Digital transformation for accountants: what is it?

Does your practice require a digital transformation? In this modern age, accountants need to assess whether their firm is keeping up to date with the latest developments in technology and if they're not, should carry out a digital transformation.

Many time-saving and cost effective tools can be utilised, including cloud technology, artificial intelligence, machine learning and other digital technologies.

A digital transformation may be defined as adopting digital technology in order to digitise business services and operations. Going digital helps businesses to modernise and future-proof their firm: certain industries rely more heavily on digital technologies, and accounting and finance professionals are seeing increasing automation and digitisation within their industry.

Are you seeking to digitise your business? Here we consider these digital systems and outline how finance professionals can use them to help save time, improve cashflow and deliver a better service to their clients.

A digital transformation is particularly important for the accounting profession with the recent and continuing rise in popularity of cloud accounting and other digital systems.

Definition of digital transformation in the context of accountancy

Accounting professionals can undertake a digital transformation in order to improve their firm's processes, efficiency and accuracy when assisting clients. Modern technology helps accountants to streamline their accounting processes, accurately analyse financial data and conduct business with clients in an orderly fashion.

A range of digital tools exist that accountants can utilise to ensure their firm provides quality advice and services to their clients. Cloud accounting software serves similar functions as accounting software that can be stored on a computer, but is hosted on remote servers.

Cloud accounting allows a finance professional to share data securely via cloud technology, and makes use of real time information, meaning that data is always up to date and current. The cost effectiveness and ease of use associated with the cloud appeals to many businesses and the ways in which they work.

Accountants may also wish to utilise what is termed 'big data'. Big data equates to data sets too large to accurately process using traditional processing software. Data is vital to all businesses - it enables firms to make decisions based on facts.

However, big data by itself isn't of much help to businesses - it needs to be analysed in order to help accounting firms make sense of it and use it to improve their processes and offer high quality services to their customers. Auditors, for example, may wish to make use of big data and benefit from how it can produce insightful analytics, and it is revolutionising how audits are carried out.

Other digital tools of use to accounting professionals include software to electronically invoice; real time information; and pre-population programmes. Many of these tools help to reduce or eliminate human error when filing returns and forms.

Examples of digital transformation in accountancy

Many accountancy firms are using digital tools and the internet to help streamline their workflow and provide the best possible services to their clients. In this day and age, going fully digital only serves to aid accountants: many key taxes now require digital submission of returns and forms.

The government's Making Tax Digital (MTD) initiative requires businesses to keep and preserve certain specific business records digitally using MTD functional compatible software. MTD is a completely digital journey:  data flows from each individual business transaction into the quarterly filing to HMRC, each stage linked digitally, without manual input.

Many accountancy firms are already making use of MTD-compatible software to ensure compliance with the MTD rules, and there is a range of useful tools available to assist those accountancy companies who need to make quarterly updates under the initiative.

A vast array of digital technologies now exist that can help accountancy businesses to streamline their workflow. Cloud-based systems support accountants in storing vital documents and files online and allowing them to invoice smarter; control their cashflow; run payroll efficiently; and automatically save receipts.

Additionally, virtual collaboration tools assist accountants in connecting with their colleagues and clients. The importance of staying connected in this age of hybrid and home working cannot be stressed enough: staying digitally connected allows employees to carry out their jobs with more efficiency and collaborate and discuss ideas with ease.

When successfully implemented, digital communication platforms such as Microsoft Teams and Zoom give colleagues the ability to attend video conferences and meetings, no matter where in the country they are. Giving your team access to virtual collaboration tools is essential in this modern age, especially with the rise in popularity of hybrid working.

Benefits of digital transformation in accountancy

Accountancy firms certainly stand to benefit from carrying out a digital transformation: the right digital tools permit accountants to provide their clients with expert insights and quality analysis of their books and business and personal finances.

Going digital may also help firms save money and promote green growth, for example by doing away with paper and working digitally. Productivity may also increase once a firm goes digital as the tools accountants require to perform their jobs effectively are readily available online.

Looking to improve your data management? Digital software may be the answer. Digital tools allow businesses to efficiently store and access their records with ease, and may even assist in data entry by pre-populating eligible records.

Challenges and considerations

Although there are certainly many benefits to digital transformations, challenges also exist that firms must take into consideration. Undoubtedly there are significant costs involved with going completely digital, and businesses need to be aware of these before proceeding.

Staff training and fresh infrastructure may also be required to ensure all employees have a thorough understanding of how digital tools work and how they can help to revolutionise how the business functions.

Additionally, data security concerns must be considered and focus on making sure digital tools are secure must be a top priority in order to safeguard confidential information.

Throughout the digital transformation process, business leaders will be required to manage their team's expectations: workflows may be temporarily disrupted whilst the firm undergoes the change, and for a time the business's services may experience small issues as kinks associated with going digital are ironed out.

It is important for anyone considering a digital transformation to carefully take these points into account before embarking on a digital revamp.

Final Thoughts

Embracing digital tools and the advantages they bring to the accounting profession is essential. As our world becomes increasingly digital, services and processes are required to keep up.

In this modern age, going digital will only serve to help improve how accountancy firms operate and enhance the services they supply to their clients. Becoming fully digital may also assist a business in keeping up with its competitors and positioning itself as a respected thought leader within the industry and the digital world.

Whether your firm is considering going fully digital or is already undergoing a transformation, Mercia can help. To find out more, please get in touch with us.