Accountants can seem fearful of change, and their profession is described by some as slow-moving. This is strange, considering the bulk of their compliance work – tax and accounting – is an ever-changing beast. We discuss where to start your technological odyssey

Change in tax and accounting is relentless and seems to be picking up speed. For those that feel bogged down by the grunt work of manual processes, what changes can be made quickly that will improve their working life – and perhaps even provide a better client service?

For Nick Gregory, marketing director at IRIS, it is a tough proposition for smaller practices to add change that isn’t ‘forced’ upon them, particularly smaller ones, when they struggle to keep up with legislative churn.

However, the combination of digitally-focused rules such as Making Tax Digital and GDPR mean that firms must develop their systems and processes.

Ultimately, the starting point is the client. If their information comes into the practice in a standard digital format, then every other step becomes easier. “You have to decide: do I want clients to do their own bookkeeping or manage it as a service for them – and even outsourcing it to someone else?” says Gregory.

For Gregory, getting this step into place is virtuous: as cleaner, more accurate and timely data comes in, time is freed up to provide higher-value services.

“Train clients to be more efficient and then use that to drive up productivity,” he says. “A box of receipts gives you no intelligence; get it into a bookkeeping system and then into a more insight-based tech at your end, things then just snowball. If workflow tools are tied into compliance you can then improve communication to clients. And the extra transactional data you receive through MTD allows you to better understand your clients – and then look at forecasting and business planning.”

Managing the transition

However, the thought of herding clients onto a bookkeeping package or helping them manage the transition to managing it themselves in a way that will help you capture their information is a big ask.

Della Hudson, a former practice owner who has recently written The Numbers Business: How to Grow a Successful Cloud Accountancy Practice, sees a way to break down the client management problem. You may want to implement an onboarding process that initially only captures details about new clients, she says. It could still lead them towards a bookkeeping service, but is a lower risk alternative to an immediate transfer of all existing clients.

“When it’s not broken but inefficient, then you think carefully about the transition,” she explains.

Tech companies have got better at providing advice around how to implement tools and what they deliver, “but how you do it is where you might need some coaching and advice – your needs will be specific”, Hudson says.

New practices

But what about new practices? What has been their approach to technology, and can a more established practice learn from them?

James Twigger runs the successful Accounting4Everything in Paignton, Devon. Set up in April 2016 as a one-man-band, he now employs eight staff.

Twigger did not feel wedded to a particular system or platform when he set up the firm – but he did know that, from a workflow, data and process perspective, he wanted to work on the cloud.

A series of standard but scalable tech was then chosen: AccountancyManager for onboarding; TaxCalc for tax production; Xero and QuickBooks for bookkeeping; and OneDrive as a data repository.

“I consider myself systematic,” says Twigger, “but had these individual elements that were brought together and integrated. We don’t keep any paper files, which has meant we’ve never had to pay excessive storage costs.”

The combination of an onboarding process and digital services means clients use automated receipt capture and invoicing at the start of the relationship. “Automating makes our lives and clients’ lives easier,” says Twigger. “We can train clients to make sure they use the system they’re comfortable with.”

Flexibility and agility

Small practitioners have a key advantage when it comes to change – they have some flexibility and agility. However, they are usually resource constrained… how can sole practices deliver for clients while thinking about making changes to the tools used to provide that delivery?

This is a key issue. Creating a more digitally-focused practice requires a shift in attitude, as well as strategy and planning. Practitioners need to be brave and take a leap of faith.

Della Hudson thinks that small practices should, for starters, make time to map out processes: “Even if it’s just with Post-It notes, you’ll soon find inefficiencies.”

Identify the ‘A-list’ of biggest inefficiencies, but also a list of ‘quick wins’. Then look for a tech solution to the problem. “Ultimately it doesn’t matter what you start with, but start with something,” says Hudson.

In a presentation to the ICAEW’s Practice 2018: Connecting in a Digital World conference, new sole practitioner Rachel Balchin spoke about approaching technology with a ‘try it and see’ approach. She said it is difficult to know which technology will suit you and your clients if you don’t use it. “If you don’t like it, try something else and move on,” Balchin told the audience.

In her post-conference blog, Balchin talks about the “tad overwhelming” tech options available. “There are somany different options to explore, it can be a tad overwhelming, but I’ve found the cloud-based accountancy packages to be really helpful in engaging with my clients, and managing my workload,” she said. “I’m going to be spending some time in the next few months exploring what other systems and apps might be available to help my clients – and help me – do things more efficiently.”

James Twigger concludes that the role of the accountant is changing, and is being driven by both client needs and regulatory change. He says: “They expect you to be able to produce information instantly, but with electronic filing systems we can produce old correspondence in seconds and send it to them in minutes. That’s what modern clients want.”

  • The Numbers Business: How to Grow a Successful Cloud Accountancy Practice, is available to purchase on Amazon.

With practice digitisation and automation comes consideration of strategy, processes and people. Kevin Reed looks at the new types of role practices are creating – and what is required of those filling them

We have sought wisdom from forward-thinking practitioners about the roles they create, why they have done so, and which skillsets are required to achieve the practice’s aim. Interviews were undertaken with:

  • Paul Barnes, managing director, My Accountancy Place
  • Alex Falcon Huerta, CEO and founder, Soaring Falcon Accountancy
  • Carl Reader, director, d&t Chartered Accountants
  • Mark Taylor, technical innovation manager, ICAEW

Virtual FD/CFO

Where the accountant becomes closely tied to their clients, through analysing information to help them make business decisions.

Mark Taylor: As compliance work declines and becomes lower-margin, then you look towards higher-value work. If you described yourself like this, then it feels closer to the client than just an adviser. Being a virtual FD feels more as if you’re in their business – but it will depend on what your clients want out of the agreement. I know of someone offering a ‘virtual’ chief information security officer service – so it’s a growing trend.

Alex Falcon Huerta: It’s absolutely a role of the now, with more companies asking for this type of person. It’s a cheaper option for them than recruiting a full-time FD. You need access to real-time data, and want to know the data is being gathered properly and accurately, and then report back to their investors and MDs.

From my personal perspective, when we do the work for them and talk to them about their data, they have trust and confidence in us. The whole point is to rely on the outsourced company – you don’t necessarily need to be a tech specialist, but you do need to understand cloud systems. It’s about reviewing the data through cloud software.

Paul Barnes: Within a finance function, you’d have an FD dealing with strategy and future financial performance, then a financial controller in charge of reporting and compliance.

There are then one or more bookkeepers making sure the data is right in the first place. That’s how My Accountancy Place is structured. We can then mould around what the client has in place. So, we might do some bookkeeping… every SME is different and has different internal or outsourced resource.

Chief data officer/data analyst

This could be either a ‘data chief’ in a practice in charge of information flow in and out of a practice, or someone moulding the data for the benefit of clients.

MT: They won’t exist in smaller organisations, but the role of data is absolutely paramount – to protect it, and do the right things with the data. We’ve seen lots of bigger firms handling and analysing data. Increasingly among accounting professionals, data analytics has grown, as has the importance of ethics – the handling and management of data.

AFH: This is interesting. Larger organisations could have this in place where there is lots of data to feed off. I could take on a CDO, but we would need a certain number of clients to have data to look at. I use technology to do that.

PB: We have recently changed the name of our bookkeepers to ‘accounting technicians’. They can offer more than just bookkeeping services: Xero and app training; integration work and also cost analysis. They can also take some of the weight from our FCs as well. They form the bedrock of what we do.

Cloud integration specialist/onboarding executive

Staff charged with making sure new and existing clients are integrated onto an accounting/tax platform.

MT: I can see the need for an effective operation for onboarding clients. It’s possible there will be some form of contraction in the marketplace as digital becomes more important, and MTD may force some practices to decide they’ve had enough and sell their practice. Therefore, existing practices will need a way to onboard those clients.

They will likely be complex cases – not particularly digital and unique circumstances. Once on a platform, it should be easier to aid their progress.

Clients are expecting a smooth progress. Look at how you buy something as a consumer: it’s so easy, that level of automated service. Cloud helps in that regard.

Some of the onboarding will be automated, but automation allows staff to become more engaged with clients. More junior staff can have more sophisticated conversations that would have traditionally been the preserve of partners.

AFH: This sounds a bit historic. I think that will be everyone’s job in a practice, everyone will do it – all of my team can do it. Perhaps it’s more of a role for existing practices that are moving to the cloud.

Operations/technical head

Someone in charge of running the practice on a day-to-day basis, with responsibility for maintaining its technical knowledge; as opposed to someone client-facing.

MT: This role fits into the model that has been well established in larger organisations – the idea of having front staff and then ops is fundamental – perhaps that’s now moving down to smaller practices. The back-end is becoming so complex; perhaps we’ll see more differentiation between client-facing and operations.

AFH: Everyone has such traditional models – I feel that I’d rather educate my team, so we can do everything. If you know the whole system you can then get on with it. If I’m teaching everybody to understand the operations of the business – then it’s more about the order of work, [prioritising and organising]. I’ve done that since day one.

PB: All our operational staff are effectively front-of-house. We recruit young grads who are hot on tech – as well as being energetic and bubbly. We ask for a video of them explaining their experience, because communication and confidence in front of our clients is vital. They are speaking to clients all the time, requesting information.

Emerging titles

Carl Reader, d&t director, has been driving a new structure and new roles at the Swindon practice. So he’s given us his own thoughts on emerging titles:

‘Pure’ relationship managers: Rather than just a job title for a portfolio manager, these will be financially literate, but focused on the client rather than ‘work’. They will act as a go-between if ever anything is tricky between firm (led by an operations head) and client.

Business development executive: This might be a hybrid role with relationship managers, or a separate role, focused on winning work.

Customer service co-ordinator: This is an evolution of the previous ‘admin’ role. Instead of typing dictated letters and filing paperwork,
they are much more involved in client-facing admin, checking in records, chasing work, dealing with day-to-day questions.

Software support: Exactly as it says on the tin, but more for day-to-day queries rather than onboarding.

Vipul’s view

As AdvanceTrack’s feature article discusses the future skills and roles that will need to be filled by accountancy practices, our MD Vipul Sheth stays a bit closer to home – and ponders firms’ efforts to get to grips with MTD

“Firstly, it’s important to step back and consider the direction of travel for practices,” says AdvanceTrack MD and founder Vipul Sheth.

“There’s a huge impetus to move to the cloud, and secondly, there’s the speed at which firms are moving.”

Sheth recently spoke to a practice moving 15 clients a week across to an MTD-compliant solution – the only problem is they need to get 1,000 across by December in preparation for the April deadline.

Worse still, he sees even “deeper heads in the sand”. Practices that are putting off dealing with MTD until the self-assessment filing season has finished at the end of January are deluded if they think they can flick a switch for transition.

“They think software companies will hand over a magical solution that will make clients ready instantly, without thinking about how clients currently keep their records… it’s usually not in an easy format to move to digital,” says Sheth.

While leaving transition efforts to February and March won’t give practices long enough, now is the time to drive clients to move.

“Identify them, speak to them, but make sure your firm has a solution,” says Sheth.

Other clients will inevitably need rolling out as the MTD project develops and broadens. So, practices need to think carefully about what this means for the future of their business. Sheth sees two very clear paths.

“Will you become a compliance factory, or an advisory practice?” he asks.

Ultimately, whatever path is chosen, it will be impossible without embracing technological advances that enable automation, or the ability to predict clients’ future direction.

“MTD will create a surge of work every quarter,” he says. “So how can you deliver that both cost effectively while keeping your own staff happy? There will be no stepping off the treadmill.

“Use tools to help clients get set up, and understand what you’ll need to deliver consistently. Then, how will you collect client data and process it?”

 

Improving efficiency within an accountancy firm is one of the top reasons we hear for adopting new technologies. However, smoother workflows and increased productivity need to be earned; it’s never as simple as switching to a new app or software.

This reality can often trip you up. If you rush headlong into using the latest tech, without taking the time to consider if it’s the right move for your firm, you can end up right back where you started – just significantly out of pocket.

And funding the switch isn’t the only challenge associated with implementing new technology. It can impact productivity and morale in the short-term, errors can increase while staff become accustomed to a new way of doing things, and security concerns can be laid bare.

So, to overcome these challenges, take a moment and review the following 3 step process.

Step 1: Understand your motivations

Before you introduce a new piece of technology to your practice, you first need to truly understand your motivation for doing so. If you’re clear in your own mind as to why you’ve decided to replace an outdated piece of software, it will make identifying its replacement a great deal easier.

Let’s say, for example, that your staff are spending too much time on manually entering data into a spreadsheet. In theory, a cloud-enabled, automated software solution could save them time that would be better spent elsewhere. However, implementing that software would represent an additional cost to the business, not to mention the time and resource spent on training, and the disruption to the existing workflow as your staff currently understands it.

Now, in the long-term, you should see the benefit of making the switch. Your staff will save time and increase efficiency, turning their focus to more profitable activities. And yet, if you move ahead without giving any consideration to your motivation to adopt this new technology, you can become deterred when faced with the issues mentioned previously.

Step 2: Undertake due diligence

Once you’ve shortlisted a few of the software solutions that meet your requirements, you still need to take a breath and make certain that the advantages for switching outweigh the disadvantages.

Undertaking a period of due diligence is therefore highly recommended. 

Work closely with those affected by the change to minimise push back, and encourage an open and honest dialogue throughout the implementation process. If the software offers a free trial, take them up on it and let your staff road test the various options to get a feel for what works best for them.

If you have concerns over security, raise them with the software provider. Then, whittle your choices down to the one that ticks the most boxes.

Step 3: Be patient & address concerns

Now that you’ve identified the software solution for you, it’s important to accept that efficiency won’t be transformed overnight. There are many more challenges to come. Here are a few tips to help you address them:

  • Appoint in-house ambassadors for the technology: Spend additional time and resource training a select group of staff members to the highest possible standards, so that they can lead the way when it comes to using the software. This will help smooth the transition and keep morale high.
  • Embrace transparency: Try to avoid taking any unilateral decisions when it comes to the technology. This will only serve to frustrate and confuse your staff. Be transparent with your decision making and talk regularly with those impacted by the change.
  • Be patient: Introducing new technology is often about short-term pain for long-term gain. This requires a degree of patience and understanding as your staff get to grips with a new approach.

In summary

The pursuit of improved levels of efficiency will often demand innovation. The opportunity to solve problems with new technology should be embraced, but the challenges associated should never be overlooked.

By following this simple 3 step process, you should be able to meet those challenges head on, and ultimately increase productivity in your accountancy practice.

New software is going to be vital in making MTD work, for both practitioners and clients. Communication between staff and customers is a key step towards ensuring a painless transition

While Making Tax Digital (MTD) plans for personal tax have been put on hold, MTD for VAT filing is still pushing ahead – coming into force for periods ending 31 March 2019 and beyond.

Some practitioners will see managing the filing and reporting of VAT easier for them and their clients, compared with personal tax – after all, they make quarterly VAT filings already.

But if only it was that simple. There is a major change in that, effectively, some form of software will be required to transmit the information to HM Revenue & Customs’ new online portal.

This means important tech decisions for both practitioner and client. These will revolve around understanding current software needs, alongside mapping where current clients are on the technology ladder.

An absolutely crucial aspect of this change is managing communication to both staff and clients. Thought will then go to longer-term planning: how information is shared between client, practitioner and HMRC on an ongoing basis, and what ramifications that has for the practices’ processes, billing and strategy.

Before communication – or anything else – can take place, practices are having to take stock of which clients are making VAT filings, how they are doing so, and whether it is handled in-house or by the practice on their behalf.

“MTD is the clients’ responsibility,” says Richard Sergeant, accountancy marketing specialist and MD of Principle Point. “But you have a professional obligation and expectation to support them through this process. Your main objectives are to understand where every single client is on MTD, then track and monitor.”

A good example of taking this approach is Kreston Reeves. The 50+ partner firm manages some 10,000 tax returns a year, so moves towards quarterly reporting and digital-only filing represent serious consideration – but an opportunity to automate.

But before the promise of efficiency, smooth processes and transparent client information, the hard slog must come first.

There are myriad potential sub-sets that clients may fit in, from those using VAT-registered micro-businesses gathering information on paper and transferring onto a spreadsheet, to those already ‘effectively compliant’ by using an established cloud-based bookkeeping and filing system, through to larger businesses who – ironically – may have to gather information on a spreadsheet due to the complexity of VAT.

For Kreston Reeves’ trainee chartered accountant Chloe Dray, this has meant tackling the project “head-on”, gathering information on who is VAT-registered in their client base, and then gauging the best approach.

Refreshingly, they have found little resistance to moving clients onto accounting systems. “We’ve tackled it head-on as a team,” she says. “It was quite a project gauging who was VAT-registered, and what would be their best approach. We’ve made progress in ensuring everyone’s compliant.”

Get your message across

For any practitioners using this initial phase to put off speaking to clients directly, ACCA’s head of advisory Glenn Collins issues a stark warning: You could damage client relationships if your messaging doesn’t occur soon.

He says: “Informing clients is vital at this stage as there’s a lot of noise out there, and there are other firms that will take advantage of you if you haven’t taken any action.

“You don’t want clients to come back part-way through the process and say ‘you didn’t let me know this would happen, now how can you help me?’ Get clients on board and have discussions about fees.”

ICAEW Tax Faculty manager Caroline Miskin believes MTD will be “a sideshow” for some practices where clients are already using digital account and tax production technology. “They’re now waiting to accept the software upgrades from existing suppliers,” she says.

But for “a significant number” of practitioners, their clients will be keeping paper records on basic spreadsheets. And as our other commentators have suggested, they need to “alert clients to change” and understand their situation, and finally support them.

Building bridges

A key area of complexity will be where businesses stick with spreadsheets. Some form of ‘bridging software’ will be required to manage the process – to port data from one system or spreadsheet, into another.A recent article by AccountingWeb covered off some of the confusing number of variations that exist on this theme.

Bearing in mind HMRC backtracked on the use of spreadsheets, Miskin warns: “I don’t think a spreadsheet option is future-proof.”

Although there is still a hint of doubt – that politicians still have the capacity to pull the plug on the project – the ICAEW is being clear “that this is happening”, as far as their own communications are concerned: “We’re running plenty of workshops, webinars and courses, and will push our communication. We also need HMRC to communicate with the 1.2 million businesses affected by this change.”

Despite the scintilla of doubt, the ICAEW supports the direction of travel that MTD drives, even without supporting the mandatory nature of the legislation.

The way of the world

MTD shouldn’t be the driver to practices going digital, but it’s the way the world is going. If you want to provide compliance services as a practice then it will be “impossible” without digitisation.

“The profession is not embracing digital as quickly as it should,” Miskin warns. “There’s still a long way for the profession to go.”

For Kreston Reeves executive chairman Clive Stevens, MTD is a “big opportunity” to help transform practices – although he agrees with the ICAEW’s stance for a voluntary, rather than compulsory, shift.

“It will help transform our business from compliance to one where people devote time to other things,” he explains.

The production of its 10,000 tax returns sees work “concertinaed” into the last six months of the year. “It’s a real pressure and it isn’t going away,” he says. “It would be great if, in three years’ time, it’s all automated, digitised, and can be delivered quarterly, allowing our people to go and see clients – perhaps work more closely with them and our financial services team to discuss investment and planning – rather than worry about the physical process of ‘how many returns are there to go?’.”

MTD isn’t the be all and end all of practice transformation. What will staff do? “Well, our internal processes have been automated and some jobs have disappeared,” says Stevens. “But now they have more interesting jobs to do.”

While there is the potential for the tech to move faster than what people and processes can keep up with, the nature of changing embedded systems means that “most staff would complain about IT not keeping up with the pace of change”, says Stevens. “We can train people to be good advisers – it’s impacting on Chloe’s training today.” MTD’s impact is driving “evolution, but it’s part of a wider piece”.

Vipul’s view

As AdvanceTrack managing director and founder Vipul Sheth ponders on MTD for VAT, he makes several conclusions

Firstly, while the spreadsheet interface is currently a requirement, digitisation will lead to its demise. It is, after all, inherently linked with both the manual entry and transfer of data. “This does not fit into HM Revenue & Customs’ view of the world,” says Sheth.

“If you think about auditability, everything is about electronic record-keeping – you can’t have paper records making their way onto an electronic form.

“And while we are concerned about whether HMRC can handle another big change to its systems alongside change that could come from Brexit, all businesses, practices and software companies will be looking at further automation in the near future.”

“Forward-thinking” firms will already have a plan, and some will be ready. But Sheth is worried that a “large number” will wait until they have traversed the self-assessment filing deadline of 31 January.

While there appears a slim chance that the MTD VAT plans won’t go ahead, Sheth believes that HMRC “can’t face another credibility shock” on this issue, having pushed back other MTD deadlines in to the long grass.

“However, there are a swathe of firms who are struggling to convince clients that this is happening,” he adds.

A lot of our recent discussions have been about practices’ strategic approach to clients, staff and management. It seems a good time to put the key UK tech providers under the spotlight. What are they focusing on, and where do they see their relationship with accountants impacting on tech development in the future?

 

Wolters Kluwer/CCH

Wendy Rowe, commercial director TAA, Wolters Kluwer UK&I

Q: What is your latest/impending launch?

A: We were proud to launch CCH OneClick in April. CCH OneClick delivers complementary cloud tools to the CCH Central on-premise suite supporting accountants around GDPR, digital data collection, accounting efficiencies and new cloud tools to support new filing regulations being driven through HMRC’s Making Tax Digital (MTD) programme. One of these tools is VAT filing, supporting the mandatory VAT filing for businesses from April 2019.

 

Q:What developments can we expect from you in the next 12/24 months?

A: Our focus for the next 24 months will be around how we support practices becoming digital and in helping accounting practices to embrace and navigate the new digital world.

Areas of interest are:

  • Providing tools that help with digital data collection and aggregation of digital data– helping practices to reduce the volume of manual data entry but also collating useful data that can be leveraged across multiple activities. For example, how transactional bookkeeping data can be used to support quarterly reporting compliance needs but can also be leveraged to create a set of accounts and then for forecasting cashflow projections for business advice.
  • Delivering compliance more effectively– with HMRC bringing in new regulations around MTD, practices will need to review their current processes. It is highly likely that these will change to ensure compliance work remains efficient.
  • Advisory– Wolters Kluwer is exploring solutions and services that help accountants to be more proactive and responsive in their client interactions.

 

Q: How will conversations with practitioners develop over that period – what will you be discussing with them in 12/24 months’ time?

A: I see the following as key themes over the next two years:

  • Efficiency/automation– how technology can make compliance more efficient.
  • Advisory and data– the use of technology to help advisers to become more proactive.
  • Client collaboration– how the advisor changes their traditional collaboration approach in light of the millennial generation and a digital world (mobility and so on).
  • New technologies (eg. machine learning, BI and so on)– how these technologies can assist the practitioner of the future while simultaneously protecting the profession.

QuickBooks

Alex Davis, business development manager, Intuit QuickBooks

Q: What is your latest/impending launch?

A: Making Tax Digital is part of the UK tax authority’s plans to become one of the most digitally advanced tax administrations in the world, and a topic on everyone’s mind as we look to make the process as easy and straightforward as possible for our accountant customers.

QuickBooks Online is already MTD-ready, which means the product is fully compliant with the requirements set by HMRC. Companies will be able to submit VAT filings directly from our software through to the UK tax authority. We’ve already completed successful filings from a number of our accountancy customers through our beta programme.

 

Q: What developments can we expect from you in the next 12/24 months?

A: Our teams are focused on helping our customers earn more money, make better decisions and develop greater confidence about their finances. Bringing together siloed data is one important way we help save customers and their advisors time, and reduce the risk of manual errors. For example, we have direct bank feeds with three major retail banks in the UK, covering 60% of the UK market. Direct bank feeds automate much of the time-consuming data entry associated with bookkeeping. Tax prep is an area in which we continue to add value for accountants who spend an excessive amount of time gathering data for a single client on an annual or quarterly basis. A recent example is our release of the option to import bills and invoices to QuickBooks.

 

Q: How will conversations with practitioners develop over that period?

A:There is little doubt that over the coming months practitioners will be focused on first identifying which of their clients need to be migrated to MTD-compliant software. Then, they will put the plans in place to manage those migrations efficiently. This will involve the transfer of critical financial data, along with educating staff and clients on how to use the software efficiently. Once these building blocks are in place, we expect the conversation to move towards how these insights can be put to use.


IRIS

Nick Gregory, chief product & marketing officer, IRIS Accountancy Solutions

Q: What is your latest/impending launch?

A: IRIS continually develops products to help practices evolve beyond compliance services to deliver more lucrative advisory-based services. This includes Accountant Go, a practice-branded app that enables accountants to engage and communicate with their clients.

We’ve also launched IRIS Analytics, an analytics tool for large accountancy practices to obtain comprehensive insights into business performance. We are due to launch IRIS AI, a new AI tool that enables accountants to address skill shortages and deliver new risk and fraud assurance services.

We are also adding more GDPR enhancements across our product range, and launching IRIS GDPR Advisor, a new service designed to help accountancy practices maintain GDPR compliance.

 

Q: What developments can we expect from you in the next 12/24 months?

A: IRIS is 40 years old this year and our heritage allows us to see the industry in a unique way. IRIS continues to heavily invest in developing its product portfolio to help accountants’ grow their businesses and deliver new services, enabling them to thrive in the new digital economy.

The next strategic announcement will be at IRIS World in October with the launch of ‘Darwin’ which will help liberate desktop IRIS compliance suite data and offer new apps, all available via a cloud platform. We also want to make MTD (VAT and personal tax) as easy and as seamless as possible for customers so will continue to enhance new digital ways of reporting into the existing products and workflows.

 

Q: How will conversations with practitioners develop over that period – what will you be discussing with them in 12/24 months’ time?

A: Without a doubt, MTD – and especially MTD for VAT and personal tax – will continue to be at the forefront of discussions. Traditional assurance and core compliance services are evolving, so our job in the next few years is to ensure practitioners get it right, first time and succeed every time through integrated, efficient and automated processes and workflows.

As the industry transforms, discussions advance beyond compliance services to business advice.


Sage

Michael Office, VP Accountants, Sage

Q: What is your latest/impending launch?

A: We’ve just launched exciting new services for accountants and bookkeepers in practice:

  • Sage Accountant Cloud– the platform to run your practice – brings together all your client information, important dates, documents and interactions to help you keep on top of tasks and jobs. It also gives one-click access to client bookkeeping in Sage Business Cloud Accounting, and an automated workflow to Accounts Production and Compliance/Personal Tax.
  • Sage 50cloud Payroll Online Bureau– we’ve given the 6,000 practices running payroll on behalf of clients the very best benefits of the cloud: automation. With secure online employee details and hours entry, payslips, payroll documents and reports – all with an automated workflow to and from payroll.
  • Accountants and Bookkeepers Hub– this has brought together all the expert advice and support we offer (from help with MTD to growing your practices, from toolkits to webinars) into one place, dedicated for accountants and bookkeepers.

 

Q: What developments can we expect from you in the next 12/24 months?

A: Our mission is to make admin invisible by 2020 for accountants, bookkeepers and their clients. Our roadmap for the next 12 months across both Sage Business Cloud (featuring accounting, payroll and payments) and Sage Accountant Cloud (featuring client/practice management and compliance) is focused around automation, efficiency and AI/machine learning driven proactive capabilities. A great example of this is automatic bank reconciliation and bank rules launching this autumn across Sage Business Cloud Accounting and Sage 50cloud.

 

Q: How will conversations with practitioners develop over that period – what will you be discussing with them in 12/24 months’ time?

A: We talk to more than 1,000 accountants and bookkeepers (face to face) every month through our expert field team and at events. We know that MTD is something that is on the minds of accountants and that together we can unlock the potential that digitisation presents.

Taking 60 days out for tax year-end and Christmas, there are just 90 working days to go until the MTD deadline next April. The average practice has 112 clients, so already that’s more than one client per day that practices need to get ready for MTD now. Our focus is therefore helping, supporting, enabling and driving practices to be ready for MTD.


Xero

Damon Anderson, director, partner & product, Xero UK

Q: What is your latest/impending product launch?

A: Most recently, we launched the all-new Xero Expenses. This has been one of our oldest features in Xero but it was overdue some love, so we’ve worked closely with our accounting partners to reimagine it from the ground up. It now offers businesses a more efficient way to manage expense claims and is smarter, easier to use and designed to benefit both the small business and their employees.

 

Q: What developments can we expect from you in the next 12/24 months?

A: Artificial intelligence has a fundamental part to play in all our product developments over the next two years.

Further proof of our commitment to improving productivity for small businesses is through our recent acquisition of data capture solution Hubdoc, offering our customers another powerful solution for better workflow efficiency.

Machine learning is paving the way to high-integrity accounting. Our Find and Recode software has already saved small businesses and their advisers in excess of 307 hours of time in the first year alone, and the next two years could see the elimination of data entry and coding entirely – a really exciting prospect for business productivity.

 

Q: How will conversations with practitioners develop over that period – what will you be discussing with them in 12/24 months’ time?

A: Making Tax Digital is having a major impact on the accounting profession, and supporting accountants through this change is our priority. And a modernised VAT returns experience will mean a better understanding of business financials as well as enable improved levels of efficiency and productivity.

There are the pacesetter firms that will have no problems in the coming 12/24 months. But many others might be faced with the daunting prospect of getting their clients’ finances online in a short amount of time, and we will be helping them navigate these waters.

It doesn’t stop there. Once MTD has been fully implemented, we then want to support practitioners as they build new service offerings or fuel their growth. We don’t see the conversations dying down any time soon.

Security is a popular topic in the industry at the moment, and it’s come to be expected that updating your security protocols, implementing new systems and reviewing processes can be a massive time sink-hole for accountants. With everything you’re looking at, it ultimately ties back to the biggest question of all: How secure is your firm?

We’ve already talked about how you can improve security internally, by looking at everything from checking passwords, bringing phones to work, training and more. But what about external security?

This is an even bigger question to be asking when you’re looking at the security of your firm, because it’s become common practice for accountants to offload some of their work and outsource. Doesn’t that beg the question “How secure are they?” because depending on what you’re outsourcing, you might be sharing everything from passwords to your various marketing engines to databases of contact information, and if your outsourcers don’t look after this data properly, it still could be you and your firm at risk!

To conclude our mini blog series on security, let’s look at some of the top things accountants outsource and how that can impact your security.

1. Marketing

This is one of the top functions of an accountancy firm to outsource. Providers like The Profitable Firm have become a staple component in firms promoting themselves through blogs, website pages, social media and more. But with this relationship comes a caveat: sharing information.

It’s often overlooked when thinking about the “greater good” that is marketing, but when you are working with a marketing company, it becomes common practice to share access to everything, from your website, to marketing engines like MailChimp and even social media accounts.

By doing so, you’re effectively giving a third-party access to a hefty amount of data. Your website could store submissions from your various enquiry forms. Your MailChimp account could contain lists of client email addresses. And it all starts with handing over the passwords to those accounts. In a case like this, it’s important to double check what security protocols these third parties have in place so that your sensitive data is protected on their end too.

2. Website maintenance

It’s a well-known fact that your website is one of the biggest marketing components for any business, let alone accountants. It’s your marketing hub, which means it’s important to keep maintaining it on a regular basis.

One of the lesser known facts, however, is the importance of an SSL certificate for your site. These have become more popular in the past couple of years and have become the norm for any website to have. An SSL (or Secure Sockets Layer) certificate, is an extra layer of security that effectively encrypts your website and therefore safeguards any sensitive data that is being sent through the website. This means any data submitted, whether it be through a contact or payment form, isn’t at risk of being stolen by hackers.

You can tell when a site has an SSL certificate installed by looking at their URL; if it starts with “https” as opposed to “http”, the “s” signifies it’s a secure site. This is becoming more and more important as it has recently been announced that any sites that do not have an SSL certificate will automatically be flagged as unsecure by Google and also de-ranked in Google searches!

Think about your user experience: Would you want to visit your site and be met with a screen that says “This site might be trying to steal your information”? That wouldn’t fill you with confidence in your accountant, let alone how they handle the security of any of your data. But the solution isn’t too difficult. All that you have to do is purchase an SSL certificate, which is readily available through domain and hosting companies, and have that installed on your site. Once that’s done, you can rest easy knowing your site is much more secure than those without an SSL certificate in place.

3. Accounts production

One of the final avenues that is popular to outsource is the production of accounts and tax returns. As you know, that’s what we do here at AdvanceTrack, and we like to think we take security pretty seriously with our online system and protocols in place.

If you don’t use AdvanceTrack, but have been considering outsourcing compliance work, it’s an important question to ask any provider. After all, you’ll regularly be sending financial data belonging to your clients and their businesses, so you want to make sure that this is handled well and protected on their end so that the data isn’t at risk of being stolen.

Security is important, act now.

Security is something that shouldn’t be overlooked, whether it’s internal or external. You need to look at everything from your internal systems, to the processes your outsourcers use, to the training needed for your staff.

When all that is done, your firm will undoubtedly be in a much safer position, as you won’t be leaving the security of your clients’ data to chance!

When accountants come to us, one of the first questions we ask “is outsourcing the answer to your problems?”

Admittedly, it’s a rhetorical question, but it makes you pause and think. We’re always preaching that outsourcing isn’t just about handing over compliance work. It’s about changing the nature of the relationships with your clients, but you can’t do that if you don’t overcome the underlying problems your firm is facing.

On the surface, outsourcing might seem like the answer, but we wanted to take the opportunity to address those issues and how to overcome them, and also how outsourcing might play a part in that.

1. Delivering to deadlines without overworking

Your accountancy firm should be 100% focused around client service delivery, otherwise chances are you won’t be in business for very long. So, what’s changed?

Well, for one, there used to be some downtime between the different projects. This allowed an opportunity to reflect on the project, evaluate the time put in, regroup and plan for the next project. But instead, you’re finishing one project and immediately diving into another!

It’s in large part due to technology. With the advent of Xero and QuickBooks, coupled with receipt scanning apps and reporting tools, your clients have more data than they know what to do with, and it’s your job to handle that.

Because of these increasing changes in the industry, the volume of work is naturally growing, meaning there’s no longer any downtime. You’re doing the work yourself because you don’t have a choice. Sure, you could outsource the day-to-day bookkeeping to free up your time, but deep down that’s not the solution. It’s time management. You need the right tools and people in place to handle projects better, which leads us nicely to problem #2.

2. Implementing new tech

Xero published a report in 2017 that revealed that more than three-quarters of firms still use spreadsheets with their clients. Even more alarmingly, 18% of firms are still working on paper ledgers.

We couldn’t agree more with Xero’s comment that “old methods continue to strangle practice efficiency”. Technology has evolved massively over the past couple of years, but the challenge for accountants is the implementation.

Which software do you choose? Which apps do you offer alongside it? What systems do we need internally? Is this going to improve our speed? What if our clients don’t go along with it?

Those are some of the questions that you’re most likely pondering and rightly so. It’s no small feat implementing new systems, and that’s often the reason most firms hold back. They’re scared of things going wrong, of systems not working, of clients disengaging.

For you to overcome these problems, you’ve got to go beyond your comfort zone and be willing to embrace the change and try new systems. You’ve got to be ready to test and learn and ultimately fail. If you’re not willing to do that yourself, what chance do you have of your clients being willing to try new tech?

It’s about that long-term goal of development and building a better, scalable firm, and it starts with taking that first step of trying something new.

3. Finding the right team

All of the issues mentioned so far come back to your team. A lack of downtime or a lack of systems affects them too, or they’re part of the problem.

If you’re the director of a firm, you could be doing a lot of the work yourself, because you haven’t got the right team members in place to support you. Likewise, you might be hesitant to implement new systems because you’re not sure if your team would be on board as well.

A lot of it comes down to how you recruit. You’re not just recruiting for another person, you’re recruiting for someone who’ll embrace the changing environment. It’s about skill set, engagement, motivation, meaning you’re ultimately looking for someone who is resilient and willing to adapt. That’s the kind of team member that will stick by you, rather than hopping from one firm to the next and leaving you to pick up the pieces.

What’s wrong with this picture?

 It’s a vicious cycle: You’re not delivering to deadlines and/or you have no downtime. That’s caused by not having the right systems in place. This can be the case if you don’t have a willing team or the right team to support you, or even if you’re not delegating enough to them.

So, to go back to our opening question “is outsourcing the answer to your problems”, the answer would be “it depends!”

Outsourcing only truly works when you have addressed the problems we’ve talked about, or you’ve at least started addressing them. As we said at the start, outsourcing is really about changing how you work and interact with your clients, and you can only really do that when you’ve begun to work on the problems with time, technology and your team.

But when you’ve mastered that, and once you go on to building incredible relationships, you’ve got the key to success, and you’re no doubt on track to build a firm poised for amazing things.

What happens with the IT infrastructure when two practices merge? What is the strategic approach? How long should it take to move one party onto the other’s platform? Are there reasons to hold off and maintain disparate systems? Does the merger raise any peculiarities or issues particular to the sector? Read on…

The financial and analytical acumen that practitioners gain in their studies doesn’t always translate into them making the best decisions when it comes to their own business.

And the merger of two practices – generally the acquisition and absorption of one into another – is certainly an area that relies on strong diligence, project management and planning, rather than the detail of FRS 102 or the latest Finance Act.

So, how much does ‘technology’ form the merger or acquisition process? Focus may be on complementary client bases and service lines plus the culture and working practices of staff and partners – does IT get a look-in as a key aspect of dealmaking and integration among practices?

For Keith Underwood, MD of practice advisers Foulger Underwood, undertaking IT due diligence should be a key part of any merger, and to an increasing degree.

“IT has become a key factor in helping generate additional profitability by putting the two practices together onto a single platform,” he says.

“You’d want as much of that to take place on day one as possible to gain rationalisation and a benefit to the bottom line.”

One anonymous practitioner told AdvanceTrack that during an acquisition of a smaller practice the approach was simply “you’re coming onto our system”. But they had failed to gauge the quality of the acquiree’s technology – or the lack of quality in their own system: “Looking back, at the point of merger there should have been a review of the overall systems from a big, small and joint perspective. The due diligence was focused on securing the financial deal, rather than the logistics.”

Mark Taylor, a technical manager in the ICAEW’s IT Faculty, concurs. It can be difficult to set out a stall for knowing how the tech integration will work, he says, but consideration must be made as part of the pre-deal diligence process.

“For some organisations it will come down to who has the ‘newest and shiniest kit’, particularly if one of the parties has been through a recent IT change,” says Taylor.

“A lot of decisions will be made as you approach the merger: the fit seems right on a client and cultural level, and then the IT representatives from each side meet and find out things are similar. The tech will be as much a reason to merge, as cultural, client base or service approach.”

The digitisation of practices is being driven by regulation (Making Tax Digital; complex, continuous tax updates; FRS102; and GDPR), along with the ability of new tech to automate processes that were once manually intensive. The increasing pace of change of technological advances means that many practices have moved quickly to new cloud-based platforms and services. Others are muddling through, making smaller changes or putting in more effort to stay still.

Without wishing to over-generalise, there will be a substantial number of firms whose owners are looking to get out before having to invest in change. For practices that have digitised their offering, the slow-movers can become attractive targets.

“Because one firm is more technically mature than another, the acquirer will say ‘rather than you have to invest, why don’t you merge with us and we’ll save you that pain?’,” explains Taylor.

“It puts you in a position to take over a firm that’s not digital savvy – digital often drives cost savings as well.”

Conversely, Underwood has seen deals “killed” where the acquirer is paper-intensive in its processes, and can’t find a way to embed a digital-only practice into the fold.

Data protection

GDPR is worth mentioning. Data protection and privacy rules have broadened, and punishments increased greatly, under the new European legislation. So, the process of client data transfers in a merger or acquisition require a robust approach.

Consideration must be made that a merger project will likely see changes to systems and access controls during the process. “They’ll need breaking down a bit to allow movement,” suggests Taylor. “So you’ll need a solid change management programme in place”.

Underwood is seeing GDPR become a factor within the due diligence process of a deal. The great risk is that the acquiree practice has failed to purge itself of unnecessary or old client information.

“If a firm hasn’t cleaned their files then work is involved… if you’ve got data on people who are no longer clients, that has to be identified and deleted,” he says.

Another hurdle to clear is data formatting, says Taylor, a process he describes as “extract, transform and load”. Common problems include client dates of birth being in American format, or something other than DD/MM/YY. “It can be different things in different organisations,” he says. Again, time and cost need to be considered for such issues.

Impact on clients

There are two other extremely important considerations. First, the question of client-facing IT must be considered. As Underwood posits, if an acquiree’s client base uses QuickBooks and your practice’s clients use Xero, will you port them across and what impact will that have on retention?

“There will be increasing questions over the retention of clients in relation to the use of different apps or data entry. It is a risk consideration in determining the suitability of a potential target or merger,” says Underwood.

Finally, when considering your practice’s IT requirements post merger/acquisition, it’s vital to maintain flexibility where possible.

For Carl Reader, a co-owner of Swindon-based accountants d&t, a successful integration may set off the spark for further deals.

“If it works, then you’ll probably have found a way to fund the acquisition or merger, and have the appetite for appropriate risk. Once you have that in place, why would you not consider doing it again? So you should think about systems with a growth perspective,” says Reader.

“It’s something I’ve seen other practices do: they get fit for purpose of where they are now, but not where they’re going to be.

“Clients don’t have a ten-year life any more. From that perspective you have to think about acquisition or organic growth, so you need systems that allow the practice to grow.”

Practice viewpoint: Kingston Burrowes

Bruce Burrowes is a CIMA-qualified member in practice, running a three-office firm in Surbiton, Kingston and Wimbledon.

His small but burgeoning practice has taken on a number of client lists, and also brought across staff from acquired practices.

For him, he “keeps an eye on the tech” but it’s not a key influencer in the deal. “My starting point is that their clients will end up on my systems,” says Burrowes. “The reason is that we like to think that what we’re doing is pretty good.”

He does, however, “take a peek” at the acquiree’s tech choices and processes, “to learn”. “You talk to the seller about their tech, what they use, why they like it and how they use it,” Burrowes explains.

For his firm, part of the process of bringing acquired staff on board is to get them involved from day one on helping port across and manage their previous client list into the new system. “They’re an expert on the client, but not your systems,” he says. During that process they work with existing staff and is the first step in them becoming part of the team.

Crucially, he calls on an acquiree to produce a “control list” database. This contains details about how clients are linked together. For example, the name of the client, how they’re referred to in documentation, what businesses they own and what names they trade as. It will also contain information about what services they currently receive and what they’ve been billed.

For Burrowes this is a crucial reference document to help manage situations and double-check details when the previous practice owner has gone.

“Clients may be linked by family, it’s important to know that information,” he says.

Ultimately, Burrowes tries to manage IT risk by operating a single platform that provides a full suite of products. While expensive and no product is perfect, he knows the software covers “every eventuality” and simplifies the integration process.

“I remove risk by getting one product to do the lot,” he concludes.

Vipul’s view

AdvanceTrack MD Vipul Sheth takes the IT infrastructure issues out of the merger equation, and focuses on helping the key personnel work together

You might think that, with our main feature covering the topic of IT in practice mergers and acquisitions, I would also speak at length about the issues covered? Well, no – I think our commentators have done so extremely well, and you don’t need more from me.

I find the non-IT issues around mergers are fascinating but also extremely important. For example, considering the culture of the two organisations in a merger. More narrowly, can the senior leaders of the practices work together if both sets are staying on?

There is then lots of work to understand the skillsets of both firms’ staff, along with setting a clear idea of what post-merger financial and responsibilities will look like.

As you’ll see below, we can help take much of the IT integration weight off your back, particularly when you have so many other considerations to take into account.

The fully managed service can help firms make the transition to the cloud – let AdvanceTrack do it for you

The challenge for many firms is having the internal resource to migrate clients at scale to the cloud – an issue covered in our main feature spread. And this puzzle could be both for Making Tax Digital or moving clients from things such as spreadsheets. In these instances, AdvanceTrack has trained teams at hand to help manage your resource needs to deliver that service efficiently.

The fully fledged, fully managed service is available now. “It’s a service offering that’s growing rapidly for us,” says MD Vipul Sheth.

Once you’ve identified which clients need to move across, our trained teams help you set the format and move the data to its required destination.

“We’ve helped firms big and small make the transition,” explains Sheth. “We can transfer all clients from one practice to another onto a new platform, or more discrete datasets. We’ve helped in instances like this regularly – the service is a big part of our offering.”

Use your internal resources more effectively – we’re the experts at moving data. Get in touch with your porting requirements and we can move quickly on your behalf.

Like its clients, AdvanceTrack has enjoyed another busy month.

For starters, we held our second annual AdvanceTrack Conference. The event, held in central London, brought together more than 100 practitioners and technology specialists to discuss key issues and opportunities for the profession.

We covered the ‘business growth accountant’ in a lively session with Paul Shrimpling, while Martin King-Turner took us through the latest developments on that dreaded topic: GDPR.

The Profitable Firm’s Karen Reyburn talked about the four ‘make or break’ areas for accountancy marketing, while BlueHub’s Matt Flanagan pointed firms to where they should currently be on their MTD journey.

Vipul Sheth, AdvanceTrack MD, said the event illustrated to accountants the importance of building client relationships by having more up-to-date information about them, particularly on the bookkeeping front.

“I’m driving home the message about our investment in technology to run an efficient and reliable service to our client firms, and an increasing focus on building a scalable bookkeeping service,” said Sheth.

“Remember, with Making Tax Digital accountants are going to need reliable financials and do it for hundreds of thousands of clients.”

Sheth added: “What you really need to consider is you have a set of skills that can change clients’ lives. You must understand the finances, their industry, and the whole thing put together – that’s really your role. If you understand that then we can help you do more of that, and you’ll become more profitable and go home earlier.”

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