Earlier this week the government implemented mandatory digital record keeping for VAT and many businesses will now have made the move on to a digital platform.
However, compliance should be just the start of the digital journey and there are many potential benefits that businesses can reap.
These solutions will facilitate the simplification or automation of processes, saving time, reducing mistakes and making accounting and tax reporting more efficient, but the real benefits of digitalisation come from the insights that can be achieved from the data in the system.
The benefits of KPI monitoring to either drive growth or increase profits through cost reduction, are well understood but manual or legacy systems meant that KPIs were difficult to assess, were not reported quickly and the lack of transparency in the system meant that the information was typically constrained to the finance team. Cloud accounting facilitates multiple users who can be given access to discreet aspects of the system.
Our experience at Johnston Carmichael is that once businesses have converted onto a digital platform, they immediately appreciate the transparency of the data, which in turn creates a drive to improve the financial metrics and a willingness to further develop the system to drive greater insight beyond the more straightforward financial KPIs.
Whilst software such as Xero or Quickbooks may sit at the centre, it is now possible for businesses to build an effective ERP [enterprise resource planning] system using connected apps, something that was previously only available to larger businesses deploying sophisticated, expensive systems.
New apps are being developed daily to enable a range of services including efficient processing, CRM, credit control, cash flow forecasting, invoice finance, receiving payments, e-commerce, HR, point of sale, stock control and reporting tools.
This means there are more ways than ever to analyse and visualise data enabling users to quickly understand the key dynamics within their area of the business. Sales people not only have greater access to customer sales data so that they can consider where they can take advantage of pipeline opportunities, but they also have access to real-time production costs so that they can give customers informed sales prices to ensure margins and profitability can be achieved. The finance team too can analyse performance and profitability by products, geography and customers.
The most successful businesses will embrace the digital revolution and the insights that it can bring but advisors too need to transition their service proposition to be one of assisting clients with their digital journey and using their expertise to provide the interpretation and recommended actions to deliver business improvement.
For further information about Johnston Carmichael, visit www.johnstoncarmichael.com
Stephen McIlwaine, Audit Director at Johnston Carmichael