Over the past few months I have been talking to Clients about Making Tax Digital, and the requirements that are coming into place for businesses to maintain digital records via accounting software or an app.
Whist at first this may seem like more expense and more red tape, converting to cloud based software gives businesses information in real time. With the use of other integrated software it can remove most of the number crunching involved with accounts preparation as it automates most of the accounting process.
It has completely changed the relationship between an Accountant and a Client, for those clients that have converted to cloud the conversations we are having more pro-active conversations about the business, rather than a reactive response to accounts that are sometimes 9 months out of date.
One example of this is a client that converted to cloud three years ago that wanted some cash flow planning. Previously this would have been based on estimations using an excel spreadsheet, as any accounting information would have been out of date. Using the Xero reporting we could provide a monthly cash flow movement report by profit and loss item at the click of a button. Using this information, we could then prepare a cashflow forecast more accurately and the client could gain a more in depth understanding of the historical cash flow movements of the business.
Making Tax Digital is coming and businesses will have to adopt to digital record keeping, however there is a great opportunity for businesses converting to
cloud in both reducing the administration burden of book keeping and the software reporting which the software provides.
If you have any questions about converting to cloud based software please get in touch.