Back to the Future - Episode Two: Technology impact on UK firms in the last 12 months - key observations
Well, what a 12 months that has been! Who would have envisaged a year ago the way we are working at the start of 2021?
Authored by Rich Neal and Kevin Salter of BBS Consulting.
Thinking back a little further, who would have envisaged the new buzzwords and acronyms that the software houses are throwing at us in conversations, articles, white papers and marketing materials, such as big data, artificial intelligence (AI), blockchain, the cloud, robotic process automation (RPA), deep learning (DL) and machine learning, to name just a few.
The image of the fountain pen pushing accountant, filling pages and pages of analysis paper with numbers is now (in most cases but not all(!)) a long way from the reality. It really is no longer sufficient to prepare annual accounts, often just in time to meet filing deadlines – nine or 10 months after the year-end! Accountants must change or die!
In all aspects of the role, be it in accounting, management accounting, tax, audit, insolvency, or anything else, it is technology that is helping to drive the changes. Some of the changes are also being driven by external sources, and HM Revenue & Customs (HMRC) is a case in point. Making Tax Digital (MTD) for VAT is a reality, MTD for Income tax and Corporation Tax are coming down the line and behind all this sits the technology.
It does not always work as it should. HMRC had some issues when MTD for VAT started, and, indeed, there are still some real issues now, such as problems filing returns. However, MTD, for better or worse, will happen! Whether the clients want to or not, they will have to keep “digital records” – and that will be a big challenge for many.
The “cloud” has been in the vocabulary for many years, and NetSuite had a web-hosted accounting software system as long ago as 1998. However, this was out of reach for small businesses who relied for years on desktop-based systems, until the mid-2000s when QuickBooks Online and Xero started the big revolution. This changes the traditional Monday to Friday 9am to 5pm routine and empowers the accountant to provide additional and more effective services, and all of this can be done whilst working at home – essential in the current situation.
With the onset of the pandemic and working remotely, cloud-based accounting software providers have been one of the major beneficiaries. Some of this can be attributed to HMRC as alluded to above, but much of it is due to the significant advantages that such products can bring.
The fintech (financial technology) industry is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. This industry is going from strength-to-strength and the innovation is continuous, with new products entering the space all the time.
The as-a-service revolution with on-demand software is the crucial key to all technology going forward, both from a supplier and an end-user viewpoint. The supplier can provide scalable solutions, adding on servers quickly and easily to cope with increased demand, and the end user has the use of leading-edge software, with little upfront cost.
The last 12 months have seen cloud products become household names. Zoom is a case in point and the virtual meeting is probably the biggest change in methodology in the last 12 months. The virtual meeting is now commonplace, with face-to-face chat, screen sharing, whiteboards, instant messaging, and other features being added and enhanced all the time.
The last year has also seen a significant shift in emphasis to firms providing advisory services, and again, technology is the key tool behind this move. Accountants expect advisory services will lead to growth in their business as the compliance aspects become (in theory at least) more and more automated. TV adverts from accounting software vendors intimate that filing a VAT Return is as simple as pressing a button. To a large degree it is, but how accurate is the underlying data? The services might be process advisory, app advisory, financial/tax advisory or business planning.
App advisory is a hot topic. A lot of productivity gains in the accounting space are driven by the eco-system of add-on products that provide additional functionality to the core accounting product, or link into them to transfer data between them seamlessly.
This does lead to a real problem in that many firms simply do not have the time or resource capacity to research the technology impact options, or plan and execute changes. They are too busy working ‘in’ rather than ‘on’ their business, but it really is not enough these days to just provide accounts software.
A benefit of technology and software is the ability to systemise methods of working, so that everyone works in the same way and produces the same quality output. This is one aspect of enhancing practice productivity. MyWorkpapers is one product which neatly fits into this category – and is cloud-based too.
So, 2021? Remote working tools are going to remain a top priority, and this will also lead to looking at working methods. Accountants can do a huge amount to help their clients through the tough times with the innovative use of technology.
Don’t be an ostrich and bury your head in the sand, hoping the changes will all blow over – they won’t - guaranteed!