Everything you wanted to know about MTD but were too afraid to ask

Making Tax Digital for VAT (MTDfV) may have arrived, but for some HMRC’s wider Making Tax Digital (MTD) initiative is still shrouded in confusion.

From uncertainty concerning when, or whether it will affect your business to the mystery of what functionally compatible software is, we aim to answer any nagging questions here…

It’s here! In a little over four years since it was first announced MTD is underway. However, HMRC’s plan to make the tax system more like online banking hasn’t all gone smoothly. Indeed, many accounting technicians and small businesses may be feeling a little confused. Why aren’t all businesses using MTD? Do I need to shift to new software? And can I still use the spreadsheets I’ve loved for so long? These questions, and many more, are answered here…

Remind me, what is Making Tax Digital again?

MTD is the bedrock on which HMRC is seeking to achieving its ambition to become one of the most digitally advanced tax administrations in the world.

As you’ve probably guessed from its name, under MTD taxpayers will switch to a digital-by default method of interacting with HMRC.  As part of this process businesses will be required to record all monetary transactions using MTD-compliant accounting software.

By moving everything online, HMRC aims to make tax admin more efficient and less complicated: no more spending endless hours form-filling, no more jotting down expenses on random scraps of paper and no more keeping receipts in a bag. Yes, you read that right. Apparehttps://www.xero.com/blog/2019/02/mtd-debunking-the-myths-for-businesses/ntly, hoarding receipts in a bag is something one-third of small businesses do, according to Xero.

HMRC has calculated that by requiring taxpayers to digitally record their business transaction in near real-time the level of careless error and mistakes in the UK tax system will be greatly reduced, enabling the Exchequer to benefit by up to £9bn a year.

How does it work?

Under MTD, more than 3.6 m small businesses and landlords will be required to keep digital records and digitally transmit to HMRC updates on their income and expenditure at least four times a year for income tax purposes. This part of the launch of MTD is known as Making Tax Digital for Business (MTDfB).

It’ll be good news for any accountant whose customers regularly gripe about sky-high end-of-year tax bills. Because tax information will now be collected and processed in real-time, these customers won’t have to wait until January to find out how much tax they owe. Keeping track of what they owe will also help them budget for tax better, hopefully making accountants’ lives a little easier too.    

If MTD launched in April, why are neither me or my clients using it at the moment?   

After a series of setbacks not of HMRC’s making, Mel Stride the Minister responsible for MTDs roll out announced to the business community in July 2017 that instead of MTDfB being starting in April 2018 it wouldn’t be made mandatory until April 2020 at the earliest.

However, from the 1 April 2019, VAT registered businesses with a VAT-taxable turnover above the compulsorily VAT registration threshold would be legally required to keep their VAT records digitally, and file MTD-compliant VAT returns using HMRC recognised MTD-compatible software.

There’s a minority of businesses, with more complex VAT affairs such as, not-for-profit organisations, VAT groups, UK VAT registered overseas traders that have had their MTDfV  start date deferred until the first full VAT period starting on or after 1 October 2019. 

Aside from this, there are a small number of sole traders and landlords who have joined HMRC’s limited MTDfV income tax pilot and are keeping their records digitally and sending quarterly updates of their income and expenditure, as part of a live testing phase.

While it was originally suggested that if the first stage of MTDfV proved successful there would be further MTD related mandation from April 2020, this is no longer the government’s position.  During the Chancellor’s 2019 Spring Statement Phillip Hammond announced there would be no widening of MTD’s remit until April 2021 at the earliest.

Is there anything I should be doing right now?

Yes!  If you have already done this, you can start by getting acquainted with MTDfV and ensuring all your customers are up-to-speed too. It’s also worth checking whether your current software is MTD-compliant or not.

You mentioned software. What software do I need?

To keep digital records and submit tax returns (VAT or otherwise), you’ll need MTD-compatible software. HMRC isn’t providing its own software for this, but there’s a list of MTD-compatible software and apps in this list here.

If you are a licensed accountant you’ll need to set up an HMRC Agent Services Account [ASA]. An ASA is essential for submitting MTD VAT returns, plus it’ll allow you to access HMRC online services and communicate directly with them. More details here.

Can’t give up spreadsheets? You can still use these under Making Tax Digital, but HMRC has said any spreadsheet-fans will need to submit the data to them digitally. The easiest way to do this is by using bridging software or an API-enabled spreadsheet that can integrate with HMRC’s systems. Again, search for compatible bridging software here.

I’m worried many of my clients will never be MTD-ready. What can I do to cajole them?

Back in March, with just weeks to go before MTD was launched, a British Chambers of Commerce survey found 19 per cent of companies who were required to take part in MTD had never heard of it. However, since then take-up has been steadily increasing, and now over 270,000 businesses have enrolled into MTDfV and over 140,000 MTD-compliant VAT returns have been filed.

As an AAT member you can play your part in driving up awareness bv giving your employers a gentle reminder (or three), or if you’re a licensed accountant you might want to segment your client list to identify which clients are affected by MTDfV before contacting them. It’s also worth getting in touch with any non-VAT-paying clients too. Think of it as a nudge for them to stay on top of their books in time for 2021.

If you’ve got your own practice, you could start marketing yourself as MTD-ready, maybe by uploading an MTD-ready logo to your website or alerting others via your social media posts.

Remember: some of your clients may be exempt from MTD, such as the ‘digitally excluded’ (those who are largely offline due to reasons such as religion, age, disability or remoteness).

What happens if I or my customer can’t comply?

While for those who deliberately do not engage with MTDfV there will be penalties (gulp), HMRC has said that for the first year following the launch of MTDfV there will be a “soft landing period”.  Whereby penalties will not be imposed on any VAT registered entity that has tried to comply but due to technical issue has been prevented from meeting all of HMRC’s MTD requirements.

HMRC is keen to stress, to avoid incurring a penalty, it is vital that in instances where a business has been prevented from filing an MTD-compliant VAT return by the due date it must ensure that HMRC receive payment of any VAT liability by the due date.

What else should I know?

Try to think of Making Tax Digital as a business opportunity. It’s a great way to bring in new clients, plus it gives you the perfect excuse to update your current software. You could even change your pricing too. According to cloud accounting software firm FreeAgent (note: other MTD-compatible software is available) many accountants are now charging monthly rates rather than an annual fee, to cater for their customers who’ll be submitting tax info more regularly.

For more info on Maxing Tax Digital, check out the AAT’s Making Tax Digital centre here.

9 writing tips to help you through your studies

Accountancy isn’t just about punching in numbers; you’ve got to explain complicated concepts, such as accruals, or why profit isn’t the same as cash.

As with all technical subjects, this can be intimidating to the non accountants whom you deal with on a daily basis. Especially when dealing with time-poor individuals, you need to be able to get to the point quickly and clearly when it comes to your writing.

These are the nine points to follow to master good writing. Some are our own, but the last five come from George Orwell, the author of Nineteen Eighty-Four and Animal Farm.

George Orwell’s writing rules may date back to 1946, but they still ring true today, no matter what you’re writing.

1. Practise, practise, practise

You may or may not be intimidated when it comes to report-writing but, no matter what your writing ability, the truth is that, as with any skill, you’ll get better the more you do it.

Make time to write, and review your work to see how you might be able to improve it.

2. Make a draft

Use Word (or whichever software you have) to write a draft before putting together your final report. This allows you to constantly edit and rewrite.

It really helps with spelling and grammar too.

3. Speak as you write

Read your words in your head and imagine saying them out loud.

4. Mention the obvious

Assume your reader doesn’t know anything. Write clearly so that anybody can understand you.

5. Avoid clichés

Never use a metaphor, simile or other figure of speech that you are used to seeing in print. They clutter up your writing, and are overused to the point of being boring.

6. Keep it snappy

Never use a long word where a short one will do. If it is possible to cut a word out, always do so.

7. Keep it ‘active’

Never use the passive voice where you can use the active – so ‘he beat’ (active) rather than ‘he was beaten’ (passive). This will make your writing clearer.

8. Ditch the jargon

Never use a foreign phrase, a scientific word or jargon if you can think of an everyday English equivalent.

9. Break the rules

Orwell said: “Break any of these rules sooner than say anything outright barbarous.” What he meant is that no rules are hard and fast in writing. Ignore the rules if doing so makes what you’re writing easier for the reader to understand.


These tips were written by AAT tutors Gill Myers and Cath Littler.

Why digital skills are important for you and your workforce

It would be an understatement to say that digital skills are a big deal, after all the rapid advancement and evolution of technology is ever-present in our daily and professional lives.

With this in mind, to know that in 2017, according to the Lloyds Bank UK Consumer Digital Index 2018, there were 4.3 million people (8%) in the UK with zero basic digital skills sounds surprising, but to know also that this was a fall on the previous year of 470,000 fewer people is downright alarming.

It perhaps highlights that it isn’t safe to assume that we’re all becoming more tech savvy purely by association of being alive in this moment of inescapable and radical smart phone, social media, cloud and other digital technological innovation.

A widening skills shortage

‘The shift from traditional ways of working to a more digitally focused workplace is clear, with two in five UK organisations (38%) in our 2019 Salary Guide considering digitalisation to be the main evolving force in the workplace today,’ said Matt Weston, managing director at Robert Half UK. ‘This is posing a considerable challenge to employers, who face a widespread shortage of specialist digital skills, with half of CEOs (53%) admitting they can’t find candidates with the necessary skills.’

James Brent, director at Hays Accountancy & Finance, agreed: ‘Despite a rising digital presence in the workplace, the speed at which businesses are incorporating new technologies is not always being matched by the rate at which employees are learning the skills needed to work alongside them. The result is a digital skills shortage, which looks set to worsen if action is not taken by employees.’

Here are several reasons why digital skills are important to you, your business and your workforce, and what could happen if you just expect to be swept along in the digital revolution:

Digital skills drive business productivity

From going paperless to automated bookkeeping, from contactless payments to data analysis, from cloud accounting to blockchain, and from audit drones to robotic process automation (RPA), the future (indeed the ‘now’) of accountancy is very technological. And while not all of the above may apply to you depending on your business, sector and scale, at least some will and having a business that incorporates such technology is a great step to embracing the future and achieving efficiencies.

But the real productivity gains will not be known until staff know how to use them properly. Furthermore, if you encourage your workforce to embrace new technology, if you create a culture of curiosity and collaboration, they’re likely to find efficiency gains and boost productivity beyond your expectations. This can also lead to a more satisfied workforce, a better company culture and subsequently better staff acquisition and retention, as technology also allows them more space to perform higher value tasks.

‘For teams performing time-consuming, repetitive tasks, automation can streamline these processes, freeing up employee time to focus efforts on higher value work that helps meet the operational and commercial objectives of the business,’ said Weston. ‘Meanwhile, organisations that can leverage technologies such as data analytics and artificial intelligence to gather commercial insight will reap a competitive benefit and increase productivity.’

Key employer takeaways

  • If you encourage your workforce to embrace new technology, if you create a culture of curiosity and collaboration, they’re likely to find efficiency gains and boost productivity beyond your expectations
  • Greater productivity through digital skills not only improves your business’s output by 1) volume thanks to efficiency gains and 2) quality of service as automation frees people to perform higher value tasks, but it can lead to a more satisfied workforce, a better company culture and subsequently better staff acquisition and retention

Digital skills provide a competitive edge

By not enhancing the digital skills of your workforce, you could be jeopardising your future business opportunities, as staff won’t be able to keep up with the changes digitalisation brings, said Brent. If employees are encouraged to keep their qualifications up-to-date through their institute’s CPD learning programmes, why not help them stay digitally at the sharp end? ‘A skilled and engaged workforce will sit at the heart of any successful digitalisation project and will be the key to driving change in an organisation,’ said Brent.

By investing in the right training for your workforce, your employees are more likely to outperform their peers at rival organisations – giving your business an all-important competition lead. ‘Failing to embrace technological innovation can place a company at a competitive disadvantage to its peers, while a workforce that is not fully prepared for digital challenges may result in costly project delays,’ said Weston. ‘A “laggards” culture can also create a barrier to attracting and retaining top talent.’

Key employer takeaway

  • Simply, a business that lags in the digital aspect of its service and workforce is blunting its competitive edge, and by coming late to the party risks playing catch up to its peers for years to come

Digital skills can increase revenue and build relationships

‘As businesses come under growing pressure to adapt to AI, automation and digitisation, a significant digital skills shortage could prove detrimental to a company’s workforce, and ultimately, to its bottom line,’ said Weston.

As consumers turn from the high street to e-commerce, a business needs a strong online presence to help increase revenue. This ranges from being able to purchase your services through your website to consuming your marketing in the form of content, which can lead to purchases or new client relationships. Increasing revenue in this environment requires knowing your customers and being where they are, which requires a range of digital skills to engage, persuade and drive demand or loyalty.

Increasingly, business is about building relationships with customers and clients by responding to their changing expectations and engaging with them through a diverse range of channels, such as email, social media, mobile apps and so on. It’s vital that employees have the digital intelligence and ‘netiquette’ to ensure the modern increasingly digitised customer experience is positive.

Key employer takeaway

  • Your bottom line is at risk if you’re a digital laggard. Points of sale, payment processes, social media and content marketing – your customers, clients and relationships are not where they used to be or conducted in the same way, so you need to find and engage them on their increasingly digital terms

In summary

It’s clear that the landscape for accountants is changing and digital skills are becoming a must have rather than a nice to have. The key point here is investing time into helping your employees understand the value of digital processes and providing adequate training to show the benefits of incorporating digital into their every day.

By encouraging your employees to embrace the change and adopt new ways of working, this will not only boost the productivity of your business, but will allow you be one step ahead of your competitors in the long run.

Coming next: How to raise the digital intelligence of a workforce

How to stay motivated during your studies

A positive mental attitude is one of the most important skills for learners and professionals to cultivate.

Intrusive, recurring negative thoughts are something everyone deals with at some stage, but with the right techniques, anyone can overcome them.

Kate Wilde, managing director at business mentoring consultancy Engage with Business, specialises in helping CEOs and company leaders motivate themselves to succeed. We asked for her top tips when it comes to staying on track, banishing negative thoughts and building confidence.

Avoid making excuses

“It might be that you don’t have enough time, you have children to look after, or you don’t have the money,” says Wilde. “Any of those things can easily become excuses if you allow them to be.”

It’s easy to let circumstances get in the way of taking action. Moving beyond that, and achieving the positive mindset that’s going to propel you forward, is a matter of setting aside excuses, and simply getting on with it.

Socialise

Isolation is one of the most common challenges faced by self-motivated workers and learners. Lack of human interaction can have a negative effect on mental health, according to research from the Mental Health Foundation, so take every opportunity you can to engage with people. If this isn’t an option for you, though, all is not lost.

“There are so many books you can read, podcasts you can listen to and YouTube videos you can watch to inspire you,” says Wilde. “If you can fill your head with positive thoughts, then it’s more difficult for negative energy to creep in.”

If you easily compare yourself to others take some time off from social media: “It’s always people’s highlights; too much time looking at all the wonderful things that other people are doing can actually have a negative impact on how you’re feeling about yourself.”

Set clear goals

Clearly defined goals are an integral part of self-motivation. Goals should be specific, measurable, attainable, rewarding and time-based. You need to know immediately whether you’ve succeeded or failed so that you can move on and learn from your experiences.

“Don’t set fluffy, vague goals. Set SMART ones that are very specific in terms of what you want to achieve,” advises Wilde. “Make sure they’re timed. Make sure you know how you’re going to achieve them. It’s easy to say ‘I’m going to earn £50,000 in the next year’, but how are you going to do it?”.

Keep track of your successes

There’s no better motivator than the sense of achievement you get after a job well done. When things get difficult, it can be harnessed to work for you.

“Make a note of all of your achievements,” says Wilde. “Every little positive result you accomplish, every small win, because they do build up. Success breeds success.”

Rather than putting them out of your mind, use your past victories to fuel your future ones. Focusing on the work you’ve already done can be an extremely powerful tool for transforming a negative mindset into a positive one.

Learn from your failures

Failure is one of the most challenging obstacles that anyone faces in life. Confidence and willpower are surprisingly fragile things, and it only takes one mishap to imperil all your positive work. But failure can also be an opportunity.

“How you deal with it is entirely up to you,” says Wilde. “You can look at it as a chance to take stock. What have you learned? What could you do next time? Or you can go and bury your head and say ‘I’m such a failure’. How you choose to deal with it is all about mindset.”

Wear red underwear

Self-confidence is about the way you carry yourself, how you dress, how you walk. Faking confidence is often the best way to achieve it. Even wearing particular colours can have a noticeable effect. Studies show that wearing red, for instance, can make you feel more assertive. Wilde has a quirky trick to try out.

“A lot of people wear red underwear,” Wilde says. “Red is such a powerful colour, it exudes confidence, but sometimes you’ve got to be a bit more discreet. Red underwear can still have that effect. It’s widely used by more people than you’d think!”

Ultimately, banishing negative thoughts is about building confidence. The things that appear to be holding you back are far less powerful than they seem. You simply have to act, make decisions, learn from your mistakes and build on your successes.

Always give yourself every advantage you can, whether that’s surrounding yourself with like-minded people or wearing the right colours.

Browse the full range of AAT study support resources here

Data analytics – 2 – your role in an analytics-focused finance team

In the second in a series of five articles from digital transformation guru Chris Argent, we explore the roles available in a modern finance team working with sophisticated analytics.

Most people see analytics as for the few, not the many. Accountants and finance professionals, therefore, believe analytics roles are for highly trained experts in mathematics, statistics and programming.

But that’s only one role in analytics. It’s a team sport and there is a role for you.

To understand how we can fit in to this new world of analytics, it is important to understand the end to end process of delivering Analytics, where we can add the most value, and where we are likely to need support from those scientists.

The Analytics lifecycle

What’s the problem? Discovery, context and observation

The first thing to consider is suggesting questions that analytics can answer based on the business problem you or your managers have encountered. 

It is important to take a holistic view of the problems. Think about the impact on the stakeholders to ensure the outcomes have the highest value to the business.

During this phase, the team will consider the existing resources, skills and technology to ensure they can progress the project once the big questions have been agreed on.

When the team have agreed on the what, why and how, they build a hypothesis (to be proved or disproved) that will help to answer the business question. This also helps frame the analytics for the data scientists and to agree what a successful outcome would be.

Why you should learn about analytics 

“Plenty of people out there can read spreadsheets. But not many can interpret data. Most don’t know even the most basic techniques for doing so. Interpreting will be a huge part of accounting “

Heather Darnell, founder, Ask the BOSS (accountancy practice)

What data do we have? Data understanding and preparation

This phase is often a pregnant pause while the technical aspects of the business models, required results and data availability is worked on.

Huge amounts of data, often from multiple sources and in various formats, need to be aggregated, transformed and loaded into your analytics platform.

What model do we need? Model planning and execution

A model is a set of constructs and rules that are used to break down the big question or hypothesis. It is then used to create the analytics output.

This is led by data scientists, but it is important to include all stakeholders when building the framework for the model, to agree the methods and techniques that will be used to answer the business problem.

At this stage, business context and knowledge is very important to ensure the model performs well, and creates a strong result.

It is likely at this stage that any data availability issues are resolved, as the importance of creating the analytics becomes clearer and the impact on the business becomes more tangible.

What did we find out? Share and test (pilot)

After the model collates the data and it is visualised for better understanding, the data scientists will share their findings for review.

This is a critical phase for accountants. You will need to understand how well the model has performed, assess the findings and decide if the new data answers your question.

You are also likely to be the person communicating the results to the business. Not only is this critical to the project success and to you personally, but it is a critical part of developing interest in becoming a data-driven company, helping leaders and teams get excited by an analytics-led approach.

Once approved, good practice would be to summarise lessons learned from the project, measure the original success criteria and add any suggestions to create a continuous improvement plan.

Use data to look ahead

“Traditionally, accountants are reactive; they wait a year to tell clients how they did. That’s shifting. If people don’t adapt quickly, they’ll go out of business. The boring, traditional accounting firms are already suffering. “

Paul Pritchard, founder, Abacus Accountancy

What next? Apply findings to the business

So far the data has been operating in a private, prototype environment. Now the model can be used – deployed into the live, main production system. 

Sometimes projects are a one off, and success is simply by delivering the prototype. But if there is ongoing value from using the model in the business with live data, it will be deployed and used.

The project team will need to document the code, the technical and functional specifications, data flow diagrams, and data architecture models from the prototype environment and hand them over to the ongoing support team.

Once in the live system, you can use live data to create more information and insight, and support better decision making on an ongoing basis.

Your role in data analytics

There are several roles that someone from a finance background might perform in a project team. They can be split into four key areas, listed below. There are also technical disciplines (namely data science, and data visualisation), but they are specialised and not covered here.

1. Business Partner

The Business Partner is the one who talks to the business and draws out an understanding of what issues need to be addressed. It requires knowledge and the ability to communicate.

The Business Partner role is ideal for someone with a finance background. As an accounting professional, you will already be aware of the challenges in the business. By talking to stakeholders within the business, you will get a firm sense of what questions need answering, and which questions are hardest to answer. Your mission is then to select the right question to answer with analytics.

Think big and try not to use standard measurements or Key Performance Indicators. Try to find new questions that need answering.  Take lots of people for coffee!

2. Domain Expert

The Domain Expert role also requires in-depth knowledge. But instead of facing the business, this role is about supporting technical specialists in the analytics team.

The Domain Expert uses their knowledge to provide answers and context.

Data scientists (those in the technical project roles) are unlikely to be close to the inner workings of the business. So the Domain Expert will work alongside them answering queries and identifying issues with the analytics framework and model being built.

The Domain Expert will have knowledge about what affects the business. For example, sales trends, supply chain realities, even factors such as the weather or holiday patterns.

3. Business Analyst

The Business Analyst is another role with detailed business knowledge, this time from a process point of view. The Business Analyst needs to know how data gets collected and stored within each process of the organisation.

This knowledge will be vital to the technical team members. Obtaining the right data, creating relationships and correlations, and joining and linking data are critical to data modelling. The Business Analyst will be a practical ally to project technicians, helping them to achieve these things.

Building a great model is a fundamental step for a successful project. It should be a team activity and will bring huge value to the findings. This is critical to the communication phase and the overall success of the project.

4. Analytics Champion

The Analytics Champion is the person who influences the business to participate in the analytics project. It requires seniority and credibility to mobilise the project and key players. They are the face of the analytics project within the business, a true advocate of data, analytics and cultural change.

Analytics projects are only as good as the findings and its ultimate impact on the business. The champion’s role is critical in building and maintaining support. They need to communicate the achievements and needs of the project team clearly so the rest of the business understands.

The Analytics Champion leads change. They need the ability to see the big picture and take an overview to make sure that projects do not slow or stop. 

Different combinations of these roles

The four functions above may be performed various ways on different projects.

On a small project, one individual might handle several of these. Alternatively, on a large project there may be many individuals in one discipline such as Business Analyst.

Some of the common considerations include understanding the required business changes that need to happen during and after the project; identifying key stakeholders; helping to mitigate resistance to and change; communicate your vision to create buy-in, and learning more about design thinking and agile ways of working, so outcomes are user-focused and built in a workable way.

Leading change

With as much as 50% of the analytics being about discovery, modelling and communication, not to mention the change management required, accountants and finance professionals have a big role to play in driving it forward.

Success with data is a fine balance between technology, data, people, and processes. It’s very much about being curious, collaborative, empathetic and excited about the future, as well as having the courage to change.

Learn more about change management

Read the change case studies

Cultural revolution – creating change and maintaining it

Data in action – further reading

Looking for clues in the numbers: 10 signs a company may be about to go bust

Big data – can it stop another crash?

Glossary

Analytics Model is a mathematical equation that describes relationships among variables in a historical data set. The equation either estimates or classifies data values, which can then be used to forecast new future data.

Design Thinking is a methodology used to solve complex problems and find desirable solutions. A design mindset is not problem-focused but solution focused and action oriented towards creating a preferred future for a user or customer.

Agile methodology is an approach to software development under which requirements and solutions evolve through the collaborative effort of self-organizing and cross-functional teams and their customer/end user.

About the author:

Chris Argent has overseen digital finance transformation projects for Vodafone, Amazon and John Lewis. He is the founder of Generation CFO – an online resource for finance professionals.

Chris is a speaker at the 2019 AAT Annual Conference. Find out more here:
Annual conference

Your first year of business: how is it going?

Congratulations, you’ve survived your first 12 months in self-employment. By all means, celebrate, but pause and reflect too.

We’ve spoken to three accountants to find out what lessons they learnt from their first year in business: what went well, what could have gone better and what they would have done differently given the chance.

Difficult beginnings

Rebecca Trudgett, who founded SwitchFoot Accounting in September 2017, admits the first year was definitely not plain sailing.

“At first it went really well, with a lot of support from my business friends. Then I got to the new year and things went quiet – I was clearly out of the honeymoon period. I had to do consultancy work for other practices and one-off Xero consultancy to supplement my income.

Some clients took 12 months and longer from initial conversation to sign up and start paying. I did have doubts, I had to hustle and bootstrap, and to make compromises.”

Adrian Markey set up his practice two years ago but continued to work in other roles, before going fully self-sufficient last August. He also found the process of getting clients onboard slow and frustrating.

“Of course I secretly hoped it would be a tsunami of new clients straight away, although I was being realistic to the fact that this probably wouldn’t happen. To an extent, however, I did think that once I started marketing, the emails and calls would just start coming in, but that wasn’t the case.”

Learning curve

Markey soon realised that he should focus more on building up his brand and reputation rather than on building his client base.

“One was bound to lead to the other. From the potential client perspective, I was unheard of and unproven. I took the approach that I had to hold myself out as the expert on something specific, put out content that supported this and then hope it would resonate with people who wanted to continue the conversation.”

In late 2017 and early 2018, Markey started advising in the niche area of cryptocurrency taxation.

“The cryptocurrency market was booming and people were beginning to consider how it impacted their taxes, so I put out what I considered to be the stance that HMRC would (eventually) take.”

He says this one blog post that he created changed everything. “Clients were now coming to me rather than me seeking them out.”

But he didn’t rest on his laurels and spent most of 2018 continuing to market his expertise in that area.

From side hustle to new business

Zoe Whitman started her bookkeeping practice But the Books, as a side hustle whilst on maternity leave and then returned to work part-time running the business on the side. She also spent the first 12 months building her brand, networking and marketing.

However, she admits: “I didn’t push for new business as much as I could have done, so it was another six months before I was confident enough to leave my job, hire a team and take the business full time last August. If I’d started out again, I’d certainly have taken these steps sooner. We now have a very clear process for tracking new business and pursuing leads.”

The first 12 months of self-employment are certainly a steep learning curve.

“I also had to quickly address other knowledge gaps. I’m now a CTA Tax Pathway student, which is the best decision I made.”

“I thought I knew a reasonable amount about business development from my previous role, but it turned out I still had a lot to learn,” Rebecca Trudgett says.

All the right moves

Trudgett knew she could have built the practice initially much faster if she’d taken on anyone and everyone.

“But I didn’t want to take on clients whom I’d later have to orphan, I only accepted those who fitted the practice I wanted to build,” she says.

She adds: “Early on I decided not to charge low fees. I wanted to attract clients who understand that having a qualified accountant is an investment. I don’t offer discounts or mates-rates either, as this would also undermine the quality of the service I offer.”

Trudgett also quickly realised that the only way she could continue financially was to bill in advance and move all clients onto monthly payment plans using GoCardless.

From day one, both Trudgett and Markey have worked to fixed fees, too. “The clients definitely appreciate the certainty,” Markey says.

He also stands by his prices. “The specialist cryptocurrency work is currently priced at a premium given that only a handful of firms are actively marketing themselves in this area of taxation. So, for the most part, I will pass on potential new clients who feel the service is overpriced.”

Zoe Whitman started out charging an hourly rate, but moved to fixed fees as soon as she established a clear value proposition. “For some clients we were able to set a fixed fee very early on, but certainly by the time we were 12 months into business, we had a very good idea of what our packages would include for a typical client.”

Fine-tune for success

18 months on, Trudgett’s business is generating referrals without her having to force them, so she’s busy doing some fine-tuning.

“I’ve always used templates to reduce the time-consuming engagement processes, but soon I’ll also be using Practice Ignition to streamline my processes further,” she says.

She’s also reviewed her networking to see which activities are the best use of her time:

“Networking and having a support group is essential when you start out and I couldn’t have done it without them. But in the last 6 months I’ve become more selective about the type of networking I do and now choose to do more community-based networking.”

Setting the standards for clients and your business

Markey has decided to be more selective about the work he takes on.

He’s also going live with a new website shortly. “It’s much more attractive and promotes the practice better. The original one was a bootstrapped, homemade project.

“In the last year, I’ve grown to appreciate what I actually like doing. I’m now happy to pass on work that I don’t really want to do or on clients that I don’t think I click with.

It wouldn’t be worth it in the long run and it’s freeing up capacity for the work that I do enjoy.”

For more on starting a business check out this article.

What future opportunities lie ahead for accountants?

The accountancy profession is changing, fast. Just about every industry expert is recommending that we need to be in the advisory space.

The commonly held view is that the game is up for today’s traditional accountants and that the only option is to play a new game, called advisory. There’s a perception that we will all move into management consultancy becoming coaches to our clients on how to run better businesses.

Drawing such a conclusion is reasonably logical, but is it really realistic? Most firms recognise a need to move into advisory services however the majority are not sure how to do it.

What’s happening in accountancy is not unique

The main reason for these changes can be placed firmly at the feet of technology. Historically trends will show us that where margins continue to be eroded the industry will eventually get to a point where the only option is to change.

Fast-forward to accountancy now and we see a similar pattern – technology is making major inroads to automating what was previously time and labour-intensive work. Margins on core compliance work are being squeezed plus client expectations are changing.

The government are helping drive change through initiatives like Making Tax Digital. All these changes and more are in danger of rendering the accountant less relevant to their clients.

Has the perception of the accountant changed?

For as long as the profession existed the accountant has been considered the “most trusted advisor”. The accountant was on a pedestal within the local community along with the banker, lawyer and doctor. Is the service provided by today’s accountant as valued as it was?

The profession was founded on accountants helping clients make sense of their numbers and providing advice. As the business world became more competitive and because margins were relatively high, accountancy services got pushed into compliance specialisation. A large part of the work accountants used to do is now being done by software. In addition, as mentioned earlier Government legislation has changed the landscape further and many would say with mixed results.

So what’s next for the profession at a time when it appears as though both the Government and the major software suppliers appear to be adopting the strategy to communicate directly with the end user, your client? One thing we can guarantee is the industry is entering a period of great change.

The modern accountant

Any period of change creates opportunity. The modern accountant needs to embrace this opportunity to improve the relationship with clients. What if we could do that by focusing on what we’ve always focused on – helping our clients make sense of their numbers and use those numbers to help our clients grow their business?

What if we could be the real face of modern accounting, elevating our position in the community once again so that instead of being irrelevant, we are the opposite – we are the most relevant partner to the businesses of our clients?

Once again we can become front of mind for our clients helping improve efficiencies and harnessing technology for their benefit. These are the domain of the modern accountant and those who embrace such are in a great position to take their firms to new heights.

The key to providing advisory services to your business clients is to provide advice and support that will help them grow their business. Many of your clients are also finding it challenging to keep up with these changing times and are looking for support, direction and guidance. This is the role of the modern accountant.

Darren Shirlaw helps businesses achieve long-term, sustainable growth. This year he will be speaking at the AAT Annual Conference alongside various other experts. This years’ AAT Annual Conference is packed with inspiring talks, presentations and workshops designed to provide accounting and finance professionals with the skills they need to grow a business or advance their careers.

Join us, top brands and leading financial professionals on 13-14 June in Stratford-upon-Avon, to exchange ideas and learn more about the most pressing issues facing the sector.

Presenting data 2 – using Excel to make persuasive and useful data dashboards

We show how to make dashboards in part two of our series on getting started in data analytics using only Excel.

A dashboard is a visual summary of how a business is doing, and you can easily create one in Excel. Dashboards enable business owners and senior decision-makers to get an idea of how a business is performing and to identify any potential problems as quickly as possible. Below are some guidelines on how to create a good dashboard in Excel.

What metrics do you need to show?

The graphs in a dashboard visually summarise the value of key metrics or key performance indicators
(KPIs). Here are some KPIs that are commonly measured by companies:

  • value of sales in a period
  • number of enquiries received in a period
  • number of staff in business in a period
  • number of customer service tickets raised and closed
    in a period.

Each business will have its own KPIs. Hence the first thing to is to decide what KPIs should be measured.

Don’t have too many KPIs in one dashboard – limit it to six. If you need a lot more than six, thenI would suggest breaking down your dashboard into mini-dashboards on separate worksheets in one workbook. For example, you might have one for HR-related metrics and another sheet for sales.

Tips for managing data

If you do need to have multiple dashboards, then keep all the data in one workbook. I always avoid linking Excel workbooks as they may not stay synchronised.

Most companies use monthly dashboards. However, some organisations may have a separate dashboard showing either yearly results or cumulative values for the year to date. Senior decision-makers like to look for trends – for example, how are sales in this period compared to the values in the same period in previous years?

Keeping data accessible

It may seem obvious, but unless you can get the required data easily, you won’t be able to populate your dashboard. So, before you plough head first into creating a super-slick dashboard, check that the data you require is actually available. 

Don’t strive for perfection on the first day.

You may wish to break down sales by geographic area, but find that a couple of areas produce consolidated sales with no apparent ability to break down the numbers. In the short term, you might have to live with the consolidated information and hope that, with time, you’ll be able to get hold of new data.

Get a good prototype working and develop it over time. If you find that a particular KPI graph is no longer required, don’t delete it. Instead cut and paste it into a separate part of the workbook.

Plan interactions

In large organisations, the data may come from several sources at different times of the month. Therefore, it is worth having a project plan so that you know when data is to be expected. This will help you manage the expectations of senior decision-makers, who will be eagerly awaiting the latest version of the dashboard. 

Choose the right type of graph

Excel has a multitude of graph types that can be used to create stunning dashboards. There are three obvious ones: line, bar and pie chart. However, these charts come into their own when you start to combine them.

Try combining a line chart with a bar chart. On the line chart show the forecast, and on the bar chart show the actual values. Use the stacked bar and column charts to get a better understanding of the figures – for example, the individual stacks could be the amount of particular product sold.

Summary tables

Although graphs are a key aspect of dashboards, you could use summary tables as well. These can show information that might not be clearly represented on a graph. You might want to have a table that showcases the top three opportunities in each month.

External data sources

The world is becoming ever more connected, with the ability to pull down data from external data sources including the web, other accountancy packages and third-party data sources. Before linking to such data sources, it is worth considering a few points.

If you want to pull down data in this way, the chances are that you will need the ability to write Visual Basic for Applications code to control the flow of data. In that case, the file must always be saved in the XSLM format, rather than XLSX. Any end users must be taught and reminded of the need to save the file in this format – otherwise, the macro that manipulates the data will disappear.


Need to work with more complex data sources? Check out our series on Data Analytics for business


Excel macros only work on Windows, not Macs. As far as I know, there is no way of integrating a third-party application in Excel on a Mac. If you are building a system for a client, ensure their machine or network is configured to allow any necessary third-party integrations – the user account may need admin privileges.

Be mindful of software updates that could throw the integration out of sync. One client of mine had issues with Sage integration. Every time they updated their Sage accounts, it threw out the Excel integration.

Think about data entry

Although the visual graphs and any necessary summary tables are the outputs of the dashboard, they should not be considered in isolation. Another key part of the dashboard is data entry – it is important to make this as painless as possible.

The person building the dashboard may not necessarily be the one populating it. For example, I worked with two businesses with very different approaches:

  • An engineering firm, with a managing director based in London. He got his team to populate all the data – and they operated from Poland.
  • A finance firm with two directors – one for sales and the other for operations. Each director populated their respective areas, and the workbook was designed to pull together the respective information.

Think about how to make data entry easy. This will ensure the dashboard gets used and produces the correct information. For example, you might have separate sheets for each area of the business, or you might assign different colour codes for cells that require data entry and those that calculate values. Colour a row black or red so the user is aware they shouldn’t enter data below this line. 

Consider that many organisations want to look at data over a rolling period – say, the previous year. You should avoid having to rebuild the dashboard every month, increasing the potential for errors and inconsistencies. The solution is to build dynamic charts (see the previous article) and have a drop-down to select the relevant time period.

Graph types, and how to use them

  • column – Great for comparing values.
  • Bar – Avoids clutter when labels are long.
  • Line – Reveals trends over time.
  • Area – Shows part-to-whole relations.
  • Pie – How various elements represent part of a whole.
  • Histogram – Show the shape of a continuous data set.
  • Scatter – Shows lots of data points.
  • Waterfall – How positive and negative factors affect a value.
  • Surface – The optimum combination of two data sets.
  • Radar – plot groups of values over common variables.

Useful Excel functions

Excel contains a vast number of functions that help facilitate the creation of dashboards. Here are a few that could prove particularly useful.

COUNTIF
This is used to count the number of values in a range that meet certain criteria – for example, the number of salespeople meeting a particular sales target.

COUNTIFS
This function returns the number of values in a range that meet multiple criteria – the number of salespeople who live in a particular region, say.

SUMIF
This returns the total of the values in a certain range that meets certain criteria – for example, the total value of sales made by a particular salesperson.

SUMIFS
This returns the total of the values in a certain range that meets multiple criteria – for instance, the total values of sales of a product by each salesperson.

SUMPRODUCT
This is used when you need to count/sum values in a date range – for instance, the monthly totals of each product sold. Again, this could be split further by the salesperson.

Download example file

You can download an example Excel file for this article by clicking here.

About the author

Kapil Kapur is the director of Fingertips Intelligence, which helps companies obtain management information (a.k.a business intelligence) easily.

How to learn smarter and faster

So, what are the best ways to retain information when learning – and what’s the practical advice from the experts?

“Understanding your own learning style is crucial when trying to retain information,” says Teresa Folkes, Associate Director, Professional Development at the Chartered Institute of Marketing (CIM).

“This means whether you engage visually, logically, aurally or verbally. It can help you to link your knowledge to practical application rather than just memorising,” Folkes explains.

Understanding your learning style

“When you’re learning new material, it can be overwhelming when you think about how much time you need to truly understand it all”; knowing whether you’re a written or a visual learner helps you absorb more and saves time.

Studying in chunked sessions can help this, Folkes adds. “It’s often the case that people learning need to study less, but study smart. If you can engage with a learning style that works for you, and set aside specific amounts of time in which to learn, this can help when recalling the information at a later date.”

Find the technique that works best

“Make a story out of it,” says Dan Kelsall, Founder at Vonkel, a digital recruitment app. “This helps you remember how seemingly disparate things sit well together. It’s hard to store tiny bits of information; you only have so much capacity. So remembering what links things together is more important.” You can be imaginative with this, says Kelsall; “create a storyboard. This can literally be a whiteboard that you put pieces of information onto and turn into a narrative.”

It will help you “see” information – “you don’t have to remember the minute details, but you will remember the story.”

Justin O’Brien is Co-Director of Student Experience at Royal Holloway, University of London. Based in the School of Management, O’Brien agrees on the power of storytelling.

“Brian Eno, one of the music industry’s most creative artists, uses playing cards to encourage his collaborators to look at challenges in a different way.”

For O’Brien, “extending this into a kind of ‘forced recombination’ – finding a narrative that links two random ideas or elements, e.g. shampoo and bald man – can be both entertaining and powerful.” You might prefer to do this in your imagination rather than on pieces of paper – “try linking ideas to objects in rooms of a ‘house’ that you walk through in your head.”

Other suggestions

Mind-mapping is very useful,” O’Brien says. Developed by psychology author Tony Buzan, this involves creating a branch diagram that is designed to use all cognitive parts of the brain.

The key is to find the tool that works for you. “You could record yourself and listen to it – make the information into a rap or song. And perhaps tap into bath time or travel time to stimulate subliminal learning.” Another tip is “to try teaching someone else. The master-apprentice relationship is widely heralded as powerful.”

Many of these techniques are variations on mnemonics. Mnemonics are simply devices you might have for remembering a sequence, like “Every Good Boy Deserves Football” for example when being taught music at school. In finance, we use similar phrases – “SWOT” for “Strengths, Weaknesses, Opportunities, Threats”. You can create your own, to help you retain particular pieces of knowledge.

Using the information effectively

Having learnt techniques for retaining information, it’s how you use this retained information that’s important – to do well at synoptic assessments, you need to turn information into insights.

“Whilst being able to identify and extract useful data is an undeniably useful skill, it is not the only important talent business professionals need to acquire,” says Folkes. “In today’s world, employees must have the capability to process and understand data in order to extract value from it. Indeed, professionals handling data should also be on the lookout for exceptions rather than rules, when it comes to large volumes of analytics.”

Information that is out of place can often be the most useful,” Folkes adds. “Those using data should also be clear in knowing whether they are viewing the information from a problem-solving or research perspective, as this can aid their interpretation of the data.”

Memory retention: top tips

1.Build a narrative around what you’re learning.

“Make clear connections between your knowledge. If you find something uninteresting to you, link it to something you care about,” suggests Teresa Folkes.

2. Take regular breaks.

“It’s counter-effective to believe you have to press on all day without pause,” says Dan Kelsall. Research shows that we can only concentrate to full capacity for around four hours, “so you need to completely take your mind away from the work for a while. Do a few hours, and then do something different. Consider how if you get away from the work for a while, the answer that’s been eluding you can pop into your head the next morning – this is not a coincidence.”

3. Have a structure to your learning.

“Set key times to recall information to test your retention,” Folkes says. “Switch your focus every so often to something new, and don’t force yourself to remember new information quickly. Stay attentive and change your surroundings if your focus slips.”

4. Make sure the data is turned to insight.

‘The importance given to rote learning and recall testing in our society is diminishing over time,’ says Justin O’Brien.

“Many institutions are gradually moving away from handwritten examinations and towards more practically oriented coursework, encouraging students to engage more deeply in their own research-led learning.” By moving away from memory downloading and towards more vocationally useful assessment techniques, “we have the potential to address the long-standing graduate employability skills gap.”

Browse the full range of AAT study support resources here

How to shift industries – but not careers

You’re happy working as an accountant or bookkeeper, but you fancy a change of scene. How many doors can your accountancy or bookkeeping qualifications open for you?

Move around

You could be working in an accountancy practice, surrounded by others with similar qualifications. There are many advantages in this scenario: you’ll be working in a team and your work will be as varied as the clients you have.

But maybe you fancy a move into industry, say, working as the in-house bookkeeper or accountant for a company. Long-term, if you’re keen to eventually move away from accountancy into other roles – maybe management – then a shift into industry would be ideal. However you may find yourself working more on your own and have to be more of a self-starter.

Moving industries could be just what you need to boost your career. And doing it early in your career would be advantageous, so you can get an idea of different sectors before you plump for the one you like best.

Dan Brown, senior manager at recruitment specialists Robert Walters says: “It’s very easy to move across industries. At the more junior level, getting a broader range of industries and departments helps experience”.

However Brown warns against too much moving around: “[The] higher up the chain in finance people go, specialising can be very beneficial for your career as certain industries or companies will look for a similar skill set in senior appointments. You may also be able to negotiate a better salary if you have a more industry specific CV versus one without”.

Move around and try new industries early in your career so you’ll have a wide range of experience on your CV

Enhance your skillset

Before you even consider moving industries, have you got the right skillset? Lee Owen, Director at recruitment firm Hays Accountancy and Finance, comments: “While technical expertise varies from role to role and will continue to evolve, there are certain skills which will enable accounting professionals to transfer smoothly between sectors. Strong communication, effective organisation and a willingness to learn are transferable skills for accountancy employees wishing to move sector”.

Getting some new qualifications in these areas and more will help you boost your marketability. You might well enjoy the intellectual challenge too. Have a look at our article on Lessons for lifelong learning and re-skilling for help with studying if you’ve been away for a while.

Recruitment agency Randstad says there are eight essential skills accountants must have: general business knowledge; numeracy; IT skills; communication skills; integrity and discretion; logical approach and problem solving; leadership and analytical skills.

Just being a brilliant bookkeeper or accountant will not help you persuade an interviewer to take a risk on you and your desire to swap industries.

Especially if you are moving from practice to business, you’ll need to put forward a convincing argument that you can manage the change. So, for example, you might have to give examples of how you are a self-starter and can work on your own initiative as well as part of a team.

Increase your skills to make yourself more transferable

Know your worth

Let’s say you fancy a job as an accountant in the travel industry. You’re not going to get it simply by saying you like going on holiday. You will need to do your homework first.

“Regardless of the role, a client will typically ask in interview why their company and industry appeal to you,” says Owen. “By making sure you have researched their business, competitors and products, you’ll demonstrate genuine interest and make your career transition go more smoothly”.

Having a demonstrable interest in the sector you want to move into is a good idea. If you’ve got a side hustle as the drummer in a band, you’re going to stand out from others going for a job in finance at a music company.

Think specifically about how you’re going to answer questions about your motivation: just saying you’re interested in the sector won’t cut it.

Think about what makes you stand out from others

Be bold

Fear of change could be holding you back (check out the 5 most common accountancy career fears to see if any of them ring true for you), but a move across industries could be just the boost your career needs.

“Your skills are just what companies and organisations are looking for,” Owen says. “Natural aptitude for numeracy and accuracy is particularly valuable to advising and operational roles which work closely with businesses. Stay up to date with trends in different industries through events, work experience and social media platforms to see how and where your skillset can best be utilised”.

A move from your current sector may not only get you out of a rut but can also help reinvent you. It’s a risk moving from a well-established firm to a smaller company, for example, but the chances of promotion are higher.

Remember that a lot of top chief executives started out as accountants – indeed a fifth of FTSE 100 companies have chief executives with accountancy backgrounds.

And while some of these top CEOs might have spent their lives in one particular industry, the chances are high that many have swapped around. The one constant they have is their invaluable accountancy skills.

Remember that you have a similar skillset which potential employers will covet – you just need the courage and a bit of background work to sector-swap successfully!

Your skills are just what top employers want, whatever type of business they are in

Accountancy or bookkeeping qualifications are highly valued across many industries, and so many of the skills you learn in these roles are transferrable, so your options are endless. If you’re feeling the urge to sector-swap, follow the advice above and make your shift a roaring success.