Transition Between Offline and Online Accounting

Karl Hodson examines how businesses can manage the transition between offline and online accounting – and the benefits they can achieve as they do so.

The UK government’s ten year strategy to build a trusted and modern tax administration system, also known as Making Tax Digital, is transforming the technological maturity of accountancy firms nationwide.

What does this mean for accountancy firms still reliant on offline, paper-based accounting, looking to make the mammoth transition to online accounting? We explore the transition in stages – from introducing new accounting software, funding the transition and digitalising company records, to migrating information and embracing a ‘digital-first’ culture in the workplace.

Transitioning to online accounting

When transitioning from offline to online accounting, you must navigate the selection process with care. Explore the options available and weigh the importance of the primary and secondary features offered through the online accounting portal for your practice.

Choosing a platform

When choosing online accounting software for your business, you must consider your long-term needs. While it’s common for practices to offer multiple accounting platforms to clients, you need to consider affordability and staff training before taking this route.

Here are some key questions to consider when choosing a cloud accounting platform:

• Is the software industry standard, secure and compatible with Making Tax Digital?
• Is the platform scalable as your business grows, including client numbers?
• How proactive are the providers with implementing updates and developing new technologies to remain competitive?
• What are the costs for the current package and future upgrades, and is this affordable in the short and long term?
• Are there any client incentives included, such as free add-ons or complementary services?
• What customer support is available for your practice and clients?
• What do reviews and client testimonials say?

The cloud accounting software of your choosing must function as a one-stop shop for the sake of efficiency and client satisfaction. While online accounting is naturally an upgrade from offline accounting, intuitive features such as artificial intelligence and integrations can truly elevate the experience and save substantial administration time.

Cloud accounting software stores data in the cloud so it is accessible anywhere, at any time, and shows a live snapshot of company finances. Automatic back-up means that in the event of a data breach, security threat or an administrative mistake, your data is protected.

Funding the transition

Accountancy firms are advancing their digital capabilities and upskilling staff to support the roll out of new technology. The profession is rapidly changing as accountants must match the technological literacy of clients to stay competitive.

As the world we live in embraces digitalisation, from digital currency to online only banks, and AI‑powered customer support, the world of accounting must mirror this by offering tools that can transform the accounting journey.

The 2024 Intuit QuickBooks Accountant Technology Survey found that accountants and bookkeepers are doubling down on their investments in technology:

• Accountants are planning to increase spending on technology by 50% over the next 12 months.
• Firms invested £30,000 on average in accounting technologies over the last year – a 50% increase from the average £20,000 investment reported last year.
• An average of £30,000 is earmarked for accounting technologies over the next 12 months.
• When asked which technologies accountants foresee their businesses investing in or upgrading, 47% said cloud accounting software and 48% said practice management software.

As the digital landscape in accounting is changing, the appetite for accountants to embrace new tools early is equally increasing. To thrive in this dynamic industry, accountants must actively invest in new technology.

If you require a helping hand to fund the transition to online accounting, a business loan or refinancing may provide a solution. If there is more than sufficient cash in the business, you may redirect funds to the digital transformation of the business from areas that are already well supported.

Migrating financial records

When transitioning to online accounting software, you must embrace the mundane task of digitalising offline records. While this may appear like a gargantuan task, there are purpose-built tools available that can seamlessly facilitate this.

Most industry standard accounting software offers migration tools that enable the mass transfer of information from offline sources, such as Excel.

By using these features, you can migrate financial records at the click of a button and save considerable time otherwise spent manually inputting information. This practice is prone to human error, which could cause discrepancies and seriously hamper the accuracy of your work.

Considering integrations

Reconciliation in accounting is only possible when all the financial records of a business are accessible. While some businesses may depend on a handful of essential applications to record their financial activity and process payments, businesses with multiple income sources may regularly use a variety of portals and payment gateways. Your accounting software must enable data feeds from these platforms.

Integrations are essential as they establish a connection between applications and the primary accounting portal. The accounting software that you subscribe to must actively update integrations. Due to the fast-evolving nature of technology, popular apps are likely to change over time, so fresh updates are vital.

There are a wide range of integrations that fulfil a host of purposes, such as:

• accounts;
• preparation;
• tax filing;
• bank feeds;
• credit control;
• customer
• relationship
• management;
• data entry;
• invoicing;
• expense
• management;
• inventory;
• e-commerce;
• business finance;
• business funding;
• reporting;
• integrations;
• payment
• gateways;
• payroll;
• practice
• management; and
• time tracking.

These features are crucial to clients to make recording financial information a palatable experience. Integrations enable the automatic transfer of information, which is essential for painting a complete picture of a company’s finances, tax liabilities and exposure to financial risk.

Cultivating a digital-first culture

The transition from offline accounting to online accounting is a mammoth change that can positively transform and futureproof an accountancy practice. To showcase how online accounting can revolutionise the way your workforce works, take advantage of the resources on offer as part of the onboarding process.

This often includes a free live demo, software trial, online training and a Q&A with a dedicated account manager. This is key to building a workforce receptive to change and passionate about the digital platforms and tools that are an integral part of the accounting journey.

“The move to online accounting is inevitable to meet industry benchmarks and appeal to a digitally powered client base.”

• Customer expectations: The necessary move to online accounting mirrors the demand for digital innovation in accounting. Firms must embrace this to meet customer expectations.
• Industry benchmarks: The technological standards in accounting are progressing year-on-year, so the fight to match up to industry benchmarks is on. By avoiding modernisation through the adoption of new technology, you run the risk of operating an out-of-date business model.

The government is a long road to modernising and simplifying HMRC’s tax framework, with much focus on digitalisation. This involves implementing a digital by default approach and reducing paper outputs. A recent HMRC consultation, ‘Simplifying and modernising HMRC’s income tax services through the tax administration’, took place to gather views on how the current tax administration framework can be updated to fulfil the following requirements:

 

• deliver on the government’s ten year tax administration strategy;
• make sure the tax administration keeps up with the rapid changes taking place in society, economy and technology to deliver the flexible, resilient and responsive tax system the UK will need in the years ahead;
• deliver a more real-time, integrated and accurate data-led service; and
• implement a digital-by-default approach and execute the necessary legislative changes to support the move to digital.

This is clear evidence that the move to online accounting is inevitable to meet industry benchmarks and retain appeal to a digitally powered client base. The wealth of benefits that stem from transitioning to online accounting are innumerable. From unchaining your business of geographical restrictions, to increasing efficiencies and connecting workflows, the switch to online accounting is an exhilarating milestone for any practice.

 

Author bio

Karl Hodson is a business finance specialist at UK Business Finance, helping businesses to raise finance through lending, crowdfunding, loans and government schemes.