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Exact SME Barometer 2016
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UK accountants embrace cloud while SMEs lag

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8th Dec 2016
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The UK accountancy profession is near the top of the European league for cloud adoption, but only 16% of small business are inputting their accounts online, according to the Exact SME Barometer.

The Exact 2016 SME Barometer figures support studies this autumn from IRIS and Intuit QuickBooks that also put cloud take-up at around this level. While the cloud movement is well established among accountancy firms, the majority have made it very clear that they face significant challenges migrating their small business clients into environments that will be able to support the quarterly reporting requirements envisaged by HMRC in its Making Tax Digital initiative.

As part of its long-running international research project, the Dutch-based accounting software developer surveyed 2,500 professionals across Belgium, France, Germany, the Netherlands, Spain, the UK to investigate the relationships between accountants and their clients in different countries.

In the UK, 45% of accountants now use online solutions for administration. This is the second highest level of digital uptake in Europe, behind the Netherlands (60%), but ahead of Germany (35%).

The survey identified a drop in “spreadsheet accounting” from 25% in 2015 to 20% this year. While the number of UK small businesses entering their data online is still just 16%, that still represents a significant jump from the 10% recorded in 2015.

How businesses and accountants responded differently to some of the questions uncovered some of most interesting nuances in the Exact survey. The impact of digital disruption was very real for both parties, with 39-42% of SMEs worried about disruption from digital competitors and 56% exploring new business models.

When asked where they thought their accountants could improve, businesses answered:

  • 21% want their accountants to improve speed & responsiveness
  • 16% want their accountants to understand their market sector better
  • 14% want data analysis from their accountant
Exact SME Barometer 2016 - What SMEs want from accountants
Exact SME Barometer 2016 - What SMEs want from accountants
The survey had some good news for UK accountants who received 77% “satisfied” ratings from their clients, second only to Dutch accountants with 82%. This followed a less impressive 2015, which meant that over the past year the UK profession has enjoyed the biggest satisfaction surge of any country.

For practitioners keeping up with rules and regulations increased in 2016. With a 52% response rate, remains the biggest concern for accountants polled.

In contrast to the focus among clients on the speed and specialist knowledge of their accountants, accountants prioritised IT and software knowledge as the most pressing area for improvement (37%), followed by core accounting knowledge (33%) and communication skills (30%).

Exact 2016 SME Barometer: Where accountants want to improve
Exact 2016 SME Barometer: Where accountants want to improve

Faced with increasing demands for instant answers and commoditisation in the compliance services they provide, accountants are going to have more of an issue justifying what they do, Exact Cloud Solutions UK general manager Gavin Fell told AccountingWEB.

“If they become more specialist and knowledgeable about particular industries and provide pro-active, real-time support, that conversation disappears,” he said.“Lots of practices are reactive, but the UK accountants we’ve been talking to are saying they want to move away from that. For them, continuous improvement is all about being a specialist and the support they provide to business clients.”

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Adrian Pearson
By Adrian Pearson
08th Dec 2016 10:25

John, you talk of accountants having problems "migrating their small business clients into environments that will be able to support the quarterly reporting requirements" in the same sentence as you say "While the cloud movement is well established among accountancy firms".

Did you intend to infer that cloud bookkeeping software is needed to meet MTD requirements? Because my understanding is that desktop software could also have its part to play.

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Nigel Harris
By Nigel Harris
08th Dec 2016 14:34

I think the headline is out of date. The growth in cloud accounting in my firm has definitely been driven by clients. The tide turned at least a year ago as we were approached my more and more new and existing clients who were either using or wanted to move to cloud accounting.

We are now working on converting clients who have yet to make the move, but we find most clients are at least aware of the cloud now.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
08th Dec 2016 17:35

Caught again by your forensic textual analysis, Adrian.

I did indeed conflate those ideas, which was a bit presumptuous given that we still don't know the full scope of HMRC's reporting requirements.

But the examples frequently cited by ministers and HMRC staff concern people running businesses using smartphones to capture and upload their expenses and income figures. As long as they're not going direct to their personal tax account in some way, that presupposes some kind of cloud interface with any agent acting on their behalf.

In practical terms, the big challenge for practitioners doing quarterly updates is going to getting the figures back from clients in good time to check and possibly adjust them. With cloud bookkeeping tools, whatever the client has entered is there already.

There are tools like Sage Client Manager that can retrieve information, but not in the same instant, no-intervention way.

I know that with MoveMyBooks and CheckMyBooks you're right in the middle of some of those processes. Are you able to offer any further insights about MTD record-keeping arrangements that I don't know about? I'm quite happy to be corrected again if it'll help AccountingWEB members plan ahead.

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Adrian Pearson
By Adrian Pearson
09th Dec 2016 13:26

Hi John, please be assured that I don't sit around actively waiting for a chance to score points or look clever at an author's expense. On the contrary, I browse Accounting Web periodically looking for news and insight - and your article suggested an insight into the MTD plans that is not common knowledge.

There is currently much FUD surrounding MTD and lots of "will they, won't they" speculation about HMRC's ultimate plans. So, if well-connected commentators such as yourself (and Accounting Web generally) appear to have some "insider" knowledge, it is important to me to be sure whether it is true or not. My comment was seeking clarity.

Please note, this is not the first time I have sought to check the facts on this topic. See https://twitter.com/adrianpear5on/status/797122294552428544 (Intuit / 2020) and https://www.freeagent.com/central/making-tax-digital-consultation/ (FreeAgent). It is important to me, and your readers I suggest, to understand if apparently authoritative sources are "in the know", nudge nudge, or not, during such uncertain times.

You mention Movemybooks and Checkmybooks and, yes, our services will be affected by the changes that MTD eventually brings.

Since Movemybooks is a data conversion service for clients switching from desktop to cloud accounting services, if you had been confirming that "only cloud accounting software will do" then Movemybooks would need to plan and resource accordingly. However, if in January HMRC announce that, surprise surprise, actually "Excel will do" then our planning completely changes.

Checkmybooks automatically checks clients' desktop and cloud accounting data for accountants. Again, if HMRC mandated only cloud accounting software will do, then our product strategy for this product potentially changes dramatically.

I'm trying to work out what MTD means for my businesses and the wider accountancy environment, which is where our customers live. So, I'm keen to check the veracity of any and all claims right now!

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