Accountants face their own productivity slump during the busiest time of year without the help of digitised systems.
How tax time highlights the need to jettison tradition
It’s officially the busiest time of the year for our 36,903 accounting businesses as 14 million Australians lodge their annual tax returns over the coming weeks and months. How can innovations in technology help keep accountants productive and sane during this time?
Tax time pain points
During normal tax season, accountants find themselves dealing with excessive demands and often work overtime in order to keep up. The challenges have been further complicated by a plethora of changing tax legislation made effective at the beginning of July. These include the removal of the low and middle income tax offset (LMITO), work-from-home expenses now being claimed separately instead of a fixed rate, and crackdowns on inaccurately filed returns from landlords.
This means revised processes and structures to manage as well as additional time to understand and implement these changes to maximise client returns.
All of these factors eventually result in lost time, energy and, most importantly, productivity.
Productivity is key to modern economic growth and prosperity, and the aspiration is always to improve it over time. Unfortunately, Australia is in a productivity slump with stagnation or regression across the board.
Earlier this year, the Productivity Commission formalised these sentiments in the result of its five-year productivity inquiry, which outlined key recommendations for continued economic growth and prosperity.
One of its five key themes concentrates on digital technologies and their potential to significantly improve the economy. It says businesses are struggling to harness the potential of digital innovation to boost productivity.
Accountants should think of how productivity currently operates at tax time. Often clients send documents that must be manually scanned, printed and processed by employees. These can amount to dozens, if not hundreds, for each client. Extrapolated to an entire portfolio, the pain points are clear.
These are felt by all levels, from accountants and their employers to customers and the economy at large.
Accountants are stressed and more susceptible to burnout and mistakes. External regulation continues to change existing processes. Internal expectations and targets add to the pressure for timely application turnover.
As a consequence, businesses and employers are affected, resulting in potential worker burnout and poor staff retention, revenue, profit and growth.
Overstressed employees have a flow-on effect on businesses and employers through resignations, revenue/profit drops and stagnant internal growth. These can result in the loss of customers or even the business itself, contributing further to unemployment and insolvency rises.
At the end of the funnel, customers are impacted by long process times and potential mistakes in their returns. This sense of dissatisfaction can weigh heavily on those already feeling the brunt of inflation and higher costs of living.
In a macro sense, the greater economy is then impacted by potential labour shortages, higher unemployment and lack of spending through lost productivity.
Digital over tradition
It is clear that the traditional means of accounting are outdated. It is even clearer that accountants need technology to maximise productivity by streamlining workflows and creating higher time to value.
Prior to our own digital transformation at Factor1, we relied on paper-driven processes to service clients. This proved costly and time-consuming. Factor1 sends and receives about 5,000 tax documents annually across all client sizes, requiring 2,000 hours of labour from staff for the physical printing, signing, binding and mailing of each document – roughly equivalent to one full-time employee a year.
Extrapolate these numbers across all accounting practices and the magnitude of processing at tax time becomes clear.
It was only once we embraced technology, through investment in measures such as e-signature software, that the business could tap into more efficient systems.
This in turn led to reduced operating costs, increased productivity, added flexibility to scale the business as well as a better customer experience. Recoupled productivity costs could then be reinvested back into the businesses elsewhere.
These were largely aided by the automation, intelligence and workflows provided by technology – methods otherwise unavailable or extremely inefficient through traditional pen and paper.
Ultimately, embracing technology is the way forward for the accounting industry to remain productive at its busiest season and beyond.
David Fitzgerald is CEO at Victorian accounting practice Factor1.
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