As we shoot towards 2020, it’s important to understand what lies ahead. While we can’t predict the future (although our software can!), there are some trends we know will dominate the industry. Some have been in the pipeline for some time, while others are new. Here’s our roundup of advisory trends that will surface in the coming year.
1. Cloud accounting takes over
Cloud accounting is ever on the rise, expecting to be worth over ten billion dollars by 2025. We’ve seen the market change, grow and expand since our launch five years ago and the increased hunger for improved, innovative solutions by businesses and the development and evolution of advisory services from the accounting industry. This will continue to go from strength to strength.
2. MTD rears its head again
We made it through the soft launch last year, now, those in the UK will need to prepare for the changes coming with this year’s hard launch. Businesses and their accountants and bookkeepers should be preparing for three major changes.
What new changes will be made to MTD in 2020?
- Digital bookkeeping
- Digital journey
First up, digital bookkeeping
The biggest progression, sees bookkeeping go digital, affecting the hundreds of thousands of businesses who work on paper or in spreadsheets. The 2020 changes to MTD require these businesses to digitize the recording of their supply purchases and sales, giving details on time of exchange, value and VAT rate.
So, this is the perfect opportunity to discuss accounting software options with those clients who haven’t yet made the jump.
Second, the digital journey
What do we mean by the ‘digital journey’? After April 2020, any data transfer between compatible software (eg. accountancy or invoicing systems) will need to be done with digital links. This means no manual inputting and no corrections or changes made in spreadsheets. Detailed off-software calculations, like partial exemption, for example, are exempt from this rule.
This can be tricky for businesses with multiple accounting systems or group accounts. So, speak to your clients about their options, whether it’s integrating their systems or finding compatible software options. It’s important to note that businesses with complex or historical IT issues can apply for an extension.
Step up, it’s penalty time.
Coming out of the soft-launch period, MTD has switched into their ‘bad cop’ hat, and will begin handing out penalties on late filings, inaccuracies and other offenses against the new MTD systems. Fines are cumulative, based off on a total number of offenses over the past 12 months. Fines can reach up to 15% of due VAT, plus fines of up to the full total of undeclared VAT.
3. Technology and automation continue to grow
Linked to the above, as the demand for advisory grows, innovations in tech will allow advisors to find new ways to engage and protect clients, increasing visibility over businesses and making processes more efficient. In addition, improved tech solutions will lower time costs, for both compliance and advisory work.
4. Forecasting & scenario modeling take center stage
As ever, getting insights into the future is a key part of advising clients, growing in popularity. Even a simple two-year forecast based on historical data will give a business owner more direction than if they were to go it alone. Similarly, playing with scenario modeling to test the outcomes of decisions will empower clients to learn the best, worst and middle cases that derive from their actions.
5. Late payments will become a larger problem for clients
According to research completed by MarketFinance, the average number of days overdue payments were made doubled from 2018-2019. This puts businesses at serious risk, being paid 23 days late. Late payments will harm cash flow, reduce chances of investment and create a lot of admin work for businesses. So, this is one to help your client keep a close eye on.
Using Futrli Flow, your client will be able to see their customers' rankings, be notified when payments are late, and see how payments are affecting their cash flow. And now, with our partnership with GoCardless, you can help your clients set up Direct Debits for their customers so their invoices are always paid on time.
6. Clients will want to get their hands dirty
As clients become hungrier for advisory services and more involved with their numbers, client-facing portals will become more popular. Futrli Flow, for example, provides your clients with daily, data-driven updates on their business, letting them know what's going right, wrong and what they can do to improve their performance. This will allow for advisors to provide a more proactive service, using the same information snippets, and also being able to automate providing timely information.
7. Marketing new services is a must
Marketing is becoming one of the most important pieces of the puzzle for practices. 2020 is going to see the firms which have adopted advisory start to up their game with their promotional work. Not just great for winning new clients, your marketing effort will encourage client retention. Business owners are finding it easier to shop around for accountants who will serve them best, so let your clients know you’re on the ball and keeping pace with them. The power of marketing is undeniable. We have a full guide on marketing advisory for your firm.
8. A great strategy will drive firms forward
Your strategy is going to drive your success. As more and more firms evolve their offering, your strengths and strategy will separate you from your competitors. But, in equal stead to your positioning and marketing, your internal rollout is just as important. Think about who in your team could head up your advisory team. This will put you in great stead for rolling out your new way of working to your clients. When you get your team aligned, your external strategy needs to be realistic and achievable. Celebrate the positives and make sure that everyone’s on the same page.