Jargon-busting: speaking the language of your clients
A shift in the accounting industry has caused widespread reverberations. With changes to the typical client offering, and an increase in fintech solutions, today's world of accounting is a far cry from the pencil pushing stereotype.
But what has remained intact is the importance of establishing, and maintaining, good client relationships. Formed on a basis of communication and honesty, these relationships determine the character and reputation of your firm.
In order to have these conversations, it’s necessary to avoid using too much jargon - or overcomplicated language. But how do you avoid it? And how do you listen out for the everyday concerns of your clients?
What is jargon?
Linguistically, jargon can be defined as a sociolect - which means that it’s a language used by a specific class, group, or profession. So, by very definition, accounting “jargon” ostracises those that don’t speak it.
For most accountants and bookkeepers, it’s second nature to use technical language when talking to colleagues or clients. And using acronyms just keeps things moving faster, imho. In a lot of ways, jargon can be a good thing.
But, being aware of the language you use is important, just as it’s important to know your audience.
Feelings of confusion
It’s this language that can lead to feelings of confusion and disillusionment for your clients. This, in turn, can culminate in less engagement with you, your firm, and most importantly with their numbers.
It is the curse of knowledge that can often lead to the use of highly complex language. Terms that are commonplace to you, even particularly simple, can alienate a client. For some, when you use technical terms, you may as well be speaking in tongues.
In the past, maintaining the position as a financial savant was accepted - even encouraged. Clients wanted to know that they were in safe hands with someone that knew what they were talking about - even if they didn’t.
But the world has since moved on. Relationships between accountants and clients are now becoming more balanced and business owners no longer wish to feel distanced from their numbers.
How better communication can help your clients
Having a simple conversation with your client about their business, their finances, and their stresses, can be incredibly illuminating.
Being the trusted adviser means being an active member of your clients' financial team. Spotting corners to cut, and cash-saving skills, are no longer enough in the world of modern accounting.
Instead, accountants must read between the lines for concerns over payroll, making it to the end of the quarter, and everything in between.
Speaking the language of your client can often mean that you understand their concerns before you even lay eyes on their forecasts or projections. It is essential to understand that speaking your clients’ language is a form of data collection that can’t be replicated in any kind of cloud-based app, never mind a spreadsheet.
It’s natural to want to be heard and understood. So make sure that your clients understand everything that’s being said to them. Don’t let miscommunication be your lingua franca.
Big accountancy firms tackle partners over sexual harassment
In a week when Deloitte joined other big accounting firms by admitting they had fired male partners for inappropriate sexual behaviour or bullying, it's worth just taking a look at the following comment.
“You can’t meet someone more junior to you in a bar on a Friday evening after work and assume she or he is attracted to you [and is seeking] a one-night stand. You just can’t do it.
“Some people definitely would have to have that explained to them. So we’ve been very clear on what is acceptable in our firm.”
Fire 20 of its partners
That's Deloitte chief executive David Sproul, amplifying his company's admission to fire 20 of its 1,000 partners over the past five years.
It's staggering. Not the numbers. But the comment itself. And the fact that it had to be made. And, even worse, the fact there are 'people' (And professionals, too!) who have to have that explained to them!
I mean, are we meant to be impressed by this sudden expression of openness and honesty by the Big Four? Really? It's nearly 2019 for goodness sake!
A few more facts
Anyway, rant over. Back to a few more facts on this story...
EY dispatched five UK partners because of inappropriate behaviour, including sexual harassment and bullying. That's out of 681 in the past four years.
Next up was KPMG. Seven of its 635 UK partners left in similar circumstances over that period.
Anti-harassment
Moving on to PwC... five out of 915. And BDO: one out of nearly 200.
Apparently, Deloitte introduced anti-harassment and discrimination training plus helplines a while back. The #MeToo movement on social media has also highlighted misconduct and other tawdry behaviour in business and politics.
Quite why the big accountancy firms have decided to open up on this now, though, is slightly odd.
Maybe the wider business community will follow. Though I wouldn't hold your breath, especially when you add those pesky shareholders into the equation...
Investigate HMRC powers, say UK Lords
With Theresa May's no-confidence vote monopolising the news agenda, it's not surprising that important matters are getting overlooked, ignored or dipping beneath the radar.
While the accounting/tax media homed in on the House of Lords' recent comments about HMRC, it still strikes me that this issue may be edging into the above territory. It's certainly worth revisiting.
In its report titled 'HMRC Powers: Treating Taxpayers Fairly', the economic affairs committee is basically calling for a wholesale review of the UK tax authority. The report concludes that recent powers given to HMRC undermine the rule of law and hinder taxpayers' access to justice.
It's serious stuff.
Widening the role
These are the key findings of the committee...
- The government should consider widening the role of HMRC's Adjudicator or increasing HMRC obligations to respond to and act on Adjudicator recommendations.
- HMRC should urgently review all loan charge cases where the only remaining consideration is the individual's ability to pay, and establish a dedicated helpline to give those affected by the loan charge advice and support. Such action should take place well in advance of the loan charge coming into effect in April 2019.
- The government should withdraw clauses 79 and 80 of the Finance Bill, which would extend HMRC time limits to assess offshore matters to 12 years.
- The government should withdraw its proposal, for which consultation closed in October, to remove oversight of the tax tribunal from HMRC access to information about taxpayers from third parties.
- Penalties associated with General Anti-Abuse Rule and Follower Notices restrict access to justice and should be abolished.
The government should legislate to give the First-tier Tribunal (Tax) the power to conduct judicial reviews. - The Treasury should assess whether HMRC is adequately resourced to fulfil its charter obligations in the next spending peview.
And this is what the committee's chairman Michael Forsyth had to say on the matter. "HMRC is right to tackle tax evasion and aggressive tax avoidance. However, a careful balance must be struck between clamping down and treating taxpayers fairly.
"Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer should expect.
Taxpayer safeguards
"Since 2012, perhaps due to reduced resources, HMRC has been granted some broad, disproportionate powers without effective taxpayer safeguards. High penalties, designed to deter some taxpayers from continuing appeals against tax liabilities, are a tax on justice.
"Some of these powers disproportionately affect unrepresented and lower income taxpayers. We took some disturbing evidence on the government’s approach to the loan charge.
This is devastating the lives of middle and lower income individuals, from the private and public sector (including the National Health Service) who used disguised remuneration schemes, in many cases being required to do so by their employers.
"The charge is retrospective in its effect, claiming tax from years which should be closed to enquiry. We have included some of the personal accounts submitted to us as written evidence as an appendix to our report.
"Clauses 79 and 80 of this year’s Finance Bill would introduce another disproportionate power. Extending HMRC’s time limits for assessing offshore matters to 12 years would place an unreasonable burden on a disproportionate number of taxpayers, who would be required to retain records for two or three times longer than currently.
"We need to work together to build new principles for the tax system, taking a tough approach to tax avoidance while treating taxpayers fairly. We recommend a new review of HMRC powers, and an independent review to consider new oversight arrangements for HMRC."
Tax accountants lag behind the MTD curve
I'm yet to see survey results that demonstrate the accounting profession is fully supportive of, and prepared for, the digital future. The latest piece of research by Thomson Reuters does little to change that.
UK tax professionals are still unsure how to get ready MTD for VAT.
About 70 per cent of the 146 tax and accounting professionals surveyed said they had developed plans, but not started implementation.
The research also found that 37 per cent will now halt changing policies until HMRC provides updates about the revised October 2019 MTD for VAT deadline for “businesses with complex requirements”.
Records maintenance
About 72 per cent say software and digital records maintenance top their MTD worry list.
Over 60 per cent of accountants still manually track VAT, despite 80 per cent saying they use the HMRC portal to submit VAT returns. That's up from 53 per cent in summer 2018.
According to Thomson Reurters: "Increased use of the portal is positive, but it is clear that finance departments are unsure on the technological and process changes they need to make moving forward."
Quick fix approach
When it comes to storing VAT info, over half of those asked still prefer the spreadsheet! And a third (34 per cent) believe that they will still use Excel to keep digital records relating to VAT post-MTD-implementation.
This would imply that they are considering a “quick fix approach to MTD for VAT”.
Kim Hau, of ONESOURCE Indirect Tax at Thomson Reuters says: “There is a real opportunity for tax accountants to embrace software that does much more than simply file a return.
"By accepting the inevitable move towards digital tax reporting, companies can use the new October 2019 deadline to implement indirect tax compliance software that will bring benefits such as automation, reporting, cost savings and improved compliance.
"It will mean businesses are ready for 2019, 2020 and other future tax changes, rather than taking a quick fix ‘sticking plaster’ approach.”
Thomson Reuters is a provider of news and information-based tools to professionals. Its network of journalists keep customers up to speed on global developments, with a particular focus on legal, regulatory and tax changes. For more information on Thomson Reuters, visit tr.com and for the latest world news, reuters.com.
UK skills shortage reaches critical levels
With continuous demand for skilled employees in some of the country’s highest growth sectors, the UK skills gap is a major and well-publicised crisis that, according to a report by Open University, costs the country more than £2bn a year.
Further, 97% of organisations working in STEM and 96% of financial organisations have had difficulty hiring skilled employees over the last 12 months.
In the tech sector particularly, a 2017 report by Tech Nation revealed over 50% of business owners in the UK digital tech community reported a shortage of highly skilled employees, while a quarter said sourcing talent was a major challenge.
To find out more, the research team at Bidwells compared industry vacancies against undergrad enrolments in 2017 to uncover which areas have the most significant shortages.
University enrolments v average Industry Vacancies
| Industry | Vacancies 2018 | Enrolments 2017 | Gap |
| Professional & scientific tech | 72,000 | 21,970 | -69.49% |
| Construction | 28,000 | 9,310 | -66.75% |
| Education | 50,000 | 16,745 | -66.51% |
| Health & social work | 133,000 | 64,115 | -51.79% |
| Manufacturing | 59,000 | 34,020 | -42.34% |
| Information & communication | 44,000 | 26,100 | -40.68% |
| Admin, financial & insurance | 94,000 | 79,095 | -15.86% |
| Arts & entertainment | 19,000 | 50,340 | 164.95% |
Data: ONS average industry vacancies 2018 and HESA full-time, first degree university enrolments 2017.
A combination of valuable economic skills and high-level technical education is critical to meet the UK’s skills needs, yet despite growing student enrolments in fields like computer science and tech, new jobs in these high-growth sectors still outweigh the number of skilled workers to fill them.
The latest British Chambers of Commerce Quarterly Economic Survey indicates the skills shortages are reaching critical levels, with 75% of businesses in the manufacturing sector and 71% in the services sector reporting recruitment difficulties. The Open University found 91% of organisations struggled to find skilled talent in the last 12 months, having to spend money on higher salaries, recruitment costs and temporary staff as a result. Brexit adds a further level of uncertainty for companies and their ability to recruit the best of the world’s talent.
High Growth Sectors Facing Challenges
The analysis of the university enrolments demonstrates the mismatch between market demand for skills and the future supply of talent is particularly acute in knowledge-based industries. This suggests current vacancies in professional and scientific tech positions are three times higher than the total number of university enrolments in these subjects.
Science and tech jobs are predicted to grow twice as fast as other occupations, with 142,000 new jobs in science, research, engineering and tech anticipated by 2023. Looking further ahead, The London Datastore projects the information and communication sector will be the second highest growing sector over the coming decade in the UK, with an estimated 45% increase in employment growth by 2050.
According to the Industrial Strategy, these sectors are the most significant to the UK’s economic future, but the shortages of suitably qualified, high-skilled labour will present a brake on the UK economy unless addressed.
Investing in Local and Foreign Talent
Will Heigham, Lead Partner for Science and Technology at Bidwells concludes:“Havin g already had a major impact on employment and skills, digitisation is set to cause even more disruption in the decades ahead, making it crucial for the current workforce to embrace continuously adapting skill sets and a changing workplace landscape. However, the analysis of UK university output underlines the fact that companies will need to continue to look further afield.
“In a survey by the British Chambers of Commerce, when businesses were asked how they would respond to a potential restriction on access to EU workers, only 43% said their business wouldn’t be affected, while some aim to pay additional costs to recruit from the EU, relocate businesses partially or completely overseas, or retain older employees.
“Preliminary results of our survey of major international R&D companies indicate skilled labour is the most important issue for companies when choosing sites for R&D facilities (Bidwells and Creative Places, 2018). The UK urgently needs to put in place measures to both deliver homegrown talent for the future as well as ease the process for attracting the best in class globally.”
What’s next in the world of MTD?
HMRC’s drive to become one of the most digitally advanced tax administrations in the world is gathering pace.
The first stage of Making Tax Digital is quickly approaching – it is only a matter of months until the first MTD VAT returns will need to be filed using MTD-compatible software. The use of the Government Gateway will no longer be available to those affected.
The changes will apply to VAT periods that start on or after 1 April 2019, although HMRC have confirmed that the deadlines for sending VAT returns and making payments are not changing.
Digital transformation
It seems that although the number of VAT registered businesses is rising, there are many that still don’t know enough about MTD or HMRC’s digital transformation.
The Office for National Statistics report that the number of VAT and/or PAYE businesses in the UK has continued to grow, to 2.67 million (as at March 2017).
However, according to research by the British Chambers of Commerce, a quarter of businesses have never heard of MTD and two-thirds know it only by name or sketchy detail.
Support businesses
This may be of concern to HMRC, who have in recent months, published further information to try to support businesses and agents in the run up to the mandatory deadline. This includes:
- Agent Update: Issue 66
- VAT Notice 700/22: Making Tax Digital for VAT
- Making Tax Digital for Business – stakeholder communications pack
- List of software suppliers supporting Making Tax Digital for VAT
The stakeholder communications pack provides agents with a source of material and information to support any communication with their clients as to what they need to do over the coming months as MTD progresses.
It is important that all agents take a look at the communications pack, which includes important facts about MTD (including the use of spreadsheets and software for digital record-keeping), the advantages of digital record keeping, key messages for agents and businesses, additional information and support and MTD related frequently asked questions.
What should agents do next?
In preparation for the mandatory deadline agents should:
- Invest time in understanding HMRC’s plans for MTD.
- Identify which clients are VAT registered and with a taxable turnover above the VAT threshold.
- Identify which clients are not yet keeping their business records digitally and understand what help and support they might need.
- Make sure an Agent Services account has been created.
- Contact software providers to find out when they will be MTD-ready.
- Decide if any clients are to be signed up to the MTD pilot and contact HMRC to register interest in taking part.
Taking part in the MTD pilot for VAT
When HMRC launched the private MTD pilot for VAT in April 2018, they initially invited a small number of VAT registered businesses who met a specific set of eligibility criteria to join.
As testing continues through to the end of 2018, HMRC hope to increase the numbers and types of businesses able to sign up in preparation for a public beta expected to be open before the end of the year (although a date for this is still to be confirmed). This allows HMRC to test the service ahead of April 2019.
To find out more about being involved in the private MTD VAT pilot, email HMRC at makingtaxdigital.mailbox@ hmrc.gsi.gov.uk
What information will HMRC need?
If an agent has identified a client that would like to take part in the pilot, when contacting HMRC it may be helpful to provide the following information:
- business name.
- VAT reference number.
- the Company Reference Number or National Insurance Number (NINO) – if a partnership the named partners NINO.
- the VAT Return Period stagger you normally file your returns (for example June, September, December, March).
- the software product you use to submit MTD VAT returns.
- if spreadsheets are used to maintain business records and/or help calculate the figures used when putting together VAT returns.
- whether the business intends to take responsibility for the whole process (sign up and submission with guidance from an agent) or if an agent will act on behalf of the business for all the responsibility or a mix of both.
Once an interest is registered with HMRC, this does not automatically mean the business will be signed up to MTD for VAT. Additionally, there is no commitment to sign the business up to the pilot, if there is a change of heart by either the business or indeed the agent.
HMRC will run checks to determine the acceptance of the business to the pilot and when HMRC expect to be able to invite the business to join the pilot.
HMRC will be keen to receive feedback from all participants in the pilot. This is said to include, on occasion, follow-up contact by HMRC user researchers, to ensure that MTD for VAT will be the best it can once the segment of the industry is required to file MTD VAT returns.
This gives HMRC the ability to talk to businesses, agents and software providers to get a holistic view of how the MTD VAT Pilot is progressing.
How will TaxCalc help me be ready?
TaxCalc VAT Filer was MTD-ready in October 2018. VAT Filer will continue to allow use of the Government Gateway for those clients not signed up to the pilot or who are below the VAT threshold (£85,000).
TaxCalc MTD VAT Filer will bring you:
- an innovative way to import from Excel spreadsheets into the VAT return.
- smart ‘VAT Adjustments’ tools to amend imported VAT figures (and store the history of any adjustments).
- full use of HMRC’s APIs for VAT which include:
- Retrieving VAT periods (also known as obligations) e.g. 01/01/2019 – 31/03/2019.
- Retrieving VAT previously filed VAT data, e.g. the figures of each box on the fulfilled VAT return.
- Retrieving Payments & Liabilities, a history of the client’s VAT account.
For more info check out our MTD VAT Filer.
- Thanks to TaxCalc and the ICPA for this article.
Software leaders predict bright future for bookkeepers
The bookkeeper is an endangered species on the verge of being devoured in the technology jungle. That's what many industry observers are warning.
But it's not an opinion that was massively in evidence among the 400 or so at the Institute of Certified Bookkeepers' annual two-day summit in London this week. And they may well be right.
The idea that the future is bright for bookkeepers was not just the preserve of ICB chair and co-founder Garry Carter either. It was echoed by some of the leading lights from the jungle itself, the accounting software sector.
Change is getting faster
Sage's executive VP Jennifer Warawa recognised that the new work environment was challenging. "This is the slowest pace of change that we will see for the rest of our lives," she said - meaning that change is only going to get faster.
"Will technology take your job? No. But you need to evolve," she said. Jennifer outlined a strategy to move from being redundant to indispensable. And the key to that is remaining relevant.
Best route to the future
The best route to the future is summed up in these bullet points:
- Vertical markets - don't try to be all things to everyone.
- KPIs - focus on clear objectives.
- Packaging and pricing.
- Talent & recruitment.
- Client engagement: are you sure they're happy?
- A business development plan.
Keynote speaker Gary Turner, Xero's UK head honcho, had a captive audience... virtually. When asked how many in the room were Xero users, I reckon at least 60 per cent raised their hands. Gary brought his mum along to the show, too. She was a bookkeeper for his dad's business... and his inspiration. Nice.
Important to small business
"Everything's going to be OK," Gary told his audience. "Your role is important to small businesses. You need to harness the technology but keep the human heart. Bookkeeping is absolutely NOT going away.
"Accounting is still hard for small firms. So it's a huge opportunity."
FreeAgent's sales VP Nick Longden also focused on the opportunities brought about by artificial intelligence with an emphasis on open banking. I liked this analogy. "Just because you have good toothpaste doesn't men you can get rid of the dentist. So it doesn't matter how good your software is, you still need a good bookkeeper."
And on the subject of good bookkeepers. Congratulations to ICB veteran Jacquie Mount, who not only delivered some great practical workshops at the summit, she also received a 'life-time' Luca award at the Summit dinner for her contribution to the institute.
A beginner's guide to outsourcing for accountants
What is accounts outsourcing?
It’s very simple – Accounts outsourcing is when accountants or accounting firms contract out their work to an outsourcing company such as Fin-eX. This is done with the objective of increasing capacity, expanding business, meeting staffing shortages, and improving profitability.
As companies continue to operate on leaner budgets, some have found that outsourcing certain functions is a good way to keep quality up and costs down.
For many years, businesses have transferred services such as bookkeeping, accounting, and Controller/CFO services to third-party firms.
While once seen as an option for larger companies in the past, today the floodgates of outsourcing have opened and more and more companies are reaping the benefits.
According to a recent KPMG survey, about 40 percent of companies planned to increase their use of outsourced accounting.
Reasons to consider outsourcing to Fin-eX
Improve processes — One of the hidden benefits that many businesses don’t realise is that outsourcing your accounting function provides an opportunity to upgrade and improve your current financial accounting processes. Outsourcing vendors instil best practices and controls that can help improve efficiency and timeliness of data.
Save time and improve operational efficiency — By spending less of your day overseeing bills and payroll, you’ll free up valuable time that can be redirected back into managing and growing your business.
Save money and reduce overhead — Businesses typically spend 2 to 5 per cent of revenues to properly train and staff internal accounting departments. While it might not seem like a lot, outsourcing your accounting can actually lower your total costs by eliminating expenses related to employee benefits, training, hardware, and office supplies.
From a survey conducted by Fin-eX on our existing clients, it has been observed that by using Fin-eX clients can cut their costs by as much as 50 per cent.
Be proactive and scale — When you outsource your accounting you can expect to minimiSe large investments in human resources, technology, and infrastructure and maximise your production, thereby giving an opportunity to scale and react to change more quickly.
Data protection and security — We are ISO 27001 certified and approved employer for both ACCA and ICAEW. Fin-eX is also GDPR Compliant and gets audited on an annual basis – our quality checks and standards right up there! You can feel secured that your data is in safe hands.
So when is a good time to Outsource?
There really isn’t any bad time to consider outsourcing. Think about it, no matter if you have three or 300 employees, you still will have the same compliance requirements as well as payroll and reporting needs. The bottom line: the sooner you start outsourcing the sooner you can realize the many benefits and get ahead of your competitors.
But why Fin-eX?
Fin-eX has a qualified team of ICAEW, ACCAs, CIMA and MBAs led by FCAs and FCCAs with prior experience in PWC, KPMG, EY and GT practices. Our Professional team of accountants has detailed working knowledge of the UK financial reporting and tax compliance. The technical knowledge is constantly updated to provide the clients with the best quality service.
Fin-eX will be exhibiting at Accountex on May 1-2, 2019.
Learn more about how outsourcing to Fin-eX can help you reduce you operational costs and hassle.
BrandWatch: Numerable focuses on the human side of the balance sheet
Bristol-based engineer and entrepreneur Martin Coulthard has launched the Numerable web app to help businesses control their finances better.
The app, unveiled at Xerocon London, enables accountants to quickly produce engaging, graphical management reports.
Martin says: “We are addressing a fundamental need for people to understand their accounts, so they can make better decisions.
Tabular reports
"Many struggle to do this using conventional tabular reports. Our app overcomes the problem using a new, highly visual way to show the information.
"It also appeals to accountants as it saves them time, so practises can offer a cost-effective reporting service to smaller clients.”
Interactive plots
Numerable imports data from Xero cloud accounting. It turns reports into interactive plots supported by automated text explanations.
Advisers can add expert comments, create presentations and export to PDF. The company has applied for patents for its novel user interface, which has 1-click charting and needs no configuration.
Bristol-based metrology company Third Dimension is a pilot user.
Financial reports
Its accountant, Natalja Beesley, says: “I prepare financial reports in Numerable for our board meetings. The interface is very simple and easy to use.
"I can quickly identify the key points I want to get across, choose different plots that illustrate them, and add my comments. It’s great to come to each meeting with confidence that I’m ready to give a well-structured, engaging presentation.”
Numerable has been approved by Xero as a Connected App and is available with a free trial through numerable.io and the Xero App Marketplace.
Taxfiler launches smooth integrations
As bookkeepers and accountants brace themselves for another busy tax season, Taxfiler is launching integrations for KashFlow and Xero online accounting software to streamline the submission process.
The new integrations enable accountants to efficiently move information into one system, enabling submissions (tax returns, accounts and VAT returns) to be completed from a single compliance solution. Efficiency has never been so important in the industry, as professionals prepare for the changes required within the new Making Tax Digital (MTD) for VAT regime coming into force in April 2019.
James Reeves, director of Taxfiler says: “Digital record management and sharing is absolutely key for MTD. Every efficiency gain made helps drive productivity and streamlines the process for accountancy professionals. The new integrations are another step to ensuring core compliance can be done correctly, and help firms succeed on the MTD journey.”
Monthly subscription service
Taxfiler has rapidly established itself as a cloud-based monthly subscription service for agents and accountants to submit statutory accounts and tax returns for companies, partnerships, individuals and trusts.
Alongside QuickBooksOnline, trial balances from KashFlow and Xero are imported into Taxfiler Accounts Production. This is done by opening a client, selecting the Trial balance screen, choosing the relevant cloud bookkeeping option and entering user credentials.
Taxfiler says it will be announcing further integrations in the near future.