allows for the secure transfer of files both within the firm and between the firm and its clients. Having such a system can also make it much easier to comply with record retention rules.

Client portals

Client portals have, in a short time, gone from an idea to a novelty to, now, the main way a client will interact directly with your firm. There are literally dozens of portal solutions in the market today, some of which are part of a larger suite and others of which are standalone products. When selecting a portal, firms will want to prioritize its ability to integrate with other systems (particularly practice management and document management), its security (an insecure portal can lead to a devastating data breach) and its ease of use (clients won't want to use a portal system that's too complicated for them to understand).

Time and billing software

Despite some changes in the professional landscape, the billable hour remains a staple of the profession. Time-tracking software can help organizations know exactly how much time has been devoted to a task, and when that time was spent. Relatedly, accounting firms will need a way to both send bills for services rendered and pay the bills for their costs.

A CRM system

Considering accounting firms need clients to survive, a system that can manage client relationships — a client relationship management system, if you will — is essential, particularly as they grow. It's how firms will maintain comprehensive client profiles, track interactions, identify opportunities, manage projects and enhance communications. It is especially relevant for practices that specialize in advisory services, which often have a more consultative and ongoing relationship with clients. Accountants in this area need a deep understanding of the client's business, regular check-ins, and a proactive approach to identifying opportunities or challenges, things with which a CRM can assist.

Workflow tools

Creating an advisory workflow in the cloud

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It was highly recommended that accounting firms invest in workflow tools that can help track the particularities of major projects and engagements. When deciding on a workflow tool, one should consider what integrates with it. On an ideal level, a firm's workflow software should integrate with its document management system so that people can simply review information from there versus having to go hunt down the file.

Collaboration software

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While this may have been optional pre-COVID, today there are just too many remote workers to not have, at the very minimum, video conference tools that allow for remote meetings between staff members and with clients. At the higher level there are more dedicated tools that contain elements of project management and document management as well, allowing for not just remote communication but true remote collaboration as well.

Cybersecurity

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Accounting professionals are especially tempting targets for cybercriminals due to the vast amount of financial data even the smallest firms hold on their clients. With the number of data breaches climbing, it has become essential to invest in at least some information security measures.

However, it is a mistake to think of security as a one-and-done measure. A firm can have the best software in the world but without ongoing monitoring and regular training, it won't mean a thing. Experts said this is not something a firm wants to skimp on. Whatever budgetary gains they may make are small compared to the enormous consequences of a data breach.

Specialized software

If a firm specializes in a particular type of engagement, it is likely that they will need software specific to that type of work. So, if a firm does a lot of tax engagements, it will need to invest in a high-quality tax engine. If it does a lot of audits, it will need audit software. If it does a lot of advisory work, it definitely needs a CRM system (though, as noted previously, virtually any firm can benefit from CRM).

On a more general level, experts also said a firm will need a solution that can handle preparation, compiling and reviewing financial statements, ideally in a streamlined and automated way that integrates with the firm's document management system. Similarly, many also said that a firm needs a trial balance and a general ledger software solution.

A practice management platform

The various components we've discussed? A robust practice management platform centralizes and streamlines them, reducing the chance of overlooking important details. However, when selecting a platform, it's vital to ensure it aligns with the firm's strategic goals and integrates seamlessly with existing software. A system that cannot communicate with key applications will not be effective.

Policies

Beyond the technology itself, though, it is essential to have the right policies and procedures in place. Some of the essentials include:

An information security plan that outlines how the firm will protect itself from cyberattacks and what it will do in response to one. Cybersecurity also requires continuous monitoring and training, so do not think of this as a one-and-done thing.
An acceptable use policy that outlines just what people can and cannot do with the firm's technology and who can and can't access what programs. There also needs to be training and onboarding processes to help people understand these policies.
Privacy policies and procedures.
A business continuity plan, especially in light of the large number of natural disasters that have occurred in recent years. Firms should also conduct annual "tabletop" exercises to test the plan. Keep in mind that BCP is beyond just the technology infrastructure, what do you do if the technology isn't available? What are the alternate procedures to handle a situation? Who needs to be notified?
Similarly, a disaster recovery plan.
Finally, as artificial intelligence evolves, firms may want to consider developing policies around AI use.

(See our feature story, "Managing your firm's technology.")