Reshaping operations in the digital ageby
Digital tools have profoundly affected the accounting profession over the past decade, but the distribution among firms remains unevenly spread.
What can new platforms or systems offer accountants, and what does the future hold for those looking to get their firm on a digital footing?
In a similar way to the wheel or the printing press, digital tools have had a profound impact, not for their own sake, but because of what they enable people to do. From an accounting standpoint, digitalisation has had a transformative effect, not only on the way accountants perform their day-to-day tasks but also on the nature of the tasks themselves.
Traditionally manual tasks such as data entry and document management have been automated via bank feeds, data and expense capture tools and automated workflows, freeing up time for staff to focus on client care, new service lines or making their practice more efficient.
Automation has also changed the way
many accountants handle tasks such as reconciliations, payroll processing and financial reporting. Software tools can automatically categorise transactions, reconcile bank statements and generate financial reports at speeds much greater than humans can hope to manage. While current systems are by no means perfect,the time spent fixing anomalies is far less than the manual alternative.
Cloud-based practice management or workflow systems allow client work to be brought into the practice and allocated to the right member of staff at the touch of a button, avoiding the manual re-keying that previously accompanied the task. Such tools also enable real-time collaboration, allowing team members to work from different locations and enhancing communication among team members and clients.
Digitisation vs digitalisation
While some accountancy practices made an active decision that new technology isn’t for them, other firms have either avoided new tools due to a lack of knowledge or confidence, or adopted digital technology without first understanding its place in the accounting landscape, how new tools fit together, and what wider benefits they can bring.
There are tales of firms purchasing cloud accounting software, for example, only to map over their old process to the new tools, keying in data by hand and continuing with manual bank reconciliations, while simultaneously tearing their hair out at the fact that the time savings promised hadn’t materialised.
While this is an extreme example, there are plenty of other, smaller moves that highlight the fuzzy lines between digitisation (putting something that’s analogue, for example a paper receipt, into digital form) and digitalisation or digital transformation (where the use of digital technologies changes business processes or models, potentially providing new revenue-making opportunities).
So how are accounting firms using new digital technology? And what benefits are they bringing?
Do more of what you love
For Xero’s head of UK product compliance and industry engagement Stuart Miller, digital tools allow accounting firms to build efficiencies and a culture of continuous improvement, future-proof themselves against regulatory or market changes, and give time back to accountants to do more of what they love.
“From a practice standpoint, what are we passionate about?” said Miller. “Speaking to clients, learning about their business and finding ways to help them save tax or money. This gets practitioners excited and having real-time information available through collaborative cloud accounting technology makes this easier.
“For example, if a fully digitalised process allows you to have an up-to-date fixed-asset register for a client, you can flag to them that they’re about to hit the annual investment allowance threshold, so it might be worth holding off making that purchase until next month.”
According to Miller, technology also gives practices the opportunity to know their worth. “With better cost-checking measures in place, you can really see if a client is worth the firm’s time and find out if they’re profitable,” he said. “Some clients might not be, but provide 20 referrals a year. All this information can be readily available. It gives accountants and bookkeepers the power to prove their value and say ‘this is my fee’”.
By setting their tools and processes on a digital footing, Miller believes accountants and bookkeepers are shoring up their practices against changes that will inevitably come in the form of regulation, economic turbulence or other, unexpected events.
“Any new regulations that come in, you can move more quickly, with more agility,” he said. “Through the pandemic, many accountants using digital technology were able to adapt quickly to remote working and use all the tools available to get the quickest form of help to their clients.”
And with a wide variety of regulatory changes coming in the form of cross-border e-invoicing, tax digitisation, and digital ID and anti-money laundering rules, Miller believes technology allows accountants to cope with whatever is thrown at the profession.
Digital transformation also allows larger firms to keep their staff happier and more engaged. “New colleagues joining the profession have been brought up on smartphones, not adding machines and ledger books,” said Miller. “Younger staff members at practices will usually want to use technology to drive efficiencies, productivity and growth because that’s what they’re used to. Those forced to use outdated tools will simply look elsewhere.”
How can accountants make a start on digital transformation?
Wide-reaching digital change takes a long time, and the hardest part is to take the first step.
“Many firms start by looking to identify inefficiencies within their practice and reviewing services they offer, and whether they can do it better,” said Miller. “Once you’ve done this, you can then look at utilising technology to build efficiencies.
“There’s a bit of trial and error involved,” he continued. “The transition to a digital-by-default approach can be complicated and time-consuming and it’s difficult to have the confidence you’ve made the right decision. That’s why conversations are important, whether that’s with your staff, your clients, vendors, your representative body or other accountants at conferences or events.
“There’s a huge case for highlighting digital and digital transformation,” concluded Miller. “Whether that’s building efficiencies, having happier staff or better customer satisfaction. The ultimate end goal is to enjoy our working lives and give us enough time to enjoy life outside it as well. There are lots of accountants who are passionate about what they do, and digital transformation gives them the time to do what they love.
This article is an extract from our new editorial special report: “The practice innovation handbook”. Download it now to access expert advice and real-life examples to help you identify areas for improvement in your firm and make changes that will drive innovation and boost efficiency.