The move to the cloud has been going on for years in the accountancy sector, fuelled by the popularity of systems like Xero and QuickBooks. As well as the introduction of Making Tax Digital (MTD).
But the road towards the cloud isn’t always a smooth one – operational practices must change dramatically to accommodate this new way of working, whilst clients must also be moved over to new platforms.
So, it’s perhaps not surprising that many accountancy practices continue to cling onto the legacy technology - despite the introduction of MTD, which effectively mandates them to adopt cloud accounting software.
Some firms are guilty of inputting data through MTD-certified systems, but continuing to operate legacy tools and practices as they have always done.
This is particularly true of mid-size firms, which are less agile and able to adapt than smaller firms – but have less money for investment than larger practices.
There may be an argument that if an existing system works, then why change it – particularly as a new system comes with inevitable costs and disruption.
But moving on from legacy technology can be hugely beneficial, here’s how:
Cloud-based systems are easier for clients
More and more clients now expect a service that can be accessed conveniently and seamlessly at the touch of a button. Basically, they want the ease and flexibility of a digital, cloud–based approach.
Not providing this risks your customers jumping ship, and moving to a more digitally savvy competitor.
Of course, not all clients are comfortable with change. Older, or more established customers may prefer the familiarity of your existing systems - at least in the short to medium term.
That is why many accountancy firms are setting up a digital arm of their business, which can run in parallel with existing operations and offer cloud-based services to those clients who have indicated a desire for change and who would benefit the most.
Legacy systems are a security risk
The latest State of Cyber Resilience report by leading management consultancy firm Accenture, reports that legacy infrastructure is a major threat to cyber security.
By their very nature, older IT systems are more open to attack – they’re less regularly patched and updated and have been around for longer, allowing cyber criminals more time to discover their weaknesses.
Cloud-based systems can help cut costs and boost revenue
According to a report by market research specialist Vanson Bourne, organisations can cut their operational costs by 13% by modernising legacy IT systems.
This is largely due to maintenance issues. Older platforms have more bugs, which means more work has to be done to maintain them – as well as the consequent impact on productivity when something does go wrong.
Equally, moving to the cloud can also boost your profits as it creates a leaner business model. According to the Vanson Bourne report, moving away from legacy systems can grow annual revenue by over 14%
For accountancy firms, using cloud-based systems makes it both easier and cheaper to provide basic accounting facilities by automating many procedural aspects of the service – like bookkeeping, accounting and tax preparation - freeing up time and staff capability across your firm. More clients can then be taken on, but without having to recruit more staff.
Provide more strategic business advice
With cloud accounting, you’re also able to offer a more holistic service to clients, one that also concentrates on business advice and help – rather than just traditional tax services.
This is because one of the major strengths of cloud accounting is that it provides real-time financial information, rather than a single annual profit and loss statement.
Providing this more regular, consistent advice enables your clients to respond more quickly, ultimately helping them build a more profitable business. And if you’re helping a client make more profit, they’re much more likely to stick around.
Investing in technology helps with staff recruitment and retention
Like it or not, the accountancy sector is moving to the cloud. And younger members of the profession – and those just entering the sector – are usually anxious to get to grips with new ways of working.
Giving younger members of staff the chance to experiment with technological innovation taps into this desire, which can be critical to both acquiring and holding onto staff.
Too many mid-sized accountancy firms are keeping faith with old, legacy technology – and for the most part this is to avoid the cost and disruption associated with moving to a cloud-based platform.
But the move to the cloud is an inevitable one, and by struggling on with legacy systems you are holding your practice back. Moving to the cloud frees up huge amounts of time within a firm and helps you move from an end of year necessity, to a strategic business advisor.