5 January 2021
The accounting benefits of going digital
If 2020 taught us anything, it is that technology is a wise investment for your business. Some businesses have only survived the pandemic so far by adapting processes and moving online as much as possible. For any business, accounts and tax are key and even before the pandemic, HMRC was rolling out its Making Tax Digital campaign; requiring all businesses from sole traders to multi-national corporations to file all tax returns online. Read on to discover all the benefits of going digital...
For some, going digital is a valid concern. There is a worry that heavy reliance on technology will cause a loss of human skill. Why would it be necessary to learn how a balance sheet is put together when the computer program does it for you? Of course, it is still necessary for a human being to possess such a skill, so that business can continue if the technology fails. There is also the concern that those who are not ‘technology minded’ and prefer to work in a traditional way, will be left behind as businesses adopt more and more digital processes. Despite this, there are some compelling reasons to go digital.
A more streamlined process
Manual accounting simply does not work for large business as there are too many transactions and the data which they produce is too voluminous to be recorded manually. It would also be nigh on impossible to gather the information required to produce a timely report for management or shareholders from a manual system.
With a digital accounting system, transactional data can be automatically entered at the point of sale and from online banking, just requiring initial set up and ongoing sense checks which are much less time consuming. In addition, should a report be required, this can be produced at the touch of a button once regular reports are set up within the system and it is not always necessary for an accountant to produce these reports, although the job of explaining them isn’t likely to go away.
Improved security and controls
A digital system is far easier to keep secure than a manual system as access to certain areas can be restricted for different employees. A digital system can also help with controls against fraud, such as segregation of duties, for example, if one employee has raised an invoice, the system will not allow the same employee to raise a credit note for that invoice. Segregation of duties is much easier in a larger organisation with more employees to separate the work between, but even in a smaller business which might have just one person doing all the finance work, a manager can be required to review such transactions before they are passed through the system.
Cost and time efficient
As we have already mentioned, digital processes are far faster and since they are automatically produced also require less human input. Therefore, since staffing costs are much lower, after the initial outlay to purchase a licence for accountancy software and the ongoing technical support the business may opt for, long term costs are also reduced when using a digital system.
A digital process does not (usually) take a sick day or have an off day and thus generally tends to be more reliable. It is also possible to calculate time scales for jobs with greater ease than with manual systems as processes will always take the same amount of time and multiple processes can be run concurrently.
Making Tax Digital compliance
Perhaps the most significant benefit of moving from manual to digital accounting processes is that as HMRC continues to roll out its Making Tax Digital initiative, your business will stay compliant. That means your business will able to keep up with developments and continue to offer a full range of services.
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We are experts in cloud accounting, and understand the difficulties businesses are facing during the pandemic. We have invaluable knowlege to help support you. Contact our Director, Nick Bonnello, directly today on 0115 964 8860 or email him at firstname.lastname@example.org to find out how we can help you across all areas of your business.
The views provided in this article are for general information purposes only. Nothing in this article represents advice of any nature whatsoever. Accordingly, RWB CA Limited does not accept any liability or responsibility for the information contained in this article or any decision or other action that may be taken in reliance upon the information contained within it. RWB CA Limited accepts no responsibility for any errors of fact or opinion and assumes no obligation to provide you with any changes to its assumptions.