How to improve your data and nail Making Tax Digital (MTD)

The cloud makes data and software accessible online anytime, anywhere and from any device. With Xero, it opens up a world of opportunities – increasing efficiency, streamlining the way you manage your clients, and adding moments of beauty into your everyday working. 

However, it’s still possible to get things wrong if the right processes aren’t in place to facilitate accurate, up-to-date data. With the next phase of Making Tax Digital (MTD) fast approaching, now more than ever it’s pivotal to make sure your data is accurate.

Nailing MTD is easier with accurate data

Our recent Industry Performance Report indicated that 37% of practices say that keeping on top of the next phases of MTD is their biggest challenge going forward. Getting into good data habits now will save your practice some headaches while supporting your clients through the various phases. It’ll reduce errors and allow you to have the information you need at your fingertips to deal with everyday queries, which could otherwise cost you valuable time.

Some good data habits to implement might include:

• Checking customer amounts owing and supplier amounts owed for accuracy using the Aged Receivables Summary report.
• Confirming closing bank balance from the Bank Reconciliation Summary to bank statement.
• Checking the current balance, balance sheet items, and consistency of coding for profit and loss items by running the Account Transactions report.
• Reviewing any anomalies flagged by Xero in the General Ledger Exceptions report.
• Sense checking VAT returns for any obvious, material errors.

How to support clients management of data

Remember the old adage: “garbage in, garbage out”? Making sure your clients are equipped with the tools they need to keep accurate data records will drastically improve their inputs and therefore the information that you have to work with. 

Here are three ways to help ensure you’re dealing with data you can trust:

1. Connecting bank feeds mean transactions flow straight into Xero at the end of each business day. This saves manual entry and allows you better visibility on your client’s cash flow.
2. Regular bank reconciliation is the key to having a good grasp on your client’s financial health. Increasing the frequency that this is performed allows Xero to serve up-to-date insights and  makes it easier for you to add value as their trusted advisor.
3. Using data capture apps like Hubdoc and Xero Expenses where the data entry is done automatically by reading and inputting key information for you. Encouraging your clients to get into the habit of using these apps is yet another way to improve the quality of data your firm has access to.

If additional support is required, carving out some time to help your clients get upskilled on these can also be a major time saver in the long run.

Using MTD as an opportunity to convert clients to the cloud

According to our Industry Performance Report, the average annual revenue per client increases when more of the practices clients are using cloud-based software. With the next phases of MTD fast approaching, now is a great opportunity to start converting those laggards and improve your profitability.

When talking to clients about Xero, I always ask them to think of it like an electric bike for your accounting. By doing a fraction of the pedalling they’ll reach the same destination faster and with less effort. They can then use the energy they’ve saved to focus on the parts of their business that they love. The benefits that your practice will see will be better data and more efficient and streamlined processes. If you want some additional tips and tricks on how to handle common client objections to implementing cloud software, I recommend checking out our Breaking onboarding barriers resources.

Now is the time to optimise your data collection processes

MTD is going to continue to push the capacity of accountants and bookkeepers over the coming months. Implementing systems to improve the quality of data now will help alleviate the risk of the wheels coming off as the workload increases. By supporting your clients with recommendations on data best practice and creating good data habits, there will be less pedalling required to nail the various phases of MTD.

If you’re already a Xero partner, speak with your account manager about attending the Xero Energise consulting sessions where you’ll get tips on data management. Alternatively, get in touch with the partner consulting team at partnerservices@xero.com.

If you’re not yet a Xero partner, visit our Xero Partner Programme, where you can find out more about becoming a Xero partner and gaining access to Xero’s team of experts.

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Source: Xero Blog