Cloud technology for accountants has been around for over a decade, but with working from home becoming the norm amid the pandemic it has become an essential component for individuals in wildly different locations to be able to work together in real time.
Unsurprisingly, the global market size for cloud accounting software is expected to hit $4.25bn by the end of 2023, according to Flexi. Given all this, accountants and their clients are examining what they need from cloud-based solutions to help them address the challenges they face and to address future trends across the industry.
“Firms are looking for cloud technology to streamline and simplify their IT,” says David Lyford-Smith, Technical Manager of the Institute of Chartered Accountants in England and Wales (ICAEW), which has produced a series of guides to cloud technology for its members. “They want to be able to grow easily and expand their technology as needed, particularly at the moment when firms want to support remote working.
“Firms now have different offices in different countries, but they want to keep everyone on the same page. Cloud also increases reliability by providing back-up. The best advice is for firms is to do due diligence when choosing a provider and checking on matters such as data security. Go in with your eyes open and make sure that if you change your provider later, it will be simple to move data from one place to another.”
Making Tax Digital (MTD) is another key area pushing accountants towards investing in the cloud. After all, if everything is online, then there is a greater need for virtual efficiency, according to James Brighton, partner, audit and assurance at Deloitte.
“The cloud is an important part of the transformation of the business in terms of data analytics,” he says. “It can control speedy access and create a situation where you can have a large group working on the same file or working papers. It’s the implementation of an efficient working process.
“There are some challenges: you need to make sure the environment is secure and when it comes to the broader use of data, you need a controlled environment to operate in.” However, he believes that the use of cloud technology means that as audits will become more data driven, it is increasingly important that software providers and utilisers regulate the area securely.
Adrian Stevens is a director at Midlands-based Edwards Accountants, where he specialises in technology consultancy services, IT strategy and transformation, business intelligence and information management services. He also cited efficiency as a crucial component when choosing to invest in cloud-based accounting solutions.
“[Cloud software] is constantly updated through the browsers and there is no time delay,” he says. “Everything is also completely up-to-date: we are plugged into client bank accounts, so data is flowing in from open banking.”
According to Stevens, cloud technology overcomes the problems caused by a lack of access to data and the slowness of processing, while he believes that the biggest trend in the future will be further integration between software provided by other applications.
Lyndsay Hardwick of Milsted Langdon, one of the UK’s top 100 firms and with offices across the west of the country, also believes that integration of applications is a crucial element to look out for when choosing software.
“For example, integrating job management software and accounts and project management software is a big issue for our clients,” she says. “A quick implementation process when you have lots of locations and remote workers provides timely support and of those clients who had not previously moved to the cloud, Covid-19 means that those still on their desktops are now moving.”
Hardwick believes that the biggest challenges the cloud can hope to overcome involve the accuracy of data.
“Bank feeds and invoice automation mean information is more up-to-date and accurate,” she says. “This means we can give our clients better insights and help them make better decisions. We can log in to clients’ data and look at issues in real time, rather than having to have them send in back-ups, plugging it all in and sending it back again.”
Hardwick believes that one of the biggest coming trends will involve artificial intelligence (AI), with lots more intelligent tools becoming widely available to accountants in the future, empowering data analytics software to handle ever larger volumes of data. This trend is also having an impact on the team composition of accountancy firms.
“We are hiring staff who are not just traditional accountants but people with data analytic skills,” she says.
Chris Downing, tax director at Inspire Accounting says that his company’s motivation for investing in the cloud comes down to efficiency for the team and their clients.
We have better access to information, we can respond faster and there is better decision making for the business,” he says. ”And one of the huge hurdles [cloud technology] helps overcome is that it helps deal with human error and risk.
“It ensures accurate advice and, with the storage space it provides, there are fewer production files and less stock ordering. Automation means we can stay on top of things and we can also use developments in the technology for better fraud detection.”
He believes future trends will encompass even greater accessibility, such as all the technology becoming available on mobile phones and believes that there will be even greater connectivity between apps.
Of course, the problems that confront the larger accountancy firms can be slightly different. Mark O’Sullivan, a partner in digital transformation at Grant Thornton, leading its enterprise application strategy and implementation practice in the UK says that cloud technologies have resulted in “simplification and standardisation” while the pandemic has served to accelerate digital trends that were already underway within the industry.
“Cloud enables more flexible and agile working,” he says. “Microsoft 365 and its modern versions have let us step out of the office and work from home.”
O’Sullivan cites four areas – “a scorecard” – that are relevant as clients migrate to cloud-based systems and which should help overcome pre-existing hurdles:
- Strengthening the risk and control environment
- Creating greater efficiency and reducing costs
- Creating greater value through increased data analytics
- Enhancing the user experience
“This is the least exploited aspect of the cloud,” he says. “Modern cloud technology makes for a different user experience: it is an enabler of cultural shift and cultural change. It is better management of risk and control and empowers employees to drive the businesses further as it breaks down silos within an organisation.”
He believes that this enhanced user experience will be one of the largest growing trends, with AI playing a greater role in empowering cloud accounting tools in the future.
“People should invest in applications that afford in-built integration with an emphasis on project costing and finance,” he says. “It should be a single integrated experience from end-to-end.”
Linda Gibson, director at Gibson Whitter is well-versed in the trends impacting the accountancy profession, while at the same time encountering cloud-related issues in her own firm. She believes that initiatives such as MTD highlight HMRC’s ambition to encouraging the accountancy industry and its clients to embrace cloud technologies to make the UK tax system more effective, efficient and easier for taxpayers to get their taxes done correctly.
“We need to push forward more services like Receipt Bank and the automation of entries which help clients with compliance in areas like VAT,” she says. “The software prompts you to put in the correct information.”
Above all, it is the simplification involved that she sees to be the greatest positive of them all. “One of the biggest hurdles today is tax simplification, because the rules have become so complex,” she says. “People are making mistakes when they don’t even know there are mistakes to be made. And the Revenue itself is also a driving force behind driving the agenda, as they want more automisation of entries, because everyone wants things to be simpler.”