The recent implementation of Making Tax Digital was a huge shift for businesses and accountants alike – and the ‘soft landing’ period will undoubtedly throw up some opportunities and challenges.
But fundamentally, it’s worth remembering that digital accounting is not a short-term trend, and MTD is just one part of it. Over time, more and more elements of accounting will be digitalised. But the pace of change will be different for different firms – early adopters may well have a clearer roadmap in place for digitalisation, while others may be struggling to know where to start. In either case, being prepared to manage change is a necessity.
In my view, there are five key questions accounting firms must ask when preparing to migrate to a fully digital practice:
- How digital do you want your firm to be in 12 months, 3 years and 5 years’ time?
- What is your current technology setup and how are your team and clients using it?
- Do you have any key gaps in skills, technology or processes, and how can you fill them?
- How will you communicate the benefits of the changes to clients?
- Are your management team and staff fully on board?
The more digital your firm becomes, the more value you will gain. But the process of becoming digital will depend on how you address the considerations above, so let us look at each in turn.
How digital do you want your firm to be?
You don’t transition to a fully digital practice overnight. Not successfully, anyway. Rather, you will need to plan the scale of change and how quickly it will happen based on your firm’s people, skills, technology and resources.
Knowing what your firm does and doesn’t have, you can then set realistic goals for 12-month, 3-year and 5-year intervals, all working towards migrating to fully digital accounting. Phasing the transition like this allows you to create detailed plans for each stage, offering more control over the process.
As part of this, firms should also set goals for how many clients they want to transition in any given period. However, make sure to consider the technology each client has in place when doing this.
What is your current technology set-up?
Most firms now use at least some cloud technology, whether that’s in the form of shared document drives, cloud-based servers or suites of cloud-based apps. It’s therefore crucial to understand the extent to which your staff and clients are already using these tools.
As mentioned above, knowing what technology a firm has available can help you plan and set realistic goals for implementing a transition process. And if staff are already familiar with using digital tools and processes, they will adapt more easily.
Knowing what your staff and clients have tried before – along with any problems experienced – when it comes to adopting new technology will also help you identify and avoid potential obstacles.
Finally, in a large-scale data migration, consider whether you have the right facilitative processes in place for both desktop-to-cloud and cloud-to-cloud data transfers. The former is far more common, but most suppliers should be able to accommodate cloud-to-cloud processes as well.
How can you fill key skills, technology and process gaps?
Planning a transition to digital accounting should involve identifying two things from the start:
- Key gaps in skills, technology and processes at your firm.
- How you will fill these gaps when you find them.
This is important because your client relationships depend on the competence of your staff – and the reliability of the technology they use. And you can’t afford to damage trust with clients due to a lack of the right training, expertise, or tools.
For instance, you can’t afford to wait until after the transition to begin training staff on how to sue new processes and technology. This would make the changes difficult to implement and could lead to mistakes or oversights. As such, you must make sure you have the right people, teams and partners to take charge of important change management tasks. It’s also vital to commit resources to the transition – you can’t be half in and half out.
How will you communicate the change to clients?
To ensure a smooth change to a fully digital practice, you must keep your clients informed throughout the transition process. So as part of your initial plan, you should have a clear process in place to communicate with clients, explaining the nature and timescale of the transition and, more importantly, how it will affect them. Above all, make sure clients understand the benefits of the change – and be clear about how you will help them realise these benefits.
One crucial consideration here is whether to make certain tools or processes mandatory for clients. In some cases, clients may not be keen on being told what to do. But this is why you need to clearly communicate your reasons for making necessary changes.
How can you get staff on board?
Just as you need to communicate clearly with your clients, everyone within your firm should be fully informed about the transition process. Staff must have the right amount of insight into the scale and schedule of the changes, with no ambiguity about how their work may change after the transition. Be sure to explain how the firm will help existing staff adapt to the change, outlining plans for training sessions on new technologies and requirements.
And how about your management team? Well, even if they are not directly involved in planning and implementing the transition, you should definitely ensure they are kept as well informed as possible throughout the process.
Furthermore, hiring is an important consideration. You may be tempted to prioritise bringing the most experienced accounting staff on board, but it is equally important to hire people with the right enthusiasm for learning how to use new technology.
The benefits of getting digital change right
So, with all the above considerations in mind, what are the benefits of transitioning to a fully digital accounting practice? A few prominent examples include:
- A simplified compliance process via greater automation
- Insights into performance and growth opportunities
- Better analysis and mitigation of risk in projects and ventures
- Automated management of accounts
- Repeatable, transparent systems
- Compliance with regulatory changes in technology requirements
In summary, the shift to a completely digital practice will in most cases be a lengthy one, and not without its challenges. The advantages, nonetheless, are significant – giving firms an even greater incentive to get started now if they haven’t already.
Will Farnell, founder of Farnell Clarke and consultant at Soldo
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