In the opening pages of A Christmas Carol, Charles Dickens’ wonderful little novel of Ebenezer Scrooge’s transformation from mean-spirited misanthrope to generous tribune of the poor, we are introduced to his clerk, Bob Cratchit. Sitting in Scrooge’s offices in a tiny, icy room (“a sort of tank”, in Dickens’ words), trying to warm himself by the flickering flame of a candle, the good-hearted Cratchit worries that the wintery temperature may freeze the ink in the inkwell he dips his quill into.
This may seem a somewhat colourful way to open an article on accounting software, but the relevance resides in the technology that Dickens describes. Until very recently, technology for bookkeeping had barely advanced beyond the quill. True, the quill was replaced by the fountain pen, then the ball-point and typewriter and, later, the word processor and computer spreadsheet. But data entry and retrieval, like Cratchit copying letters with his quill, was entirely manual, eating up huge amounts of human time that might more productively be deployed on other, more profitable business tasks.
In what follows, we’ll show how new advanced accounting software has revolutionised bookkeeping, releasing human time for more gainful business pursuits.
The digital revolution comes to accounting
Human beings have been inventors of technology since our species appeared on the Earth as an upright biped gifted with an unusually large and intricate brain. The two nouns comprising the term ‘Homo sapiens’ are the Latin words for ‘human’ and ‘wise’ (or astute) – literally, ‘Wise human’ – though we might just as well be described as ‘Homo technologus’. From the wheel to the space shuttle, humans have been inventing new tools to extend their reach, their understanding and their capabilities.
Our current era is witnessing a rapid acceleration in digital technologies. We live in an era not simply of smartphones, but also of smart cars and smart fridges due to these developments. For businesses, one clear sign of this technology’s ubiquitous reach resides in the UK HMRC’s Making Tax Digital (or MTD) initiative.
This aims to convert the UK tax system from a paper-based process into an entirely digital one, encompassing not only Income Tax Self Assessment but also VAT and Corporation Tax. The goal is to make tax returns simpler and more efficient and will require all UK businesses to begin using HMRC-compliant bridging software for spreadsheets, or HMRC-recognised accounting software instead of paper returns.
The new accounting software radically automates all accounting processes (including automatically updating them with new data in real time as it becomes available) that have until now been entirely manual – manual and, it has to be said, exceptionally time-consuming and error-prone: humans are more likely to make mistakes when engaged in repetitive and, frankly, boring chores. The software automatically stores accounting data securely in the cloud and makes it viewable to business owners and authorised personnel from any connected device at any time (or location) in real time.
This is one example of the broader process of digital transformation that more and more businesses and organisations are engaged in. As HMRC puts it: “Moving away from ledger or spreadsheet-based accounting and adopting digital accounting software online, can help you stay on top of your finances. It can also save you time by automating day to day tasks like invoicing, paying bills and financial reporting.”
The knock-on benefits of accounting software
Because the software streamlines accounting by automatically integrating banking, payroll, billing and reporting, not only does it save appreciable costs on paper, printer ink and postage, but it also releases human time for more business-productive tasks.
Staff members freed from manual data entry are able to focus on more ‘human-centric’ tasks such as engaging more customers and clients. However, the software also makes the profitability of specific business projects more visible and trackable: it gives real-time visibility to the resources being used by selected projects and the income being earned through them, thereby drawing attention to areas where improved management is called for to improve results.
Not only that, but also authorised staff employed in sales and marketing can gain access to real-time information about their endeavours via their portable smart devices, even when they’re out ‘in the field’. In other words, thanks to the ‘anywhere, anytime’ availability of data secured in the cloud, their productivity doesn’t suffer when they’re travelling or working away from their desks in remote locations.
The other notable gain is enhanced collaboration: the ready availability of real-time financial data concerning specific projects improves planning and decision-making in inter-departmental and cross-project work.
For businesses with an international reach, the software can adjust invoices and other financial reports to different currencies, thereby substantially easing cross-border trading.
Making Tax Digital is likely to effect a major transition to automated digital/paperless solutions for business accounting. However, it will also free human labour from tedious and time-consuming manual data entry, data retrieval and billing chores, making human agents available for more business-productive tasks. This in turn is likely to lead to happier, more satisfied, and task-focused employees.
Cloud-based subscription software makes this digital transition an affordable option even for small and moderately sized enterprises.