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How digitalisation can help your clients through a recession | Xero | Image of a business owner dealing with paperwork
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How digitalisation can help clients facing recession challenges

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Adopting digital processes and cloud software has many benefits for your clients and the time to make the move is now, says Stuart Miller, head of industry engagement at Xero.

2nd Mar 2023
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With clients facing the threat of recession, higher interest rates and increased costs, having conversations about digitalising their finances may be tricky. 

But digital solutions will enable them to save time that they can use to focus on adapting to the financial challenges they face. Meanwhile, the right software will arm them with better financial information, and your guidance can help them to find ways they could save money and thrive. Here’s how.

What is digitalisation?

Many forms of technology in accounting are helpful for clients, even something as simple as an Excel spreadsheet can bring valuable benefits over paper records. However, the real benefits of technology are when you actually transform your processes rather than just use digital tools to carry out the same old processes.

Digitalisation isn’t just making analogue information digital – it’s about moving existing processes into digital ones, using technology such as cloud-based software and automation to become more efficient. 

In other words, not just digitising information, but a broader transformation of business processes – from bank reconciliation to supplying accountants with financial records.  

What are the benefits of digitalisation for your clients?

Adopting digital processes and software has many benefits for your clients. According to our Xero Small Business Insights Special report, businesses in the lowest quartile of technology expenditure saw their sales fall on average by £33,600 between 2019 and 2020, while the highest only saw an average drop of £1,200. 

Could digitalisation help businesses as we continue through tough times?

One version of the truth

Cloud accounting provides an up-to-date, accurate picture of your clients’ finances because of the use of automated bank feeds, expense capture, and how data entered into the software connects an ecosystem of applications in constant communication. Change one thing in the chain, and the output updates to reflect it.

Now think about how that could help your clients during bad times. Jessica Pillow, founder and managing director of Pillow May Accountancy, did, telling us: “Given the challenges we’ve had with Covid and the challenges we now have financially, having up-to-the-minute business information at your fingertips is even more important than ever.”

Having up-to-the-minute business information at your fingertips is even more important than ever.”

The best part is that, as the accountant, with cloud software you see what your clients see, enhancing your advice by allowing you to work with the latest data rather than six-month-old figures – no more missed opportunities for critical guidance, which will be essential during 2023. 

Finally, accurate records from your clients

How much time do you waste chasing clients for information by phone or email trying to get documents or information that you need? It’s an incredibly frustrating – and costly – experience, especially during self assessment season. 

However, getting your clients online with digital tools can make things easier for them, helping smooth over their admin and make things more efficient. This will enable clients to save time, and allow them to focus on money-making activities and potentially save on staff costs without compromising good back-office administration.

Automation also minimises the chance of errors by removing the need for manual processes as much as possible, saving your clients money and your staff a lot of headaches trying to correct mistakes.

Pillow said this helps if her clients decide to record their financials themselves: “We can set VAT rules up so they’re unlikely to make as many mistakes. We can also run their file through something like Dext Precision, which will pick up potential errors.”

Improved relationships 

Digitalisation can also help clients manage and improve supplier relationships in several ways:

  • Improved communication: digitalisation enables businesses to share financial information with suppliers in real time, reducing the risk of misunderstandings. 
  • Improved data management: supplier data in one central location makes it easier to track supplier interactions and improve data management. 
  • Streamlined invoicing: cloud accounting software can automate the invoicing process, reducing errors and improving accuracy, leading to smoother supplier relationships. 

With real-time financial information, your clients can also make better-informed decisions and possibly negotiate better terms with suppliers. This will prove incredibly useful in a time of significant cashflow issues and disruption within the supply chain.

Making Tax Digital

While the delay to HMRC’s Making Tax Digital for income tax self assessment (MTD ITSA) gives sole traders and landlords some time until they are forced to keep digital records, digitalising their business well ahead of the 2026 deadline will ensure your clients are ready for the changes and have worked out an efficient process. 

Meanwhile, getting used to regular financial administration, as will be required by MTD ITSA, will mean clients have the data to make better-informed decisions for the future. 

“It’s not about being ready for MTD,” Pillow said. “It’s about doing the right thing for your clients and giving them instant access to business information.”

Digitalisation can boost the profitability of accounting firms too

Digitalisation doesn’t just help your clients – it can help your accounting firm too. After all, you’ll experience every benefit a client gets from technology if you do their accounting and bookkeeping for them. 

Implemented the right way, that should save you time which you can reinvest into your business by onboarding extra clients or focusing on more profitable services. 

To put some figures to it, we found in our 2022 Industry Performance report that firms with 0–25% of their clients in the cloud had an average revenue per client of £1,334; on the other hand, firms with 75–100% of clients in the cloud had an average revenue per client of £1,636. That’s a 26% difference.

Want to learn more about how digitalisation can benefit your firm and clients? Check out Xero’s free whitepaper written in partnership with AccountingWEB. 

Xero provides cloud accounting software for accountants and bookkeepers. Get in touch to learn more. 

Replies (1)

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By Hugo Fair
02nd Mar 2023 15:43

Can't help feeling a certain degree of déjà vu ... all the way back in time to those halcyon days when software vendors couldn't rely on HMRC to generate sales for them (MTD RIP)!

It's good (no really) to see a return to trying to promote actual benefits to prospective purchasers - but I'm still waiting to hear something a bit more concrete than the unproven assertion that 'digitisation' will always lead to greater accuracy and less effort.

BTW one of my sons has just sent me the hot new t-shirt from LA - which says:
"T h e r e i s n o C l o u d
It's just someone else's computer"

Thanks (2)