Computers and technology have transformed the accountancy sector. Digital accounting – carrying out financial management and reporting in an electronic format – is the new norm.
Advancements in technology mean accountants can report on and interpret data much faster and more efficiently. This has changed the face of accountancy, allowing digital accountancy firms to enter the sector, offering a broader range of services than traditional accountants.
The impact of the cloud
Cloud technologyhas had a significant impact on the way accountants work. Accountancy platforms now have capabilities far beyond basic bookkeeping. They can communicate with other apps to create a business platform that your organisation can use to manage your operations. The platforms can also be accessed remotely on different devices, meaning you can do accounts-related tasks in real time. For example, you can scan receipts on a smartphone and upload them straight into an expenses app.
With many organisations using accountancy software to do their own bookkeeping, it has freed up accountants to focus on advisory services such as business planning. Accountants are becoming strategic partners to their clients, offering greater value by providing insight and advice to help with business growth.
Digital accounting and tax
Your business may still use spreadsheets and hand-written ledger cards to record financial transactions. If so, you will have to move to a digital system as the Government introduces measures for all businesses to file their accounting information digitally.
The Making Tax Digital initiative aims to simplify the tax administration system and phase out paper record-keeping.
At the moment, VAT-registered businesses above the £85,000 threshold must submit their VAT returns electronically. The Government was going to introduce other measures in 2020, but they have been temporarily postponed because of the coronavirus pandemic.
Future measures include accounting records being kept in a digital form and tax returns will be submitted electronically from HMRC-approved accountancy software.
Advantages of digital accounting
Digital accounting offers many advantages for your business over manual accounting methods:
Rather than having to wait until the end of the year to see your accounts, digital systems let you see your financial position in real time. As information is put into the system, it updates your records so you can access reports as and when you like.
Improves planning capabilities
You can take a proactive approach to business planning thanks to the real-time visibility digital accountancy software offers. You can adjust forecasts as you need to rather than at the end of the year, reducing the chance of issues impacting your business.
Accountancy software lets you access reports with one click, significantly reducing the time it takes to produce them. It also streamlines procedures and automates routine tasks.
Cloud-based accountancy software can be accessed from different locations and devices. It means you are not limited to being in the office to work on or view your accounts. Having all your financial data in one place also makes it faster and easier to find information and produce audit trails should you need them.
Your organisation has to comply with strict regulations relating to data, such as GDPR. Digital accounting software provides several layers of security to keep your data safe, such as encryption and firewalls.
Why your accountant needs to be digitally savvy
If you’ve bought into using a digital system for your accounting needs, you’ll need an accountant who understands technology. Technology can help advance and grow your business, so your accountant needs to have a digital mindset to support your needs.
They should be able to advise on the best software and apps for your business, ensuring they meet regulatory requirements and produce valuable management information. Your accountant will also need to have the digital tools in place to scale up according to your growth requirements.
Their staff will need to be trained to help you meet the requirements of the Making Tax Digital initiative. They should also be able to help with upgrading your accounting systems for the new tax reporting system.
Digital accounting will continue to evolve as new technologies emerge. Accountants will adapt their working methods and offer you more enhanced services over and above financial reporting. Make sure your business uses their experience and advice to help develop strategies to grow your business.