Firms back bookkeeping technology to bolster 2023 operations

The Software Insight survey of 175 UK accountants in practice asked what respondents will add to their technology stack next year. The strongest demand was found in bookkeeping, payroll and forecasting, planning and analysis (FP&A) tools. 

Overall, 19% of firms stated they plan to add specific bookkeeping tools to their operations in 2023, with 15% planning to add payroll and 14% with an eye on FP&A.

Much of the demand for bookkeeping software is driven by those classed by the Insights team as large firms - those with more than £2m in revenue. 31% of large firms stated they will be adding bookkeeping tools to their tech stack in 2023, while 12% of small firms (£100k to £250k turnover) and 16% of medium firms (£250k to £2m) will be doing likewise.

When it comes to bookkeeping tools, it could be argued that larger firms are operating from a less-developed base, with smaller practices more likely to have already adopted specific tools to enhance efficiency or client experience. The presence of more top-100 firms than ever at recent accounting tech tradeshows such as Xerocon backed this up on the ground.

The data plays into the overall “MTD effect” theory - that the government’s digitisation of the income tax self assessment scheme is encouraging accountants to bring bookkeeping in-house. Previous Insights results found that more than half of the practice respondents were either offering bookkeeping as a service or planned to within the next two years. And 43% of practices who did cite MTD as a reason for doing so – with new tools playing their part in delivering accurate data and ensuring firms continue to run smoothly.

The shift towards bookkeeping tools is also indicative of another trend at work in the profession – the growing adoption of online bookkeeping and data capture apps to drive an increased level of virtual finance services.

The virtual finance trend has been in and out of fashion among early adopter firms for several years, but ticked upwards in 2020–21 and appears to be spreading rapidly in 2022. 

The adoption of cloud bookkeeping tools is often the first rung on the virtual finance ladder, as firms that have made the leap report that bringing the books in-house secures better-quality data to work with. 

When the books are up to date, it’s a natural move for practices to offer services such as management accounts, and as the relationship between client and firm grows, the opportunities to slot in more outsourced finance function services such as forecasting or credit control present themselves.

When analysed with this in mind, data from the most recent Insight survey points towards large firms leading the way in this area, with a quarter (25%) stating they plan to add forecasting and planning tools to their tech stack, and 22% adding cashflow management and credit control tools.

“The adoption rates of these value-adding softwares such as Adaptive Insights, Chaser, Fathom, Float, Fluidly, Futrli and Satago are twice as high amongst early adopters, medium and larger firms than the overall adoption rate for firms,” commented Julian Green, AccountingWEB’s head of insights. “This is further evidence of growing numbers of firms extending their advisory services.”

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