Mention accountancy to someone outside the profession and piles of ledger books and receipts, endless spreadsheets and paper forms might spring to mind.
The fact that this perception remains is because there’s at least a grain of truth in it. But that’s changing – and rightly so.
Despite an uptick in the use of accountancy technology in recent years, more than 90% of the UK’s financial firms rely on legacy technology to some extent, according to a 2021 report from the Financial Conduct Authority (FCA).
Relying on outdated systems makes it more difficult (or impossible) to meet the challenges of current and upcoming rules, such as MTD for ITSA, and attract the next cohort of digitally-savvy accountants.
So, why is it so crucial that accountancy – a traditionally time-poor and stressed-out industry – gets involved in the digital future of tech now?
New ways of accounting
COVID-19 sparked a revolution in working practices, accelerated the adoption of cashless payments, the growth of online shopping and much more. Accountancy was no exception, as more firms moved towards cloud-based systems that enabled remote working.
So much so that 94% of respondents to Deloitte’s Q4 2021 Global CFO Survey revealed that they expected their company’s investment in digital technology and assets to increase compared with the pre-pandemic trend. That those firms adapted more quickly, and had an easier time of it, is a strong indication that the future of accountancy lies in firms anticipating what their clients may need or expect, and preparing for those trends ahead of time.
Those changes in working practices and retail payments have also had an impact on accountancy. More staff working from home in other sectors has meant that payroll and HR systems, which thousands of our customers manage on behalf of their clients, must be fully automated and accessible remotely.
Newer, digitally-savvy businesses expect accountants to collaborate in real time. And that only works if you have the relevant, integrated technology with bank feeds and open banking enabled. Other clients may take some persuasion about the benefits of adoption, but if you can build the intelligent use of technology into your practice’s daily life, then clients will quickly see how they can gain from it too.
In my (many) years in the accounting industry, I’ve championed technology as the most powerful tool to prepare your practice and clients for future change. With ongoing reforms to the tax system, the changing economy and rising business costs, making your practice as streamlined and effective as possible will make your life much easier.
Consider how much time you might be losing inputting data into three or four different places or how a lack of data-driven insights can limit the effectiveness of your decisions. If you could run that data through multiple interactive systems that talk to each other effectively and provide the user with real-time data in one place, what would you do with the time saved?
Tech isn’t about drastically changing ways of working – it’s about using tools that complement and refine existing processes.
Accountants who focus on increasing efficiency, reducing waste and growing profits can help their clients do the same. And when it comes to attracting and retaining new talent, the technology they use will be a significant draw. Accountants might not shout about the latest innovations, but the perception that they’re all traditional is untrue. Many progressive firms have adopted technology as best practice, giving people flexibility and the ability to collaborate. I believe these firms will fare best in the ongoing battle for talent.
In good times and bad
When unpredictable and volatile geopolitical factors are driving prices up, all businesses will be looking to tighten their operations up wherever they can – especially their own accounts.
Considered through this lens, the challenges of messy, cumbersome accounts systems become even more apparent. When times are tough, accountants are more important than ever to help their clients get a good handle on their revenue and outgoings. Encouraging clients to adopt features like embedded payments or PayPal invoicing makes collecting money easier, which can help cash flow.
Accountancy software is now critical for compliance, including the continued digitalisation of tax – Making Tax Digital – which is part of HMRC’s ambition to become “one of the most digitally advanced tax administrations in the world”.
Many firms will now be preparing for the introduction of MTD for ITSA, which will come into effect in April 2024. Our acquisition, just last month, of tax specialist platform BTCSoftware, adds the essential service of digital tax management to Bright’s product set. With so many accountants feeling the pain of transitioning to Making Tax Digital for Income Tax, I’m eager to use our combined experience and knowledge of the sector to help accountants through this period of change.
The reforms to reporting income from self-employment are just one of the issues accountants face now. There are also natural, tech-driven changes, like how data is managed, tagged and analysed, as we saw during the rollout of the iXBRL format – and, in turn, the writing and presentation of reports.
There are also questions over IR35 and the ongoing implications of Liz Truss and Kwasi Kwarteng’s infamous mini Budget – there will inevitably be more upheaval for accountants to deal with in the short and medium term.
Digitising the way
For all of these issues, there is technology to help. I’ve seen how the industry has changed and adapted over the years and developed the solutions available to accountants in parallel.
The solution could be something as simple as how accountants manage their payrolls. Adding the technology to batch-process payroll, payslip and RTI and CIS submissions data for multiple clients at once can protect and boost efficiency even as tasks become more complex.
A digitised system enables that kind of efficiency. Add in a direct payments platform, and an operator can also make payments to clients’ employees, subcontractors and HMRC in a far more streamlined and accurate way.
When all of this is appropriately customisable and designed with a clear dashboard that gives clients access, the amount of unnecessary admin and the number of basic errors your practice can cut out is astonishing.
Ultimately, these kinds of tools mean an operator can spend more time on the essential and more interesting aspects of the job, with the freedom to focus on their role as a trusted and forward-thinking finance expert.
Fundamentally, accounting software might not allow accountants to see the future – but it does come a close second with a real-time view of what’s happening now, so they can add value to their forecasts.
With so many new and complex regulations on the horizon and a difficult period of financial instability ahead, it’s clear that accountants who get involved in the digital future of tech now will face less stress, free up more time and ultimately fare better in the long run.
Kevin McCallum is CEO at accounting software specialists Bright.
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