Businesses of all backgrounds are increasingly finding themselves forced to accommodate the change. While regulatory and logistical issues prove problematic, the biggest hurdle to overcome is the rise of digital technologies in the finance sector and the risk and opportunities they represent.
So, what exactly is digital transformation and what role does it play in the world of accounting and finance?
What is digital transformation?
Promising greater efficiency and effectiveness, digital technologies have infiltrated every level of the financial landscape, from software packages and platforms to new technologies, and computer hardware. Marked by a move from physical files to digital documents, accountancy and finance professionals increasingly use online tools to carry out their work.
And you can too.
With many options available, the UK Govt spearheaded their Making Tax Digital (MTD) initiative in 2015, before finally bringing it into force in 2019. With many businesses now required to use the new system, technology has revolutionised the way individuals pay tax and the daily approach they need to take with their work.
How has it affected finance and accounting?
When it comes to bringing new technology into the world of business, finance and accounting practices have long been early adopters. Using automation, validation, and other approaches can help eliminate human errors and ensure that all filings are of the highest possible standard.
Some key advantages of using digital systems include-
1. Cloud Technology: Securely storing client information on the cloud allows for a renewed degree of oversight and collaboration, allowing clients and professionals to refine their approach and work together with greater ease
2. Efficiency: Dealing with paper processes or a series of apps can result in frustration, increased work pressure, and unintentional mistakes. Using the right suite of unified tools allows your teams to refine key process steps and make sure that you are following best practice guidance at all times.
3. HMRC Compliance: HMRC’s MTD initiative requires businesses with a turnover of over £85k to submit their returns digitally and with high regularity depending on the structure of their business. Choosing a system that can connect with the HMRC API allows you to securely transfer information, ensure accuracy, and avoid fines or negative publicity when it matters most.
What elements can you use?
If you are considering pursuing digital innovation for your business, there are a number of key technologies that can help provide the valuable support you are looking for. Some of these options include-
Blockchain: With its distributed ledger, blockchain is a fantastic, secure way to manage financial transactions and provide insight into asset ownership and the obligations buyers and owners have for a particular product. This helps with reconciliation actions and labour intensive bookkeeping, potentially allowing auditors to streamline their work and focus their energy on other complimentary or more productive actions. This also allows for easy analysis and review, making storing, sharing, and recording key data easier and more reliable than ever before.
Artificial Intelligence: Whether it’s a chatbot, automated process, or complex piece of machine learning – AI can be a valuable tool to help with practical problems or high-level needs. This can allow teams to make predictions with more accuracy, strip back the amount of manual labour required in making entries or work alongside a flesh-and-blood advisor to provide the best guidance and customer experience possible.
Dedicated Software Packages: Finding the right unified platform for your business or client can help add value at all levels of your business. Whether it is an established system or a bespoke platform, finding the right accountancy software can make key actions easy, provide a neat solution to complex work, and ensure that your returns are filed quickly and correctly. And with a high degree of customisation, finding the right tool and provider can help make things quick and simple even when time is against you.
If you want to learn more about the role digital transformation plays in the world of accounting for your business, our team at One Click Accountant is here to help. With many years’ experience, we work with you to provide a solution that is right for your business and fulfils your unique needs.