Software and Technology are changing the Accountancy Industry

Ask most Accountants when software really started to take hold of their industry and they  will cite Making Tax Digital (MTD) as the catalyst.

However, software has been a growing part of the day to day function of Accountancy and Bookkeeping Firms for many years, be it Firm Management, CRM systems, Tax Filing software and even, dare I say it, good old Microsoft Excel!

Accountants play a very important role within the Business world. They enable their clients to create jobs, wealth, stability, and opportunities for all.

Is it then any wonder that technology, and software now play such an important and integral role in the day to day running of Accountancy firms? The answer is a resounding no.

How has Software and Technology changed the Landscape of the Accountancy Industry?

For some, the new GDPR legislation that came into effect in the UK in May 2018, led them to streamline and embrace technology. No longer was it acceptable to have papers just lying around an office or filing cabinets bursting. GDPR pushed Client data management into software, on the cloud, or other secure digital forms of record storage.

Accounting software has allowed Clients of Accountants to gain further control of their business finances. They can now view invoices, payments, and other financial transactions at a click of a button or a swipe of a thumb on their smart device. Online banking records that feed information into accounting software mean that the business owner and their accountant can quickly and easily access and view all the relevant data. Companies such as Xero, Quickbooks, Dext as well as banking Apps such as Tide now give users more visibility over their financial records than ever before.

The change hasn’t come without it’s deterrers, however. Some accountants have been reluctant to adopt new technologies.

For one, Accountancy Firms are built on trust and service. Deliver poor service and you will soon lose clients. This is true of any business! Accountants are very proud of their reputation. They are upholding, honorable members of the community they serve. It takes many, many years to become a fully qualified Accountant; even more to become Chartered. Then there are the years of experience required to specialise; be it within the field of VAT, Personal Tax, or Corporate Taxes.

Many will freely admit to being time constrained. The demands from Clients, HMRC deadlines and staffing issues can all add up to a poor work-life balance for Senior Partners and Managers. We have recently seen Big 4 firms taking proactive steps to move staff away from working weeks that have regularly exceeded 60 hours.

Software in the Accountancy Industry

Another point to consider is the Return on Investment (ROI) for any given Firm. Will a new concept, or way of working deliver increased revenue streams for them? The average profit margin for a UK Accountancy firm is healthy; with very few ever going out of business. 

I am lucky enough to spend my working days speaking with many, many Accountants. Most will gleefully tell me how several clients are second, third or even fourth generation.

The two biggest pain points that most of them highlight are growth strategies and recruitment.

So, this leads me to trying to find out how software has, and I hope will continue to, play a pivotal role in the day-to-day activities of the modern Accountancy Firm.

With recruitment proving difficult, despite many fabulous tax recruitment firms now being in operation, software can allow automation of compliance work in particular. It has freed up the time of existing teams and allowed them to open up conversations with clients around Tax Planning and Exit Strategies.

Related: Here’s why you should use an online R&D tax credit software portal

Automation and digitalisation

Remember when RTI rules came into effect for Payroll? Automation and digitalisation of that process meant that many Payroll Bureaus now run hundreds of payrolls for clients.

Quarterly VAT returns and Year Ends can now both be automated, in real time, with the correct software in place.

Providers have already written code to cope when Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) comes into force from April 2024.

So with automation comes a leaner, streamlined and more profitable Firm, right?

Well, I suspect it will vary from Firm to Firm. Software costs have added another outgoing for many; there are even pieces of software on the market now that bring various packages together into one, centralised package.

Related: How to remotely prepare R&D tax claims

The benefits of using a Software in the Accountancy Industry

In practice, it frees up the time of Client Managers, Partners and Directors alike to focus on looking forward with clients, as opposed to the traditional retrospective view many Accountants have had in the past. For Partners and Directors, it allows them to have a holistic view of staff performance and monitor time efficiency key performance indicators (KPI’s).

There are a great number of Accountancy firms who have embraced technology, software, and “cloud accounting” and are thriving because of it. It is the Directors and Partners of such firms who are looking towards the future of this industry. A future I believe is looking very bright indeed.

Software is here to stay; and if used correctly can be the basis of a truly exceptional, profitable and successful business.

Related: R&D tax relief for digital and tech companies – All you need to know

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