Damon Anderson is Director of Partner and Product at Xero.
In business, trust is everything. Yet 70% of small businesses would not recommend their accountant, and a third suggested avoiding them completely, according to a new poll of 1,500 UK SMEs. The entrepreneurs surveyed said accountants don’t understand their business, are flummoxed by technology, and are too expensive.
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Digital realities
Yet this is a revolutionary time for accountants. New technology and accounting software now provides the basis for profound improvements in productivity that are transforming the industry, and creating a new army of accountancy experts with the ability to unlock huge amounts of growth for clients through advisory services.
HMRC’s new digital tax rules have been underpinned by these technological advances, which has seen over a million businesses - with more than £85k a-year in turnover - begin to file their tax digitally using cloud software since April this year.
But the benefits of these changes are unmistakable. Xero’s Benchmarking Report found technology brought on by Making Tax Digital leads to more cash per employee for cloud-based accountancy firms. And our data shows that cloud technology helps accountants attract up to ten times more clients, wowed by the efficiency that shared platforms create.
Benefits of cloud technology
While the debate on employment in light of artificial intelligence continues, it’s cloud technology that will take accountancy to a whole new level. In a survey last year, we found 51% of accountants said cloud software improved collaboration with clients, boosting speed and reducing mistakes. More recently we found tech-savvy accountancy firms have higher Net Promoter Scores, (a measure of customer loyalty) - than firms still drowning in paper and Excel spreadsheets.
If businesses and their advisors are to benefit from digitisation, MTD must be readily adopted. In March, a Freedom of Information request revealed by the fintech Float, showed 3,000 SMEs were registering for MTD a day, but this projected a shortfall of less than half the number of mandated firms by August 2019. SMEs should adopt quickly to make the most of the efficiency gains that digitisation offers.
The importance of digital progress
In uncertain times we must embrace technology for the health of the small business economy. MTD encourages accountability, accuracy and collaboration. June has marked the first deadline for filing returns under Making Tax Digital and accountants have a huge opportunity to take control of this technology, leading the digital evolution and ultimately inspiring greater business confidence.
Damon Anderson is Director of Partner and Product at Xero.
