The accounting industry has been gradually adopting cloud software solutions in preparation for MTD. In the past year there has been a 50% increase in firms integrating digital software. The growth is seen in mid to large firms, but is there a risk smaller firms be left behind?
The countdown to Making Tax Digital has left many small firms wondering how they’re going to manage the integration. Then imparting the changes to their own clients to educate them on the new systems and requirements.
MTD from the intense workload during the pandemic is the driving force behind many small firms’ decision to sell or merge.
Added to this, a lack of simplicity. And cost-effectiveness in the UK accounting software market may prove to be a major compliance hurdle for many businesses. As the 2022 Making Tax Digital (MTD) for VAT deadline fast approaches, according to practitioners.
Marketing the Change to your Clients
Making sure the software fits with your varied client needs. And categorising them according to these requirements is imperative. But the main issue is educating clients to keep up to date data for the quarterly reporting. And how that is managed as part of a small business client service. There are some key challenges for small accountancy practitioners. Not only do they need to manage the internal infrastructure changes. But there is a need to also market out to their own clients to prepare them for the new world. Communication is key, so using email newsletters, automated email communication, and regular monthly updates is a good way to communicate effectively with your clients how they can be prepared for the upcoming changes.
Nigel Adams FCCA, Managing Director at Ad Valorem Group, outlines the importance of communicating with business owners that real time data of cloud accounting is invaluable to making sound business decisions:
“I think the key here is communicating to your clients about what’s important to them, rather than focusing on the out of the box benefits of cloud accounting. We find there are two main factors that are extremely important to business owners: their time and making good business decisions. We therefore base our marketing around outcomes, rather than the product features. For example, to make good decisions it’s important to be confident in the information you’re using to make those decisions. Utilising live bank feeds and data capture apps ensures the accuracy of the information being inputted into the system and ultimately helps ensure the financial data is high quality. It also speeds up the process compared to manually importing statements and keying in invoices, so a win, win.”
Making the right choice of software for your client base
The choice of cloud accounting products on the market and assessing what is right for the firm and their client base can be an overwhelming task for small practitioners.
Natalie Lamb Chief Commercial Officer at Silverfin explains the potential of technology for simplifying. And streamlining your client business, but warns of the potential pitfalls:
“Firms, as well as clients, have access to a wide variety of software solutions, from practice management and payroll. Through to digital file management and process automation. It can be bewildering and many can end up with a complex stack of different point solutions. In some cases they can even make business operations more complex.
To realise the true potential of technology in terms of streamlining operations. Buyers need to remain focused on the ‘why’ not on the ‘how’ — what are the challenges they want technology to solve. They need to take a look at the complete picture of their business and all their processes. Then they need to remember that technology is only part of the puzzle. The people aspect is key, taking people with them on the journey and ensuring there are people who will lead the implementation and make it work.
For firms that want to advise on digital solutions they must acquire the right skills. And knowledge of leading cloud computing and SaaS solutions. This probably means freeing advisors from some of the pressures of billable time to assess the solutions available. And build relationships with both clients and providers. Only by truly understanding the client can anyone advise on the best solution for them. What works for one business won’t necessarily work for another.”
Don’t do MTD, Digitise MTD
MTD offers practitioner’s the opportunity to enhance their workflows within their accountancy business and also improve the service to their clients. Dermot Hamblin, Accountancy Practice Business Advisor, highlights the importance of embracing change as an accountant:
‘Ch, Ch Ch, Ch, Changes was sung by David Bowie, but can also apply to the life of an accounting practitioner. RTi, MTD are just two of many regulatory changes that accountants have to keep up to date, without going anywhere near the huge amount of information that was generated by COVID – 19. The life of an accounting practitioner never stands still.
The first phase of MTD was implemented, not without its challenges, back in 2019. We should not forget the ambition of the UK Government to be the leading global tax collection agency.
Even with the delay announced by Government, MTD should not be on the back burner, but should be kept at the forefront of practitioner’s practice enhancements. It’s time to bed in, with both team members and clients, along with the ability to improve. Look at the MTD challenge as an opportunity that the accountancy business should grab.”
There are a few key dates in the diary for the first stop on the road to MTD:
- All VAT-registered businesses will need to report digital VAT records to HMRC through compatible software from 1 April 2022, regardless of turnover.
- The transition date for MTD for the self employed has now been extended to April 2024