Cloud technology: The answer’s in the sky
By Michelle Perry
Champions of cloud technology
have long trumpeted the benefits for accountants, but the profession has been
slow to adopt it. Time is running out however as the government has set HMRC on
a digital track with a deadline of 2018.
19 May 2016
It’s time to embrace cloud technology
Three years ago a leading US commentator on technology for
accountancy practices argued that if accountants didn’t embrace cloud
technology soon, they would have to retire in five years’ time.
Well let’s take stock. At the last count by the Financial Reporting Council, in June 2015, there were 6,635 registered accountancy practices in the UK, a loss of 327 practices on the previous year’s figures. The vast majority (6,314) of accountancy firms fall in to the category of small practices.
Due to a lack of data, it’s difficult to know whether the decline is due to accountants’ unwillingness to adopt cloud or other factors. A poll during a webinar hosted by Sage and the ICAEW revealed that over a third of accountants are already using some form of online accounting software and a further third are planning to do so within two years, suggesting many accountants are still not using cloud.
Don't get left behind
When you consider that the number of businesses continues to rise year on year, the falling numbers of accountants should be a growing concern to the profession. At the start of 2015 there were a record 5.4 million private sector businesses, a rise of 146,000 since 2014, according to the Federation of Small Businesses. Most companies at some point in their life will need the services of an accountant and yet there are fewer and fewer accountants.
Today, most people, particularly entrepreneurs, use smart devices and cloud technology in their daily life, and would expect to have a similar service offered in their professional life. So if a small business owner is looking to hire an accountant, it’s likely one of the first things they will expect would be the ability to send their accounts, tax returns and receipts to their accountant online rather than in the post.
“We are seeing more and more of our clients doing their accounts and bookkeeping themselves online. Freelancing is the norm and they are tech savvy so they can do this stuff themselves. They bank online, they shop online so they can do it themselves so unless accountants step up ...,” says Elaine Clark, founder of CheapAccounting.co.uk
In 2007 Clark set up CheapAccounting.co.uk from her garage in the Wirral with the aim of founding a wholly online accountancy firm in 2007. With a background in finance and technology Clark saw how technology could change accounting long before it happened. Today, CheapAccounting.co.uk has more than 3,000 clients, all of whom are on cloud. However the firm doesn’t force clients down a particular product route because of their different requirements.
Embracing cloud technology is now “critical” particularly with HM Revenue & Customs plans to make all tax accounts digital by 2018, she says. In two years’ time all small businesses will have to file tax accounts online on a quarterly basis, so unless their accountants have adopted cloud then we may well see a further decline in the number of British accountancy firms.
Experience the benefits
The benefits of cloud are varied. The main benefit to both accountants and clients are reduced costs and scalability. Cyd Smith of CS Accounting adopted cloud in 2011 and now around 50 percent of her clients are on cloud because the data is more accurate, in real time, and she could continually
dip in and out of the software to check if it was up-to-date and that everything was running as it should be
For sole traders Smith says it’s a “no-brainer”, because they can raise an invoice on their smartphone, email it and get paid by card on the spot. And with automatic bank feeds - software that transfers financial data from a client’s account into an accountant’s IT systems - clients see the accounts instantly and know what’s gone in and what’s gone out.
Some obstacles to adoption do still remain as not all bank feeds provide a seamless service and broadband speeds outside London are not as fast as telecoms providers often claim.
Two years remain before HMRC’s goal of going fully digital and before we’ll know if the worrying prophesy of that US commentator bares out. Anecdotally, there are stories of accountants retiring early because they don’t want to deal with the speed of technological change facing the profession, but on the whole most accountants it seems want to embrace cloud but remain cautious, while others are facing external hurdles that curtail their digital ambitions. Whatever the issues holding accountants back, the next two years will be critical.