Research is highlighting a worrying trend of accountancy firms struggling to move clients to digital bookkeeping. IRIS Software Group has found three in five (61%) practices believe the greatest challenge is to move clients to bookkeeping software.
Given the conflicting reports on the readiness of UK SMEs in the run up to MTD, it is now clear most accountancy firms will continue to provide core compliance services. The IRIS survey revealed nearly two thirds (60%) of practices will provide bookkeeping services – especially those using paper receipts and invoices.
Nick Gregory, chief marketing officer, IRIS Software Group says,
Regardless of the countless reports on the readiness of eligible businesses, accountancy professionals are still relied upon for core compliance services.
Many SMEs are worried about the time and cost of adopting a digital approach to tax and compliance. As a result, they have - and will continue to - ignore pleas from their accountant and HMRC until absolutely necessary.”
There can be several reasons why businesses resist adopting a digital approach to tax compliance. Matthew Rawles, senior manager at GCSD Accountants, has found a huge lack of enthusiasm from owner/managed clients. “Especially in family-owned businesses, it’s often a non-IT literate parent, sibling or close relative who undertakes the bookkeeping. As the company evolves, they are reluctant to let go of the reins, especially when change is imposed at a cost.”
However, moving clients to digital bookkeeping is not akin to walking through treacle for every practice. Business leaders who have grown up with IT see the digitisation as positive, especially in areas such as bank reconciliation and receipt capture. Rawles continues, “the younger generation of business owners are used to IT systems, so love the idea and convenience of digital bookkeeping.”
IRIS has identified a knock-on effect in practice investment with over two-thirds (66%) of respondents investing below £1,000 to become MTD ready. Two in five practices (39%) have not changed practice technology and will be relying on bridging software; and almost half (48%) have invested in accounting software for use by clients.
Linda Gibson, director, Gibson Whitter, constantly evaluates practice technology and believes bridging software is a temporary measure. We always look to improve our practice technology. Our firm is growing quickly, so it’s logical to identify efficiencies and increase productivity wherever possible. Especially when it comes to compliance work; using solutions such as receipt-capture software is a no-brainer. However, we have steered clear of bridging software as much as possible, as it’s a short-term fix. We wouldn’t advise taking any client down this road in the long term.”
Nick Gregory concludes, “Bookkeeping software will be a fundamental tool in the future, so practices should use the ‘soft-landing’ period to encourage as many clients as possible to adopt a digital approach. This will free up time for the practice, allowing them to build on compliance services and capitalise on unexplored revenue opportunities.”
IRIS Software Group surveyed 231 accountancy professionals in early March 2019. Two-thirds of practices surveyed have 250 clients or under.