Financial digital transformation: An opportunity, not a threat
By Simon Kearsley, CEO of bluQube
Industry across the country and globally is going through a fourth industrial revolution, and accounting and finance are no different. With HMRC’s Making Tax Digital reforms and a continued focus on becoming one of the world’s most digitally advanced administrations, digital transformation is well and truly in motion in the UK finance sector. As a result, there is increasing pressure on business owners to stay ahead of the curve as accounting moves towards a digital-first approach.
There is a misconception that accounting as a sector will face death by digital, but in reality, technology is an opportunity, not a threat. Software has the ability to leverage technology to make accounting processes simpler for business owners and finance professionals; for example, cloud-based data management, interoperable systems and improved analytics.
What technology can be used in accounting?
One of the most noticeable shifts in accounting is a move towards cloud computing technology, which is where data is stored and accessed online, rather than on-premise. This gives a free flow of information, regardless of the accessing device, and means that employees within the business can collaborate and exchange information more easily. As hybrid working is now taking a much more prevalent place in business, cloud computing offers real benefits to colleagues who work remotely as they can access the software from wherever they are working.
Cloud computing is well established in accounting and is embedded into a range of accounting software. It allows finance jobs to be easily undertaken by more than one person and provides a safe storage place for all data that won’t be lost by an accidental hard drive wipe. Interoperable systems allow information to be shared so that data does not need to be constantly rekeyed, which is time consuming and may lead to mistakes that later need unpicking, and have the added benefit of giving business owners full sight of their accounts in collaboration with any relevant colleagues or external accountants.
Blockchain and automated accounting technology
Technologies that are still emerging within finance are blockchain and automated accounting technology. Blockchain is an encrypted data logbook that allows companies to use common data retention infrastructure, meaning both sides of every transaction, buyer and seller, are recorded in a shared ledger to minimise inefficient and time-consuming procedures that may lead to discrepancies. Automated accounting will make life much easier for business owners and accountants, with less time being spent on manual entry and the space for human error being minimised. As a result, time is freed up to spend on other areas of the business, which can support overall profitability.
Artificial intelligence and machine learning
Recent years have seen a rapid acceleration in the pace of disruptive technologies such as artificial intelligence (AI) and machine learning (ML) in Finance due to improved software and hardware. The finance sector has seen a steep rise in the use cases of machine learning applications to advance better outcomes for both consumers and businesses.
AI can conduct rudimentary tasks and ML can pick up on errors that would otherwise be complicated to resolve. Using AI and ML in tandem with one another will reduce time spent on arduous, repetitive jobs, such as payroll.
Optical character recognition technology
Optical character recognition (OCR) technology is increasingly being embedded into accounting software. It allows for handwritten and scan printed documents to be converted into machine-readable text that can be copied or edited as necessary. Integration with accounting software allows business owners and accountants to cut down on unnecessary paper clutter and makes documents much easier to access.
What are the benefits of finance digital transformation?
Successfully implementing technology into business accounting processes brings a wealth of benefits which ultimately lead to firms saving time and money. Operations within the business will become more streamlined so that employees and owners can focus their time on developing and growing the business. This will lead to increased sales, better relationships with customers and suppliers, and improved, data-informed decision making.
With mandatory Making Tax Digital for all VAT registered firms coming into action next year, business owners who fail to acquaint themselves with digital record-keeping ahead of time may find themselves facing penalty fines. The new legislation shows a clear shift on a nationwide scale towards digital processes. Business owners that do not embrace it may find they are left behind as competitors become more digital and efficient.
Digital transformation can improve processes across the whole business. Skeptical business owners can test the waters with accounting technology and analyse the results to see how it is impacting the business. This could be the first step on a wide-scale digital transformation journey that demonstrates the benefits of technology and opens minds to implementation throughout the business.
Choosing the right software
The finance technology sector has been growing for several years, so there is a huge number of accounting software options available on the market. Business leaders should work with all departments of their business to define the specifications necessary for the company’s unique needs. This will ensure a streamlined process post implementation and businesses should demo a number of offerings to decipher the features that best cater to the company.
Some key elements that business owners will want in their software are fixed costs and a strong and reliable support system.
Business owners are all too often stung by hidden costs in their software. Some providers will offer cheap prices, only to recoup the costs in long, expensive implementations. Before committing to a provider, ensure you have a full and transparent quote to avoid a large, surprise bill at a later date.
Software can’t always be perfect and on occasions, things do go wrong. Using a provider with reliable customer service support and expert accountants on hand to help will mean any issues can be ironed out quickly, without too much disruption. A real, human touch from your software provider will go a long way in keeping everything running smoothly as your business adopts digital transformation.
To find out more about how bluQube can help to take the hassle out of business finances or to book a demo, visit https://www.bluqube.co.uk/.
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