Making Tax Digital: Data collection at the heart of everything
Data is the keyword at the heart of Making Tax Digital in the form of digital records. In this article we discuss why this is, and how you can best configure your practice to make use of it.
An efficient back office system can’t work without good data
Few bookkeepers and accountants would play down the challenge of being prepared for the new MTD ITSA regulations coming into effect from April 2024. Resourcing and having adequate processes in place is going to have to be carefully considered and tested in plenty of time before the commencement date.
However, it’s hard to build effective and efficient back office systems without a similarly tuned system of data collection. Without the regular input of quality data, processing and reporting quickly breaks down, leaving the firm to pick up the pieces and valuable time and effort spent chasing.
Finding a way of making data collection easy, and reducing the amount of time spent processing it, will greatly improve the likelihood of creating a scalable and robust framework from which to build from.
The value of the digital record
Collecting and recording the core bookkeeping data has always been the key to running any kind of compliance and even advisory service. Without the client numbers, what have you got?.
However, it might be only once a year that you get to see them in any detail, and the true extent of what the records look like will be clear. For those that have kept only paper records, or indeed just the receipts and invoices, there can still be considerable work to do - repeating this on a quarterly basis is probably unworkable unless your service offering is to include a well supported outsourcing option.
The value of getting the data to you in the best possible shape, and in a digital format directly from the client, provides you with options to smooth and automate many more of the steps that follow.
Confidently building in automation
As there is no added benefit or value obtained by manual processing, automating safely should be considered as a must have. If you can confidently cut out the number of times your team needs to check or perform actions to the data the better.
Looking for as many of these opportunities as possible is a good idea. It’s still important though to build in time to test and to understand what is going on before committing. Automation should be something that you are in control of and that you know is working reliably to produce the right results, and not just a default position.
At the data collection side this can be to provide specific email addresses to clients that suppliers can send their invoices to, and provide a way to digitally extract data from paper receipts.
AutoEntry allows you to do this, but also to create specific rules around suppliers or types of documents to enable faster recognition of VAT and coding correctly to the chart of accounts.
Teaching the system allows it to learn faster, and improves the quality of both the automation and the results.
Driving service delivery
Different clients will require different levels of input from you, so building your approach around the smallest number of software choices needs to factor this in. Bringing all the data into one place, and allowing an intelligent system to help with the processing side is a big step towards creating a manageable set of services.
This should allow those with more confidence to engage with the data directly, and at the same time provide the backbone for a complete outsource option for those that would rather hand over to an expert.
It should also help consolidate the broader client service approach outside of those impacted by MTD ITSA. If it can work with these clients, then it can be made to work across a much broader set of clients with more complex and diverse VAT, sales and purchase ledger requirements.
How AE works around client ability and your choice of internal systems (ledger/filing etc)
AutoEntry doesn’t restrict how you work with clients. By acting as the central point for data collection it can be used to build out a whole range of services, and bring controlled automation into the heart of the firm.
Working with all the major bookkeeping software providers means that fundamental change isn’t required to either the client or to your current systems, leaving you free to organise your back office in a way that suits you, and delivers the best results.
Visit our Making Tax Digital page for more insights and tips to get you MTD ready
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