Share this content
UK Research and Innovation funds accounting technology startups
iStock_Workflow_sesame

Research fund feeds the next generation accountant

by

Making Tax Digital and the pandemic accelerated the adoption of accounting software and the cloud across the UK, that much is obvious. What is less clear is how a government R&D fund acted as a catalyst for some of this innovation.

24th Jan 2022
Share this content

Behind the scenes, UK Research and Innovation (UKRI) has been shaping the emerging digital accounting landscape by investing in software startups through the UK Government’s Industrial Strategy Challenge Fund (ISCF).

The ISCF is part of a wider effort to “level up” professional services with technology innovations that will help UK businesses to stay competitive on the global stage. This article highlights a few of the successes that the innovation agency has supported and how they are laying down a template for the future of accountancy.

For smaller accountants, the government’s intervention helped democratise cutting edge technologies such as artificial intelligence and other capabilities that were previously restricted to firms with large R&D and technology budgets. The ISCF initiative allowed tech startups to draw resources and data from across digital accounting and banking ecosystems to develop cutting edge applications tailored to the needs of the Next Generation Accountant. 

Bristol-based Xavier was one of those early pioneers. Now part of Dext and known as Dext Precision, the application formerly known as Xavier Analytics drew on Next Generation Service challenge funding to create a comprehensive benchmarking dataset and SME insights that accountants can use to offer targeted recommendations on their clients’ business performance.

At around the same time, “intelligent cashflow” app Fluidly grappled with the challenges of forecasting small business cashflows and helping them gain access to finance to help them through rough patches.

The complexity of the business finance market and reluctance of high street banks to lend without extensive information about the organisation put SME borrowers at a disadvantage.

Grant funding from Innovate UK helped Fluidly to connect its automated forecasting capability to a fast and hassle-free business funding service. Developed and tested in partnership with accountants, Fluidly can identify a client’s need or opportunity for funding, whether to resolve a short term cashflow issue or invest for growth.

The app offers specialist recommendations for funding and links to providers specific to the client’s need, while handling the necessary credit information. The 500 or so firms using Fluidly to provide targeted finance advice includes Azets, one of the country’s largest SME accounting networks.  

Also operating in the finance market, Capitalise.com expanded its capabilities with a funding recommendation service for accountants and their clients coupled with advanced benchmarking reports.

Capitalise.com recently secured £10m in investment to launch a new integrated risk management platform for accountants to identify and protect against unforeseen risks to their clients’ and suppliers’ credit position.

These are just a few examples of tools that can help accountants to enhance their business models with higher value advisory-based services.

While cloud-based accounting software is becoming the norm, these technologies do not come without risks to the professional and their clients. Security, privacy and confidentiality demand attention, as do a heightened understanding of ethics in the digital environment and what the technology can actually deliver. When harnessed responsibly, however, the benefits can be substantial.

To achieve this goal, accountants need to have an open mindset towards innovation and grow the right skills within their firm to use technology effectively. Some of these issues and challenges are being explored with UKRI funding by researchers at the University of Oxford Brookes. The resulting insights, planning scenarios and innovation toolkits are available from the Next Generation Professional Services Firm website and the companion AI for Services Network, which brings together AI businesses and academics with professionals working in law accountancy, insurance and finance.

The specialist knowledge and relationships accountants have with their clients will not be replaced by technology any time soon. But UKRI warns that if they do not make proper use of technology, they will be replaced by those who do. Ultimately the rewards of this digital renaissance will extend beyond accountancy to unlock growth and help the wider economy become more resilient.

Replies (4)

Please login or register to join the discussion.

avatar
By Hugo Fair
24th Jan 2022 12:36

I must be getting old ...

"UK Research and Innovation (UKRI) has been shaping the emerging digital accounting landscape by investing in software startups through the UK Government’s Industrial Strategy Challenge Fund (ISCF)" ... but none (or possibly one - it's not clear) of the companies promoted in the subsequent article are said to have received monies from that fund.

So is this about central govt investment in new & emerging technologies (as per China and much of the Far East) or just an excuse to hang a few PR puffs together?

I'd be interested (politically & economically) in knowing more about the former - such as how it works for the companies and external investors, what overarching vision it has and the qualifying criteria it applies ... plus a list of successes/failures to-date. Also is it based on the US model (where state investment is recouped via selling shares to the private sector) or the Singaporean model (where state investment is part of sovereign wealth)?

Thanks (3)
Replying to Hugo Fair:
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
24th Jan 2022 17:31

Those are really good questions, Hugo. I put my name to material that came from UKRI. We asked them for a follow-up interview to find out a little more about what's guiding their investment strategy for the sector.

I'll point them at your comments and add them to the points we'd like to discuss!

Thanks (1)
Replying to John Stokdyk:
avatar
By D V Fields
24th Jan 2022 23:08

It is difficult to understand how online accounting systems use innovative technology that would qualify for R&D; indeed some of those I’ve seen fail to grasp long standing techniques.

More incentives to encourage development would be welcome.

Thanks (2)
avatar
By Paul Crowley
30th Jan 2022 13:19

A simple question
The tests seem to be for something new
Is there any test that the new thing is better than the existing method of doing the same thing?

Thanks (2)