Saving struggling businesses – could more be done by insolvency practices?
Insolvency is probably the last thing considered by new business owners. However, looking at the recent demise of some top UK retailers, insolvency can affect anyone.
Some companies go so far down the insolvency line that there’s often no turning back. Many don’t seek advice when the early distress signs appear, as they are reluctant to admit or fail to see that the signs are there.
We could equally look at this from a different perspective – could business recovery and insolvency practices be doing more to save struggling businesses?
After all, having the extra time determines why some businesses may fail and why some survive and prosper.
First signs of distress and reluctance of admitting failure
First signs of distress include cashflow problems, extended debtor or creditor days, increasing staff turnover, declining staff morale, high interest payments and defaulting on bills.
It’s often difficult to detect them. Some individuals within these organisations might sense them, but their voice is not heard or doesn’t want to be heard higher up the ladder.
In many cases owners/management don’t want to admit, or fail to see, issues.
Business recovery and insolvency practices – taking a proactive approach
Insolvency has negative connotations.
Owners, directors and managers may associate it with failure. They may not appreciate that employing an insolvency practitioner can save their business, providing that they are consulted in time.
It could be argued that business recovery and insolvency practices should be more proactive in identifying and approaching companies that need help. Early identification of companies in distress or with the potential of distress could offer those struggling businesses more options.
How can business recovery/insolvency practices identify struggling companies?
The answer would be an ‘early warning’ alert system designed specifically for business recovery and insolvency companies.
Vistra’s product, InsolvencyWatch, accesses a database that holds information on over 4.2 million live UK Limited Companies. We consider information that could be used to identify and target businesses in early distress stages and provide daily updates on those companies.
Our system can notify of key alert changes such as a defined negative change in credit score, CCJ filings, late filings of accounts, filings of petitions and winding up orders and potentially adverse director activity.
InsolvencyWatch has a capability to tailor results to specific business sectors or postal codes, making it easier to approach companies in early financial distress, before it becomes critical.
Benefits for struggling companies
By taking a proactive approach, business recovery and insolvency practices have an opportunity to gain new clients, drive revenue and obtain a reputation of a business who helps others and makes a positive impact to the local or national economy.
In terms of struggling companies - the earlier they speak to the experts, the more chance they have to take a turn for the better.
To find out more about InsolvencyWatch service, get in touch with Vistra Business Information team here on 0117 918 1364. Vistra will be at Accountex on 1-2 May on Stand 396.
The state of blockchain in the accounting industry
Blockchain is certainly being explored, but we are at the tip of the iceberg in terms of its use and adoption. PricewaterhouseCoopers (PwC), Deloitte, Ernst & Young (EY) and KPMG, better known as the ‘Big Four’ auditors, all have established solid long-term blockchain roadmaps to remain relevant in the cryptocurrency and blockchain space.
It is important that the ‘Big Four’ have recognised the growing demand for both blockchain and crypto from an accounting perspective, and have taken different approaches to facilitate the rapidly increasing interest in the blockchain space.
As a starting point, their interest and allocation of resource to the technology further solidifies blockchain’s legitimate and longstanding future within the industry.
Blockchain has the capacity to be directly integrated into existing accounting infrastructures and potentially improve many technical aspects from an audit perspective. Its implementation also opens up new avenues for consultation, in particular creating a new market looking for consultancy on blockchain. There are regulatory and technical risks that come with blockchain, but these have been identified by the big conglomerates which helps companies understand blockchain’s potential in a more realistic manner.
What’s the No.1 1 trend that will shape blockchain in accounting (2019)?
Throughout 2019 we should see a gradual increase in the use of blockchain technology. For example, apps will be released that leverage blockchain technology in order to help accountants as well as business owners. These apps will plug into and build upon the cloud accounting platforms already in existence, which is a natural progression in technology. But if history is a guide the adoption will likely be very slow.
Blockchain is becoming more and more mature, and much like the .com bubble that resulted in the appearance of Google and Amazon, we are going into that space where we’ll start to see the beginnings of major apps emerging who use blockchain.
What’s the #1 challenge to blockchain adoption in the accounting industry?
While cloud technology is now a given in the UK accounting sphere, it has taken roughly 10 years for it to get there. In the same way, blockchain technology is currently at its infancy, and has a long way to go to be at the early majority stage in the accounting profession.
Blockchain is going to have to go through a similar trend and process to be fully accepted by accountants, and potentially one of the biggest challenges to overcome on that journey is converting the more traditional firms to adapt and adopt the latest technological advances.
There is no denying that the accounting industry is seen as a traditional space. According to the FRC’s July 2017 report of Key Facts and Trends in the Accountancy Profession over 60% of members of the ICAEW are 35+ in age. Arguably, these statistics support the reasoning behind why the accountancy profession remains conventional and reluctant to change.
Resistance could stem from disinterest in new innovations or it could also be because there has been so much change recently with auto-enrolment, FRS102 and Maxing Tax Digital (MTD) that it is tedious and hard to keep up.
The challenge for blockchain is not that it isn’t useful - there are many use cases for the technology in financial services and outside of accounting such as ID verification in Estonia - it’s whether accountants are willing to go through another innovation and change in their industry.
What’s the #1 benefit for blockchain in accounting?
Blockchain technology provides transparency, allows for speed and enables automation in the accounting profession. It has the potential to enhance accountancy by reducing the costs of maintaining and reconciling ledgers, and from an audit perspective we are able to see with absolute certainty the ownership and history of assets.
By obliterating menial tasks, the automation that blockchain technology offers in replacement gives accountants the time and resource to better serve our clients, move away from compliance, and focus on consultancy.
The ICAEW agrees in stating that “Blockchain could help accountants gain clarity over the available resources and obligations of their organisations, and also free up resources to concentrate on planning and valuation, rather than record keeping”.
What’s the future of blockchain in accounting?
There is a long road ahead for blockchain. We are a long way off from full scale adoption, but eventually blockchain technology will revolutionise the way we record and exchange value in the digital age.
Blockchain is here to stay and with blockchain technology as the foundation, the potential aftermath could result in further benefits for accounting such as triple entry bookkeeping. In addition, blockchain technology provides the platform for artificial intelligence (AI) to scale and thrive.
How Futrli reimagines the small business landscape
Hannah Dawson is the Founder and CEO of Futrli and has just been named as part of the Maserati/Sunday Times top 100 entrepreneurs to watch. Futrli is a UK-based tech scale up whose Classic product supports 1,100 accountants and over 45,000 small businesses worldwide. They are Xero’s Practice app of the year and won a place on this year’s Tech Nation Upscale 4.0 programme, where the likes of Monzo have thrived before.
Futrli has been building a new platform over the past two years that complements Classic’s traditional forecasting and reporting capabilities. The platform reimagines how a small business works and succeeds every day, and with launch imminent, Hannah’s full steam ahead, but excited to talk with Accounting Insight News before her session at Accountex 2019 at ExCel.
AIN: Hi Hannah. Let’s take a brief trip down memory lane - tell us about founding Futrli...
HD: Futrli was born from my own experience as a small business owner. I was working in hospitality, running a pub in Devon. There were some simple things around the business’ financials that were far harder to get a handle on than they should have been, such as getting an up-to-date overview of our cash flow. Then I was landed with a hefty tax bill I didn’t know was coming, because the information on running the financial side of a business was so lacking. It nearly closed the company’s doors.
I needed a way to run the business with eyes on the future, not just the present or the past. Making decisions was difficult and full of risks because I didn’t have all the relevant information in one place when I needed it. So after doing some research, and realising there was a significant gap in the market for this specific type of software, I founded Futrli.
AIN: And how’s Futrli evolved since you founded it?
HD: Nearly five years later we have 100 people with offices in the UK, Australia and New Zealand. Futrli Classic has done brilliantly and we’re incredibly proud of where we’ve got to. But we’re only just getting started.
We are nearly ready to launch our preview release of our AI driven smart platform for small businesses. It has a range of products that have been designed after careful research and design, which solve the most pressing pain points that small businesses face (and the accountants that support them). There’s no gold standard for the tools you use to run a small business. Our platform is this.
AIN: Why do small businesses need help?
HD: Despite all the technology available in the marketplace 50% of small businesses fail in the first five years. Something is broken. Classic is used for bigger small businesses and their reporting needs, but for the 90% of small businesses that don’t prepare monthly management reports or rolling forecasts, numbers are often a scary thing. They don’t have finance or analyst teams interpreting the data they generate every day - they need help.
The new Futrli platform is for the 90%. It discovers information; interprets it into real words and prioritises the most important things that need to be actioned every day: simple!
Whether that is something within non financial data sets, future cash flow issues or getting paid by your customers.
The benefit for our accountants it that Futrli Platform makes it quicker, easier and extremely cost-effective for accountants to service the remaining 90% of small businesses that they simply don’t have the time to get to.
The platform does the heavy lifting, every client knows exactly where they are today, and when there is a question about what to do next from the small business, the accountant is given an opportunity to service a client who would have gone unnoticed before or would have not been deemed the right fit for advisory.
Advisory will finally be democratised and Futrli accountants will be deemed heroes! Depending on whether you use the free or pro version of each product will dictate the opportunity for the accounting firm. Pro gives deeper information so that even more heavy lifting is done and there is a richer base for advisory opportunities to present themselves.
AIN: And what’s the first product to be launched?
HD: The first product to launch is Flow. Flow helps small businesses who are stressed about not getting paid and how much they owe by using the power of AI to understand customer and supplier habits. There are lots of payment chasing apps out there but what’s missing from many customer focused products is that there is no actionable detail. We’ve got risk assessment, dependency levels, customer ranking (who are your top 10 and worst for x/y/z), and because the platform doesn’t just pull data, it pushes it too, smart workflow is created as you can create invoices/bills etc directly from the platform and straight into Xero and QBO.
Layered over the top of it all is the AI driven predictive element. It’s all well and good having credit terms, but when will your customers actually pay you? Flow gets to the heart of the problem and gives you solutions.
AIN: And there are free features too?
HD: Yes! Our smart daily newsfeed for your business. We all consume information every day by scrolling until we are caught up: think Facebook, Twitter, LinkedIn - so why not one for your business? Pulse is where you login to the platform. It’s where information from all activated products is prioritised and the next best action is recommended. It’s very cool!
If the status quo of software for the 90% is broken, let’s reimagine a new way with the smartest workflow, for every data source and pain point, so that small businesses are de-risked, de-stressed and can focus on why they went into business in the first place!
AIN: What does the future hold in store for Futrli?
HD: We’re really excited about all the products on Futrli Platform. After we’ve launched Flow and Pulse, our free newsfeed, next in line is Predict. This is forecasting totally re-imagined.
It helps small businesses who are uncertain about the impact of their decisions, by combining their knowledge with AI-driven predictions to forecast their future, and again the most amazing workflow has been created to ensure it’s something a small business will actually want to do every day.
Then we have Playground. It helps small business teams who are tired of juggling multiple data sources and making decisions in silos. It brings teams and information together to deliver coordinated and faster decision making and execution. It’s a world first and takes funnel to a whole new level!
We’ve got more products up our sleeve for later in the year, but you’ll have to interview me again to find out more!
Tips for effective brand building
In this digital age, where consumers are drowning in an ocean of branded pap, companies are beginning to learn that they live or die by the strength of their brand and how they market it.
With ever increasing online and offline channels, and social media dominating Gen Zs' daily information source, identity and differentiation are becoming vitally important. ‘For markets, differentiation today is more challenging than at any time in history - yet it remains at the heart of successful marketing’ (Alastair Dryburg). So here are some tips on conveying your authenticity as a brand in today’s marketplace.
1. Brand - do you know who you are?
A cohesive, consistent and authentic brand across all area’s of your business is crucial. Branding goes deeper than stationary sets, fonts, brand colours and attire. A true brand includes a strong vision and a purpose towards which you and your team can strive. Establishing a strong core values framework early will allow you to shape key components of your business, like your customer journey and website. This way, your brand will really resonate.
At Clarity we have a core values framework called ‘LIAISE’ which enabled us to embed our core values into our day-to-day business. If you would like a copy of this, please get in touch.
2. Clients - do you really know who your ideal clients are?
Understanding who your clients are (or who you want them to be) is really important too. Communicating the right message, in the right way, on the right channel, ensures your firm’s services don’t get lost.
Creating avatars of your ideal clients is a great activity for the whole team, allowing them to truly understand who they are and how yo connect with them.
Do you know their fears, wants and needs?
What keeps them up at night?
Do you know where they hang out, both online and offline?
Do you know who their influencers are, and where they get their news from?
Do you know what types of messaging they prefer and trust?
3. Social Media
Not only is social media free, it offers direct access to millions of prospective clients. Like content marketing, the strength of social media marketing and building a true brand identity, lies in the development of a consistent voice.
There are many different platforms and it’s important to identify which ones are used by your ideal client-base so that you can target specific ones. Agree on appropriate (and often different) messages for each channel with matching and clear call to actions.
Being active on social media is a brilliant way to promote your firm without having to spend money on paid advertising. But, don’t rule out promotions on social media channels, as it can often be cheaper and more targeted than google adwords. Simple automation tools like buffer.com and paper.li are really useful for managing multiple social media channels effectively.
4. Events/Networking/Speaking
Branding isn’t all about online - we are in the people business and it is all about relationships. There is no substitute for direct personal connections, and you never who you might meet by networking at an event. Webinars are a very effective use of time and resources - zoom is a great tool to host panels and can also be a brilliant way of recording professional looking videos for you to share.
Your brand is your one true differentiator. By understanding who you are, who your ideal clients are and sharing the components of your brand consistently across online and offline channels, will ensure you rise above the pap.
CMA recommends shake-up of UK audit market
The Competition and Markets Authority (CMA) wants to see big changes to tackle serious competition problems in the UK audit industry.
Legislation is needed to take on the vulnerability of the sector to the loss of one of the Big 4, and the current "inadequate choice and competition."
The CMA is recommending the separation of audit from consulting services, mandatory ‘joint audit’ to enable firms outside the Big 4 to develop the capacity needed to review the UK’s biggest companies, and the introduction of statutory regulatory powers to increase accountability of companies’ audit committees.
The CMA’s recommendations follow extensive discussions with audit firms, investors and major UK companies on its update paper – published in December. They also take account of the recommendations of a major report from the Business Select Committee, and the inquiry into regulation led by John Kingman.
The recommendations are:
Operational split
Auditors should focus exclusively on producing the most challenging and objective audits, rather than being influenced by their much larger consultancy businesses. Given the difficulties with an immediate global structural split, the CMA is – at this stage – recommending an operational split of the Big 4’s UK audit work. This will require separate management, accounts and remuneration: a separate CEO and board for the audit arm; separate financial statements for the audit practice; an end to profit-sharing between audit and consultancy, and promotions and bonuses based on the quality of the audits.
More choice to increase resilience: mandatory joint audit
More choice and competition for the audits of big businesses can and should drive up their quality, but the barriers to entry for ‘challenger’ audit firms are currently large. The CMA recommends mandatory joint audit, to increase the capacity of challengers, to increase choice in the market and thereby drive up audit quality. Challenger firms should work alongside the Big 4 in these joint audits and should be jointly liable for the results. There should be initial limited exceptions to the requirement, based on criteria set by the regulator, focused on the largest and most complex companies. In addition, any company choosing a sole ‘challenger’ auditor should be exempt. Audits of exempt companies may be subject to rigorous, real-time peer reviews commissioned by and reporting to the regulator. The joint audit requirement should remain in place until the regulator determines that choice and competition have improved enough to address the vulnerability of the market to the loss of one of the Big 4.
Regulation of UK companies’ audit committees
It is essential that audit committees choose auditors by seeking those likely to provide the most robust and constructive challenge to the accounting practices of their companies. The CMA recommends that the regulator should hold audit committees more vigorously to account. This may include ensuring that committees report their decisions as they hire and supervise auditors, and that the regulator issues public reprimands to companies whose committees fall short of adequate scrutiny of their auditors.
A 5 year review of progress by the regulator
The regulator should review the effects of these changes periodically, in the first instance five years from full implementation. This should consider in particular: the merits of moving to independent appointment for auditors; whether to go beyond the operational split already proposed; and how to fine-tune the joint audit remedy to adapt to market developments.
CMA Chairman Andrew Tyrie said: People’s livelihoods, savings and pensions all depend on the auditors’ job being done to a high standard. But too many fall short – more than a quarter of big company audits are considered sub-standard by the regulator. This cannot be allowed to continue. The government now has three reports to hand. In large part, they come to similar conclusions. Conflicts of interest cannot be allowed to persist; nor can the UK afford to rely on only four firms to audit Britain’s biggest companies any longer. Early action will require legislation – hence the CMA’s proposals.
CMA’s Chief Executive, Andrea Coscelli, also commented:
The UK is recognised as having a strong history in the fields of corporate governance and accounting.Our recommendations, along with improvements to regulation and clarifying the purpose and scope of audits, will ensure the UK strengthens its position.We look forward to supporting the government as it considers how best to take forward these changes through legislation, alongside Sir John Kingman’s recommendations on regulation and the results from Sir Donald Brydon’s review on the quality and effectiveness of audit.
Avoid accounting software mishaps with bluQube
No one plans on software purchases ending with furiously typing a misspelled, ALLCAPS rant on a user forum… But what do you look out for to stop this?
Here at bluQube, the words “It’s not at all what we expected,” are heard too often from our new customers…
Lots of software buyers have told us exactly that when explaining why they needed to replace recently purchased accounting software.
Nobody plans to have their software purchase experience end with them furiously typing a stream of misspelled, ALLCAPS rants on user forums, but there sure are a lot of those out there.
When new customers come to bluQube, we find that there are a few main reasons why.
It could just be time to change, maybe a falling out with a supplier through extended and over priced implementations, but most of the time it’s due to a business out-growing their software.
When there is too much manual input and re-keying of information…
It takes an age to report, meaning by the time the meeting has come around – the data is out of date and probably inaccurate!
We hear lots of stories from clients who thought they were buying X but ended up with Y, so here’s our top list of things to be aware of…
- Surprise limitations on user licences. Not every user license is a full access license. Different vendors have different licensing models so make sure you know what they’re quoting for.
- Unexpected annual support costs. Very often the first year of support is bundled in with the initial cost of licensing software. The bundling of support costs can easily skew expectations for ongoing costs and total cost of ownership.
- Database and required software licensing. If you’re only tallying up the licensing costs for the actual accounting software, you might have some more software line items to add to find your true costs.
- Lack of integration. Integration might mean that you need to manually trigger a process to export data from one program to another and plan for data inconsistencies between updates. Find someone who offers True Interoperability.
- Poor support. Long waits, communication issues, inexperienced support agents, or limited support availability hours can all turn even simple problems into major inconveniences. We pick up the phone within two rings.
- Know their methodology. Implementations should be fixed price so you’re not strung along for months and being charged for it! You also need to find a partner to work with, you shouldn’t just be left to it.
- Records limitations. Certain product offerings will cap the number of records that can be stored in the software, in order to keep users from running into slow response times. Users who approach records or file size limits generally face a choice between upgrading their software or removing data from the system – which isn’t possible with UK auditing standards! Find a cloud that can expand and contracts as you do.
If you want to find out what it's like to work with an accounting software partner, opposed to a supplier, check out how we helped Oscar and Ruby here and get in touch! With bluQube, there’s a better way… 08456 44 77 88
The case for cloud document management
Let us start by defining document management (DM) to mean any software system that maintains a centralised repository of documents such that it assists in finding and organising documents, while facilitating office processes.
So a DM may be anything from a simple shared folder structure through to a sophisticated management system supporting full versioning, custom metadata, views, filtering, sorting, user access controls and document workflow.
Most professional businesses deal with vast numbers of documents and hence secure, robust storage for the document repository is a key IT concern and cost centre.
The question arises as to whether it is appropriate or worthwhile to also consider moving DM to the cloud, given that document creation, editing, storage and printing is all done locally within the office?
The on-premise rationale
Firms committed to in-house deployment for DM typically offer the following reasons:
• Considerable investment has been made in their own IT infrastructure with both staff and facilities and it therefore behoves them to leverage this investment.
• Physical security of servers is entirely under their own control and responsibility. Typically, only escorted access is permitted to on premise servers, and only their own hardware is permitted to be connected to their internal network.
• Electronic security is managed by virtue of firewall isolation from the Internet enabling controlled protocol level access to what is essentially an isolated private internal network.
• Application usage is controlled and centrally managed by IT to ensure that staff has a controlled and managed desktop working environment.
These measures are designed to protect the organisation from external threats such as hacker attack and virus penetration, and to ensure known levels of system performance, redundancy and backup.
The general belief is that internal installation of DM is necessary to maintain the level of security and robustness required by the organisation.
But is this really true and at what cost?
On premise deployments usually carry considerable IT costs, which bear scrutiny. Typically, there are 3 main cost centres:
• Cost to buy.
• Cost to maintain.
• Cost to backup.
How secure is it really?
No matter how much is spent on the on-premise or virtualised server environment albeit locked behind firewalls, it seems repositories are still vulnerable to attack by malware such as crypto-locker, which infiltrates via email or web access.
Introducing cloud document management
CDM is a cost-effective solution for document-minded businesses, and provides the following benefits:
• Unlimited file storage - no more running out of disk space, no more expensive server upgrades.
• Permanent archive - no more tapes, just an unlimited permanent online archive, never lose a thing.
• Collaboration - no uploads, no downloads, no copies, just single source shared documents.
• Security - securely encrypted file store replicated across world class data centres.
• Accessibility - view and edit your files online, anywhere, anytime and on any device.
So true cloud application technology allows all traditional costs of owning or leasing equipment, maintaining it and backing it up, to be eliminated. It allows you to eliminate expensive IT support services for host servers. It is the way of the future.
Improving practice efficiency…and compliance
A well-run practice ensures happy clients as well as enhanced employee experience. Managing complex business activities of clients also requires accounting firms to have a well thought-out practice that is able to seamlessly gather and process data, while keeping track of regulatory compliances.
Today’s disruptive technology is a boon for firms as it allows them the opportunity to bring in increased efficiency and automation while lowering operating costs. Client expectations too are changing, requiring their accounting firms to use more sophisticated technology in their operations. This requirement is predominantly driven by their need for a more efficient way of interaction between the two parties, as well as to help build confidence in the quality of services being provided.
Audit 2025, a report by Forbes Insights/KPMG, reflects these trends in its findings, while also showed that clients want firms to leverage technology for data gathering and analytics.
Leveraging technology to improve a practice also helps keep track of regulatory compliance requirements. Global operations of both clients and accounting firms make the regulatory landscape complex, requiring firms to pay more attention to compliance requirements.
The key component for a well-run practice is the team working for the practice. Well thought-out and streamlined practices will leverage paperless process automation and smart technology, help reduce repetative mundane tasks, leaving employees free to focus on complex activities and client management. In addition, it also helps boost employee morale.
One Paper Lane is helping accounting firms of all sizes digitise workflow and automate their practice areas and client management work, leading to improved efficiency and compliance. You get more than cutting edge technology with One Paper Lane, with our willingness to work alongside firms, help them review and map processes and bring in custom solutions as needed.
Who we are and what we do
We are One Paper Lane, the digital process automation and collaboration platform of the future. We are launching in the UK at Accountex on stand 490.
Our technology will enable you to streamline, automate and improve your processes. It can work together with your existing software, apps and tech tools. Our specialists also help you implement these improvements.
We have already helped accountancy and other professional services firms increase productivity and improve both the client and team member experiences.
Visit us and our UK partner, practice advisers Foulger Underwood, at Accountex. Alternatively, for more details, contact Julia Whistler at [email protected]
How much is disruptive technology actually disrupting accountancy?
The accountancy sector, like any other, is facing a sea change. The future is digital, not just for accountants but for everyone – at home and at work, the paraphernalia of our lives are leaving the page and being entered on to the hard drive. This is far from news. But despite the rising tide of digital information exchange, accountants work in what has historically been the slow lane of business development: finance.
Financiers are cautious by nature, and with good reason. When you’ve got the company’s money at your disposal, it pays to be careful before rushing into a new system, solution or infrastructure. No-one wants to be the unfortunate soul who unwittingly opens a system backdoor and sees the family jewels go rushing down the plughole.
Regulatory requirements also apply a natural brake to the speed of change – when your every move is dictated by compliance and you’re up to your ears in red tape, you’re a lot less likely to install the latest Shiny Object unless you’re sure it’s going to help you.
The balance of accounting
All of that means that accountants have to perform a high-wire act when looking to implement new technology that could help improve their services. They must take their clients on the journey with them, demonstrating the benefits of technology without bounding off ahead, missing the basic bookkeeping requirements that the majority of their customers still have. They must act as royal food-tasters, sampling the latest innovations and advising their clients on how they’ll affect their systems – and avoiding anything damaging. It’s a delicate pursuit.
New research that we will be sharing at Accountex has found that although many accountants are well aware of the benefits technology can offer them – improved accuracy, greater insight, reduced admin, deeper strategic understanding – they’re also seeing a slowness in actual uptake. That’s not because they’re lacking in vision or entrepreneurialism – quite the reverse. It’s because they have a responsibility to bring their clients along as they evolve and ensure that each innovation is up to best practice.
With that said, how can accountants communicate the value of digital transformation clearly and enable not only their own practices but also their clients to get the most out of emerging technology?
Technology feeding strategy
The answer lies in value-add services. Accountants that limit their vision to bookkeeping are missing a massive opportunity. As accounting software becomes more data-driven, integrating with other business services and bringing in data from across clients’ organisations, accountants have the chance to become valued strategic advisers. They can use their insight into the financials to provide advice on wider strategy.
For example, if they notice a sudden dip in revenues aligning to reduced productivity on the factory floor, they can begin a conversation with the client leadership about which areas need to be addressed to rectify the problem. Similarly, they can quickly pick up unexpected fluctuations in cashflow, whether they’re the result of error or fraud, and help the client to rectify the situation quickly.
The bottom line is that technology isn’t just a labour-saving device – it’s an intelligence-booster. Automating basic tasks definitely reduces the amount of back-end admin on which accountants have to spend their valuable time, but the really exciting thing is what they can then do with the time that they get back. A well-informed, data-driven accountancy firm can use the information that next-gen accountancy software gives it to grow its value in its clients’ eyes, not only improving stickability but also driving up revenues.
To answer our own question – is disruptive technology actually disrupting accountancy? It certainly is. The real question is whether accountants are keeping up. Those who take advantage of technology will have the jump on their competitors – now’s the time to get on board.
To find out more about the latest innovations in accounting technology and the findings from our industry research, visit Sage at stand 720 at Accountex London.
Preparing for your first submission in an MTD world
The 1st of April has come and gone but the transition to Making Tax Digital for VAT filing is far from over. The true impact of the change will be felt at the first VAT return submission. What should be top of mind for you is keeping digital records, reviewing your VAT clients and assessing your current processes to ensure they are fully compliant.
While it may seem overwhelming at first, start with these simple considerations as you prepare for your first submission.
How are you submitting VAT returns today?
Firstly, consider how you submit VAT returns today. Are you submitting on behalf of your client using a bookkeeping product, or using a spreadsheet to come to the nine figures only to manually type them into HMRC’s online service? Do your clients prefer to submit their own VAT returns using a bookkeeping product or HMRC’s online service? The final question should be, are these processes compliant and if so, do you want to maintain them?
How will you maintain digital records?
The next fundamental step should be to start maintaining digital records to ensure the first VAT return submission is compliant. The good news is that spreadsheets remain acceptable for digitally capturing data. For some, this might be the logical first step to digitalisation. Providing you use API-enabled or bridging software to make the final submission, you have the freedom to keep spreadsheets with valuable historic data and calculations in the process.
How do your clients currently submit their VAT returns?
Finally, in preparation for the first submission, whether you submit monthly or quarterly, you should be completing your final reviews on all your VAT clients to establish:
• Do they want to complete and file the VAT return themselves?
• Do they want your practice to prepare and file on their behalf?
• Do they want your practice to validate and file the return after they prepare the data?
Once you have agreed on how to proceed for each of your clients, the next step is reviewing the system you use today and even setting up a new system for monitoring your deadlines. This will ensure that you know when all the different activities are due and are alerted to filing deadlines ahead of time.
How do you currently monitor your VAT returns?
Research shows that most practices have been using spreadsheets to monitor returns, which tend to list out the key milestones and deadlines. One solution that practices are looking at is being able to set up an automated workflow within their tax and accounting software which incorporates the alert data, the activities and when they need to be completed.
The key question to ask yourself would be, is the process you have efficient and compliant? If the answer to either question is no, join us, Wolters Kluwer, at stand 1060 at Accountex on 1 and 2 May to find out how you can achieve both.