There is a common misconception that technology will be the death of accountancy. However, this is not really the case, and the industry needs to recognise new forms of technology as an opportunity, not a threat. New accountancy technology makes accounts processes easier for businesses, minimising margin for error and allowing business owners to focus more time on other areas.
HMRC’s Making Tax Digital Reforms highlight how digital transformation is at the forefront of the UK financial sector. The reforms aim is to make it easier for individuals and businesses to keep their taxes correct and accurate, and to stay on top of financial affairs. Using technology in business accounts reduces avoidable mistakes which were reported to have cost the Exchequer £8.5 billion from 2018 to 2019. The UK financial sector needs to take advantage of this development in financial technology and reap the benefits of being part of arguably one of the most technologically advanced sectors in the world.
Technology set to transform the accounting landscape
Blockchain and automated accounting technology
Blockchain in accountancy is an emerging technology. An openly available ledger allows companies to write their transactions into a joint register instead of having separate records. This allows for a quicker process and avoids any potential discrepancies between companies’ records. This automated system means companies can reduce the amount of time spent on time-consuming data entry, and instead spend more time on profit-making activity.
Storing all data online rather than on-premise is a well-established practice in modern business accounting. This allows data to be accessed anywhere and at any time and has been especially valuable during the Covid pandemic when those involved in company finances were forced to work from home and data needed to be accessible remotely. Companies using cloud storage were able to adapt quickly to remote working, ensuring service continued as usual.
Furthermore, cloud storage is a safer option for data storage. Cloud storage has 24/7 monitoring of security threats and constant backup systems to prevent any loss of data. This is paramount to the storage of financial information which is often sensitive.
Using cloud software has already revolutionised many businesses, and in a world of remote working, it is ever prominent as the best solution for data storage.
Optical character recognition technology
Optical character recognition software allows printed documents to be scanned and converted into digital copies. This is another viable option for storage of data and documents online. When stored as digital copies, documents can be edited by multiple employees, once again promoting the exchange of information amongst remote workers. In addition, there is the advantage of being able to cut down on unnecessary paper clutter to create a simpler and more productive working environment.
OCR also allows for data to be added to systems, eliminating data entry, saving time and reducing margins for error.
Mobile accounting apps
With the rise of accounting apps, accounting software is now available on smartphones, making information much more easily accessible. Going paperless reduces costs for a company as they no longer need to waste money on paper, stamps and postage.
The key benefit of apps for financial software is it allows for invoices and other costs to be approved even if the responsible person is away from their computer. Many business leaders are operating increasingly from their phones, and apps allow accounting processes to become mobile. In addition, apps make data and information readily available and easily accessed and displayed in meetings from a tablet, for example.
The growth of disruptive technologies has been dramatic across all sectors, and finance has been no different. Artificial intelligence (AI) allows machines to interpret information and make judgements that mirror that of human thought. AI allows machines to effectively perform jobs that are usually performed by humans.
In accounting, AI can be used to sift through large amounts of data quickly which would be a hugely time-consuming task for a person to undertake. Furthermore, it can be used to analyse data by identifying trends and acknowledging problems through data memory and storage. Once again, this is a time-saving method of data management. Reducing the time spent on data handling, accountants can spend more time on other, more pressing areas of work, which in turn can increase their profitability.
The importance of the right software
Choosing between different software options can be a confusing process, but it is important to fully assess what is important to the individual company before deciding. Due to the growth of digital accounting in recent years, there are many different accounting software solutions available. However, not all options are viable for all companies. To ensure an easy transition to digital, company leaders need to take into consideration the different needs of all departments to ensure they are choosing the right software for them.
Consideration needs to be taken into whether the new software will be manageable for the company; a smaller group will not require the same software as a major firm. Manageability also relates to budgeting for the new software. Companies need to gather transparent quotes so that hidden, unbudgeted costs are not sprung upon them after adopting the software.
Is finance digital transformation beneficial?
The resounding answer is yes.
Businesses need to take advantage of the wealth of new and exciting technologies at their disposal, which can only help them with the management and development of their business. Through examining the options, there are some clear benefits to digital accountancy. The increased efficiency and productivity of data storage and analysis can reduce time and improve accuracy as it removes opportunities for human error. The easy access of information when stored digitally is undeniably important in 2021 and beyond, as more and more people are committing to remote working meaning information needs to be accessible off the premise.
Using technology makes the collaboration process between colleagues involved in accounts, customers and suppliers seamless for all. By improving these processes, businesses will not only improve their current business relationships but are more likely to develop new ones due to their high levels of customer satisfaction. This will lead to increased sales and profitability for the business.
The arrival of Making Tax Digital means business owners who do not embrace the process will find themselves left behind, as digital finances are evidently the future of accountancy. Furthermore, they may accrue penalty fines if they do not begin working in this new and improved system of accountancy.
Relying on technology can be a difficult adjustment for many businesses. However, it should be recognised that technology does not always need to be considered a threat to a workforce. In the case of accountancy, it can simply aid with work that is already being done in an often more efficient way, to allow firms to focus on other, more important things.
About the author
Simon Kearsley is the CEO and founder of Symmetry, the developers of accounting software bluQube. Simon’s expertise lies in computer and system management, specifically accounting and financial software, SaaS, management information, integration and devolved accounting. Earlier in his career, Simon was a Business Systems Manager at Oracle, where he setup a Management Buyout of an area of the business and founded Symmetry in 1996. Since then, Simon has built a business unique in its transparent and collaborative approach, supporting customers in delivering real, tangible benefits.