Purse strings are understandably tighter than ever for many businesses – of all sizes, and in all industries. Higher contributions to National Insurance, rising operating costs in production, energy and wages are just a few challenges businesses are facing.
Juggling these financial challenges comes at a time when organisations are looking to level-up in line with the UK government’s agenda. However, according to our recent research, four in five finance leaders admit their department is not fit for future growth – a worrying statistic given the need for UK businesses to bounce back post-pandemic.
For accountancy firms, aiding growth will mean offering greater flexibility and a service that matches the requirements of different business needs. The pandemic has taught us that old fashioned accounting processes are no longer fit for purpose for businesses to even keep the lights on – never mind scale. Manual accounting is not only time-consuming and subject to errors, but it also doesn’t allow for unexpected events and to spot growth opportunities clearly.
As the role of the CFO continues to evolve with over a third (39%) noting a larger demand to collaborate with the c-suite than two years ago, it is crucial they are able to drive innovation and efficiency to propel the business forward. Accounting automation is a powerful tool that can ultimately help with this – as less time spent on manual processes means more time to be spent on strategic decision making.
Below, I address three key ways that accounting automation can benefit a business’ bottom line, and allow for accountants to align with ever-changing business needs.
Saving time and increasing efficiency
Manual accounting is subject to a high margin of error. When finance professionals are spending more than half (53%) of their time in a typical week focussing on manual tasks, this risk of error will only increase. Inevitably, when things do go wrong, accountants can spend several more precious hours locating and fixing these entries.
This time could be better spent focussing on tasks that aid strategic growth and levelling-up plans – all of which finance professionals now have an integral role in delivering. In fact, our research found a fifth (20%) of UK CFOs say they’ve seen a greater demand recently placed on them by the CEO and board.
We know, in line with levelling-up and international expansion plans (the latter which is a key priority for 22% of CFOs) finance departments need to be modernised to futureproof for such growth. As businesses start to scale, accounting becomes increasingly more complicated – dealing with tax reductions, keeping receipts and ensuring payments are compliant with regulations to name but a few challenges.
Worryingly, our research found only a third of finance professionals use automated accounting software to lessen their workloads. As a result, a massive 68% of accounts payables (AP) teams still manually key invoices into accounting software, resulting in 56% spending over ten hours a week processing invoices and supplier payments. With automation, accounting software can process all financial credentials, and relate it to existing records in the systems, as well as automatically generate audits and reports. Manual processing is taken out of their hands with automation – freeing up time to focus on new innovations and growth strategies.
2. Compliance to changing payment regulations
Businesses are facing challenges around new and constantly changing payment regulations. For example, the Making Tax Digital (MTD) laws that were implemented in April 2022 require all VAT registered businesses now have to file MTD returns. This means maintaining records digitally and making returns via software that connects directly to HMRC. Late payment laws also weigh down on businesses and failure to comply could result in payees claiming interest and debt recovery costs if a business is late paying for goods or services.
To comply with tax regulations, all VAT registered businesses need to embrace MTD approved cloud accounting software. Automating the accounting process, including the collection of transaction information with the correct tax rates means that when the quarterly and annual filings are due, businesses won’t need to scramble around trying to track down expenses, receipts and invoices – reducing the risk of errors in tax submissions to HMRC.
3. Improved decision-making
An accountants’ role is broadening. Rather than solely being focused on closing the books, they are now critical strategic partners across businesses. This requires a new skillset. Crucially, accountants need to stay up-to-date with new technology trends and learn how to optimise their accounting software to become agile and strategic decision-makers.
Data produced by automated accounting systems provides a more accurate means to analyse trends, variances, and predictability. When armed with informed data that can back up decisions, accountants can work more effectively and make educated decisions faster to keep pace with business change and be one step ahead of every eventuality. In addition, the data can be present and distributed more easily as automation simplifies the reconciliation of audits and reports.
More than ever is it important for accountants to be able to offer analysis and strategic direction to businesses looking to scale. This is only possible should businesses adopt the automation technology – giving them the time to make such strategic decisions, instead of balancing spreadsheets. Such technology is vital in providing clear and actionable data points which should be key to any decision.
Automated accounting gives total visibility of financial status, compliance to everchanging payment regulations, as well as helps make smart business decisions. Only those that embrace automation and adopt the technology will see true success when looking to grow and adapt to challenges that lay ahead.
By Rob Israch, GM of Tipalti