Adoption of cloud accounting systems by practitioners grew by 50% last year, according to research by AccountingWEB. As an industry, accounting has gradually gone digital over the past decade and online accounting systems are now increasingly the norm in many larger firms.
This move to the cloud and SaaS financial systems has been driven by a number of benefits of the online approach – instant mobile access, real-time data and the enhanced ability to deliver financial reporting that drives your firm’s advisory capabilities.
But one key driver behind the switch to online working is the need to comply with the move to digital tax accounts and the Government's ongoing Making Tax Digital (MTD) initiative. To help your firm meet the challenge of MTD, we’ve highlighted 5 key steps for completing your digital transformation in the most effective way.
1. Get your practice systems digital-ready
The starting point for being digital-ready is to have your client’s financial information available to you as digital data – and that requires you to have the right digital systems at your disposal.
At the bare minimum, this means having an online accounting platform in place across all practices. With clients’ information stored in the cloud, this gives full access to their transactional data from every location in the firm, making workflows more efficient and allowing you to pull out the relevant tax figures, supporting documents and financial reporting.
Incorporating automation into your processes will also add value – including automated bookkeeping, optical character recognition (OCR) scanning software for data input and digital working papers – getting clients’ information into the digital domain quickly and efficiently.
2. Review your workflow processes
For SaaS systems and software automation to add maximum value, it’s important that your workflow processes are set up to make use of the key benefits of a digital system.
Review your internal processes as a firm and look for the efficiencies. Then, post-review, look to systemise the whole process of getting data into your practice platform, pulling this data into digital working papers, and managing the resulting workflow and actionable tasks.
With an effective, systematic approach, you can reduce the workload and quickly have clients’ data in a digital format that can be exported directly to HMRC’s proposed digital portal.
3. Educate your clients
Many business owners are still unaware of MTD and the imperative to be digital ready. To overcome this potential hurdle – and sell the benefits of being digital-ready – it’s important to make use of the firm’s communication channels to raise awareness.
Use your blog, newsletters, webinars and events to get the message out there. All VAT-registered UK businesses must be digital-ready by 2019, according to the latest guidance from HMRC. So there’s a pressing need to communicate the key benefits of a digital approach to your clients and to keep MTD front of mind with their management teams.
4. Work closely with your software providers
The details of HMRC's digital portal are still sketchy, with very little detail around how your accounting systems will integrate and share data with HMRC's systems.
With this in mind, it's important to work closely with your software providers to ensure their API will be ready to connect, and that your firm will have access to the relevant templates for exporting and submitting tax data direct to HMRC.
5. Plan for the digital change
MTD is one of the most significant changes in tax and accounting for a generation. It changes the underlying foundations of how your firm and your business clients will interact with HMRC.
It’s important to work this ongoing move to digital tax accounts into your planning and strategy. It's a key change in the whole accounting sector, and it's going to take time, effort and money to get right. The sooner you start the digital transformation process, the better prepared the firm will be when MTD becomes a reality for clients in April 2019.
Working in the digital space
Silverfin is a centralised data hub designed specifically for finance professionals. We help you collate your clients’ data in the digital space, making MTD less of a challenge for your firm.
Find out more about Silverfin at silverfin.com