Is it time to ditch clients who won’t go digital?

With Making Tax Digital for Business ramping up over the next three years, should accountants be focusing their efforts on higher value, digitally-savvy businesses?

Businesses are not generally ready for MTDfB as we revealed last week. This week, we look at the flip side of the equation. As accountants focus on their profitability, should they shun businesses who are old-fashioned and costly to serve?

Some accountancy practices are already completely digitally-focused, insisting that clients use certain platforms and tools. Olly Evans, of Bristol-based Evans & Partners, says that for the most part, clients want that too. When they aren’t using digital tools, they try to persuade them to change. “It’s not that we’re giving less choice, we’re just saying, ‘This is the better tool to do things with, we can give our services to you cost-effectively.”

The arguments for focusing on digital are as follows:

  • They’re higher value clients, willing to pay for more services. “We’ve got a client we’re working with…we’ve doubled their fees because they want more help from us,” says Sharon Pocock, partner at Kinder Pocock
  • Non-digital clients are a drain on time and resource
  • The work is more interesting and rewarding. Pocock: “We’ve helped [that client] grow their turnover by over 600%.”

However, the situation is not necessarily black and white, with both a lack of digital infrastructure in some regions and a reluctance in the accounting sector to take clients on a digital journey. Accountants across the country give their views.

Clients who don’t go digital will get left behind

Heather Townsend, author and founder, The Accountants Millionaires’ Club

Just yesterday, FreeAgent announced it was introducing its Co-Pilot service, where business owners (with up to 10 employees) will be matched with a FreeAgent accountant and pay £75 per month for all their compliance needs. This announcement comes hot on the heels of Quickbooks launching their in-house bookkeeping services, QB live, in the UK. Once again, for an eye-wateringly low monthly fee.

But the argument for forcing clients to move to digital record keeping doesn’t just come from the requirement to remain competitive. It’s also coming from the government. MTD for income tax (for the self-employed and those with property income) will be mandated from 2023.

So if a client refuses to go digital, I don’t see how an accountant can still service them. After all, within a few years, nearly every single sole trader and business owner will be required by law to maintain digital records. And, in order for an accountancy firm to profitably service their clients, they need their records digitally.

Next steps: While accountants will always be able to justify their current fees by talking about service, how long before market forces will bring fee levels down? When that happens, automation is the only way to maintain profit margins.

Verdict: Those accountants that aren’t focusing on digital clients and accounting services need to start moving in that direction.

We do turn away clients – it’s a matter of practicality

Dan Hully, co-founder and CEO, Quantico

As a business, we’re targeting growth organisations, in particular start-ups and scale-ups, technology-based companies. So it’s very rare to come across a potential client that isn’t embracing digital technologies, though we do come across some.

From a very practical point of view, working non-digitally makes the job a lot harder. It’s much harder to collaborate, you have to arrange specific times to be able to have access to the accounting systems that you’re using. You have to do everything at the end of a quarter, instead of keeping things up to date as you move along.

Even HMRC is embracing digital. Any organisation that finds itself less tech-savvy than HMRC has got a few questions to answer.

We’ve also found that generally, attitudes to technology is a good indicator of how easy a client will be to work with. We want clients to embrace our methodology and approach so that we can give them the best service, which is why it’s a red line for us.

Next steps: Accountants should explain the benefits of using digital tools to their clients. For the vast majority, it will be hugely beneficial for them.

Verdict: From a practical and business perspective, it makes sense to focus on digitally-savvy clients.

Try to convince, but be prepared to part ways

Francesca Tricarico, managing director, Future Cloud Accounting

Accountants need to show businesses the new way. If business owners refuse to come on the digital journey with us, we part ways and leave it open for them to come back when they’re ready.

I had this happen with a potential client the other day. We’ve left it open for her to come back, and she will eventually, everyone will have to embrace digital ways of working.

If clients aren’t ready, they won’t see the value, no matter how hard you try to explain it. We understand that for clients, it can feel like they’re giving up some element of control over their finances, which can feel daunting.

Next steps: Keep trying to persuade clients to try a new way of working, and take a patient approach.

Verdict: Digital accounting is not going away – it’s up to us to get clients where they need to be.

Accountants should shoulder some of the blame for the slow uptake of digital tools

Andrew Sullivan, director, Complete HQ

Our business purely works with clients that are digital, and we do stipulate to businesses that if they want to work with us, they’ll have to use specific platforms. We do this because it means we can deliver the level of service that we think our clients deserve. That matters a lot to us, so we’d rather focus on the businesses that embrace the tools that allow us to do that.

Having said that, we do engage with businesses that aren’t necessarily using the tools that w want them to use, on the basis that they convert on sign up, and they take on our conversion service.

I do think there is an element of the accountancy sector that is at fault. It wants clients to retain working ways based on what that accountant has taught them because it suits their own needs, not the needs of the client. Those accountants should be moving with the times, adapting their own processes and systems to better service their clients.

Accountants need to take some responsibility for this and start educating businesses on better ways to work.

Next steps: Accountants need to take some ownership of the situation and make more effort to educate clients.

Verdict: Businesses will go on a digital journey if accountants are willing to lead them.

Older business owners and those in rural areas are being forgotten

Karen Chugg, owner, Phoenix Bookkeeping

I’m based in North Devon. There are businesses in this area that don’t have access to reliable broadband. They can’t even file VAT Returns, so cloud software is not a possibility for them. And there are some businesses out here, run by the same person for decades, that don’t even have an email address.

Those people are always going to have paperwork. When it becomes compulsory to file digital accounts, I’m going to have to somehow persuade them to use online banking, but that might be as far as it’s ever going to go.

There’s a village in North Devon, King’s Nympton, where the residents had to petition to get a reliable internet connection. Even then, it stops short of serving the residences that are a mile outside the village. I’m very much a fan of the digital tools that are our there, but until the country’s digital infrastructure is sorted out, I can’t see how we can expect every client to go digital.

Next steps: In rural areas, it’s all about finding out what’s possible with your clients, and petition harder for better infrastructure.

Verdict: If HMRC wants all businesses to go digital, we need better access to broadband.

Mark Rowland is a journalist and former editor of Accounting Technician and 20 magazine.

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