Taking transaction into account

The ‘soft landing’ for HMRC’s Making Tax Digital (MTD) has come to an end for most, and April 2020 sees the start of full implementation of the new digital filing system, including all the penalties and regulation that comes with it.

With this new era of digital coordination taking hold, for many smaller practices it can mean a completely different way of interacting with their clients, implementing new IT systems and the diversification of revenue streams of service.

However, pushing back to clients is no mean feat. Telling them their paper filing system is no longer acceptable can be daunting – as can putting another process and way of working in place. So, how can your practice operate?

The changes are more about behaviour and mindset than anything else, says Vipul Sheth, owner of AdvanceTrack Outsourcing.

“The problem for the practitioner is about mindset: trying to get the client used to the new way of working with you,” he explains.

Difficult conversations will be had, and for those that won’t move to a more digital way of working with you, then Sheth suggests looking closely at your pricing and operating models.

“You shouldn’t have two clients acting completely differently but charged the same,” says Sheth.

“If client A provides everything digitally documented but client B hasn’t, and you’re still doing [that work] for client B, you are essentially allowing client B to run your business the way they want and you risk losing client A,” he continues.

As harsh it may seem, especially for practitioners who have worked closely with their community and built close bonds with their clients, it is imperative that you consider driving digital processes to fit your business model.

Both parties are running a business after all, Sheth adds.

A new dawn

Practitioners must set a plan in place for how their practice will run – and then be very clear in communicating this to clients.

“This is a huge enabler to embrace change and become a progressive accountant,” says Alastair Barlow, founding partner at Flinder, which helps businesses manage their finance function. “This is an opportunity to reassess your business model and figure out what is going to work for you,” says Barlow.

This juncture could be the point at which your practices free up time, especially if practitioners can partner with a software provider that helps manage both bookkeeping, and IT coaching/support.

However, most small business software systems include an app, which will sync pictures of receipts and invoices from phones that automatically attach to an account, allowing the accountant to see information in real-time and provide better business insight.

But what if, with the best will in the world, the client refuses to budge? It is often the client that doesn’t want to use the technology, says Sheth.

“This is what the accountant is up against; it can be especially diffi  cult when the client doesn’t capture data contemporaneously,” he says. 

Outsourcing 101

The other alternative is to outsource that function altogether. But Barlow warns that while there is a place for outsourcing, practitioners need to understand exactly what they are asking from their outsourcer, with many being housed off shore.

“There is a place for outsourcing but you cannot outsource accountability and outsourcing does not absolve you of responsibility,” he warns.

Sheth says that it’s important, as a practitioner, to maintain strong communication lines with both the outsourcer and the provider of the technology platform.

While there are pressures on firms to reduce fees and ‘do more with less’, there is an opportunity to encourage your clients into good habits – namely the provision of timely business information – which can only benefit you both. 

Rachael Singh is a freelance journalist