On a daily basis, I hear that quite a few accounting practices are deferring the need or requirement to get clients reporting in a more efficient manner. I believe this is mainly down to HMRC’s wavering deadlines and general confusion within the industry.
However, regardless as to what the exact process might look like once HMRC sets out the details, the elephant in the room today is that it’s time to change and help your clients go digital now.
Each firm should come up with its own independent plan for what I call “Making Business Digital” and be less reliant on waiting for guidelines on Making Tax Digital for Business (MTDfB) or Making Tax Digital for Individuals (MTDfI).
It’s time to change your practice’s priorities so you’re getting to a point where you reach accounting utopia – which will in turn pave the way for Making Tax Digital (MTD) once the time comes.
But how do you do this? Let’s explore some strategies for converting clients.
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Utopia is of course going to vary from firm to firm. But generally speaking, most accountants think utopia is having 80% of clients using their own accounting software and working in collaboration with their accountants.
The other 20% are either going to end up paying more and become an outsourcing client or are going to have to incur higher costs by recruiting a bookkeeper.
Within this plan to get to practice utopia, we need to be reasonable in what we are asking clients to do and not overload them.
Getting a client who has previously not had a large amount of involvement with the day-to-day bookkeeping of their business to start doing everything is overwhelming – to the point that it’s almost guaranteed to end up with books littered with errors. It will be time-intensive and give business owners less time to work on the things that matter.
So here’s my first tip: consider having a strategy in place with each client to clearly map out what the next 12 months look like. Knowledge is power and being able to manage client expectations as well as helping ease the struggle is one of the important steps to getting clients successfully transitioned.
I often ask accountants how many clients they have to transfer to their own accounting software in the next 24 months. The answer is generally an easy one as it was a likely regular agenda topic internally.
I then ask how many clients have successfully transferred to their own hybrid/cloud accounting software in the past 12 months – and again that figure is usually obtainable.
By performing a quick calculation to determine your transition rate using the past 252 working days in the year as a guide, you can figure out whether your required daily conversion rate is moving forward. It is this rate that in most cases does come at a bit of a shock.
We know this journey is not going to be an easy one and that the only way to achieve utopia is to ensure you have a cohesive client strategy.
Here are some suggestions as to what steps can be taken to help make this journey a little easier and start the journey to practice utopia.
1. Be clear with clients
We know clients look to you as their advisers (often looking for advice outside of your planned remit), so it’s imperative that you have the answers, support and strategy in place to reassure them you have it all in hand.
2. Clients will do what you tell them
Well, most of the time they do – so manage their expectations and tell them what’s going to happen in plenty of time.
3. Map out the journey
Digitising business for lots of small businesses is an incredibly daunting task. Some clients are already time-pressured and finance conscious, so they might worry about increasing time or financial pressure.
4. Communicate clearly
We can learn from the highs and lows of auto-enrolment and instead of reinventing the wheel, we can benefit from some of its processes.
Have a list of communications that need to go to your client. Send a letter or email informing them that their journey to the cloud will begin in 30/60/90 days (depending on how much notice you think they might need or coincide it with their year-end).
In it, highlight that correspondence will clearly outline what the next 12 months looks like, how you will support them, what training will they get, what milestone will they hit and why they are doing so.
5. Break it down into bite-sized chunks
As I have already alluded to, this is a daunting task. Research has suggested that by giving clients a new system and getting them to start doing everything sees engagement at near on 90% in month one.
However, this drops to 60% in month two, while by the end of the first quarter engagement, it slumps to a miserable 20%.
Having a staggered staged roll-out means you can get clients contributing or taking on a number of smaller tasks (such as raising their sales invoices or managing their stock/inventory).
Once they are familiar and comfortable with that, you can start to increase their workload in line with the clear strategy you informed the client of in your earlier correspondence.
Bonus tip: Pick accounting software with a strong audit trail as this is crucial for monitoring and improving the way that clients are working and can save on reworking client data.
6. Stick to the strategy
As time goes by, it could become easy to forget or deviate from the planned strategy – but don’t. Have a way of tracking these steps for each client. Add this to the weekly meeting agenda and make sure each client is on track with their cloud journey.
7. Get feedback
While this journey is a new one you can learn from each client you digitise, it is important to find out what worked and what didn’t work, then make the necessary improvements to help other clients too.
8. Don’t forget them
Just because a client might have come to the end of their cloud onboarding, it doesn’t mean this journey will end. Keep in touch with them, remind them of new features that will benefit them and consider holding quarterly or biannual sessions to refresh and fine tune.
Guide to Making Tax Digital for accountants and bookkeepers
Discover what Making Tax Digital means for your practice including the key dates you need to know and the five steps you should take to prepare now.