Reviewing Your Financial Software – One Size Doesn’t Fit All

Nick Banks, Business Advisory Partner at Scrutton Bland looks at ways to get ahead with the latest developments in accounting software.
 
Making Tax Digital (MTD) requires businesses with turnover above the VAT registration threshold to review their accounting systems to ensure that they are compliant to maintain digital records from which to submit VAT returns. For some, this may require an upgrade to existing software or consideration to change at a time when the technology is fast moving, not only in the accounting and finance space but much wider across marketing, retail and inventory management.
 
The backdrop of Brexit, anxiety about change and risk of financial distress can be mitigated by ensuring your business systems generate reliable, regular data upon which informed decisions can be made. 
 
Ask yourself some questions:

• Do I get the information I need?
• Can I get data when I need it?
• Do I need to be in the office to get the information?
• Can my systems be more efficient?

Software selection should as far as possible identify a solution which can integrate much of the financial and business data to one platform. A smaller business may opt for a generic accounting package, whereas larger businesses will opt for sector specific software often bespoke to their own processes.
 
Any system should drive efficiency in the business.  Technology and changes in banking regulations have created opportunities such as being able to process invoices from a photo on a phone, scanned image or email and enter those invoices directly into compatible accounting software, retaining a copy behind the transaction for ease of reference.
 
Bank feeds enable the software to talk to your bank and pull the bank transactions into the software to assist with completing the bank reconciliation.  In time, you should be able to transact bank payments through your software.
 
Traditionally, software has been desktop based and this continues to be the preference of some who are wary of the cloud and the security of data. My personal view is that cloud vendors’ security is so vital that their servers will be subject to the most robust protection against cyber-attacks and it is more likely that a business’ data is more vulnerable to being hacked from an email the owner may open inadvertently. Some software packages have evolved to offer a hosted version, that is a version of the software is hosted on a server that the software vendor maintains, but which enables multiple user access such as the business owner and the accountant. The cloud offers the most accessible route to a business’ data since it can be accessed on a computer or mobile device such as a smartphone.
 
Using data effectively will drive success, but this requires integration. Cloud vendors use Application Programming Interface (API) links to enable different software applications to work with each other and this enables bespoke software solutions, often referred to as app-stacks, to be built for a business.
 
Data aggregator platforms also utilise API technology to provide one point of access for business intelligence, collating financial information and other sources of data that may be available if the data source is accessible.  This can enable a business dashboard to present key data and performance indicators to give a real time snapshot of the business’ financial wellbeing.