The level of MTD communication has snowballed in recent months. HMRC has written to every eligible UK business. Newspapers, radio programmes and webcasts have extolled the virtues of digital bookkeeping.
As many business owners are aware, ramming the benefits of digital can not only feel like eating an elephant, but there’s a propensity to view it like an angry teenager. You are telling me I must do something. So, I won’t. I’ll procrastinate, tackle all other priorities, and huff and puff just thinking about the change.
And rightly so. When everything is running smoothly, digital record keeping is the keystone to increased productivity, economic progress and differentiation. But there seems a chasm between the start and the end game. So where should a business start?
Nick Gregory, chief marketing officer of IRIS Software Group, looks at some practical steps SMEs can take on the path to MTD.
Don’t show the elephant
Introducing a new process can feel akin to eating an elephant. It’s long trunk; large, floppy ears and wide, thick legs look too daunting to eat in one go. It can be equally as formidable for a business when being told of the impending legislation. So firstly, focus on a specific business issue.
A huge task for any company is recording business purchase orders, invoices and expense receipts. Whether you are a sole trader or Limited company with many employees, the arduous task of submitting and recording receipts can feel like herding a group of elephants before you sit down to dinner.
One step every business can take is to use a receipt capture app that can take images of receipts, sales invoices and purchase invoices for seamless processing. The user simply captures an image of the receipt on a mobile device which processes the data into a format that can be published directly into bookkeeping software such as KashFlow or exported into other bookkeeping solutions.
Using these types of tools also minimises the occurrence of incomplete records or lost receipts and invoices by ‘snapping’ all records as they arise. Sara Lewis, a communications consultant explains, “My desk used to be strewn with receipts by the end of the month. The thought of documenting each expense used to fill me with absolute dread. Now I simply digitise each receipt as I receive it. The process is simple, saves a good chunk of time each month and is far more accurate than manual entry.”
Matthew Rawles, senior manager at GCSD Accountants has also found success showing receipt digitisation to clients. “Managing receipts is often a huge point of pain for businesses. Whether they are thrown in a shoe box until the end of the financial year, or you hear of the monthly chore documenting them, they cause anguish. Whether the business is VAT registered or not, a good starting point for us has been to show clients how to photograph a receipt. Once they are comfortable with receipt digitisation, we move on to sales and purchase invoices.”
This could be the first or only step of digital record keeping but either way, both the client and accountancy practice benefits from the move.
Scale the success
To focus on what’s working well for a business can be perceived as counter intuitive. We usually receive emails when we haven’t completed our expenses or have missed a deadline. It’s human nature to focus on the negative but sparking hope and showing what’s possible is a positive experience. So, spend time scaling success.
For employees, including finance teams, the positive results should be celebrated; for example, if everyone in the company is ahead of the expenses deadline it creates a positive feeling. They become interested and are open to learning more about the ‘good stuff’ that’s come about from the change.
Evangelise the successes, highlight the efficiency gains and financial benefits, and trust in the new process will build.
Show all the jigsaw
Change is easier when you know where you’re going and why it’s worth it. Talk to everyone in the business about the big picture – show them all the jigsaw, not just the piece that’s relevant to them. What will the business’s accounting system look like when moved to a digital platform? What difference will it make to individuals and how will it be beneficial in the long term?
The reasons why it’s worth it, I’m sure could be extolled by every business. Not just the time, accuracy and financial benefits, but also consider wider business discussions. Finance teams can remotely access real time cash flow figures and P&L reports, and identify potential issues such as future cash flow problems.
Tweak your environment
Every business situation is different. Some will dive straight in and work tirelessly to move quickly to a digital platform. Others will listen to peers and their MTD stories before making decisions. Some SMEs just won’t have the capacity, so talk to your accountant about what’s working well for you and where you need help.
Linda Gibson, director of accountancy practice, Gibson Whitter, started to digitise her client base four years ago. However, 20 per cent of Gibson Whitter’s revenues continue to be generated from core compliance services. “We recognised some clients were finding it difficult to move to digital record keeping, so offered a service to set up and populate bookkeeping software. Some clients took over the ongoing record keeping management and we are now working with them in a purely advisory capacity. For others, we provide a monthly management accounts service with added basic financial commentary. It’s core compliance but the financial commentary provides a basis for a strategic relationship.”
The frenetic activity from businesses as they transition to bookkeeping software will not diminish on 1st April. We know the move to digital record keeping is far easier for some businesses than others, but by taking small bites of the elephant, scaling achievements and sharing the bigger picture, it won’t be a case of convincing the business to move to a digital platform, but sharing in the successes of their new-found world.
Nick Gregory, Chief Marketing Officer at IRIS Software Group