HMRC have recently announced that Making Tax Digital (MTD) for income tax has been delayed until April 2026, extended from April 2024. It was originally planned that MTD would apply to partnerships from April 2025, which has also been delayed; however, no date has yet been set for this. This will be welcome news for many smaller businesses that may find moving to MTD challenging.
Despite HMRC announcing a delay to MTD, digitising your accounting records now will bring these five key benefits to your business.
- Time-saving
Over the past 10 years, we have seen a significant change in how our clients deal with their bookkeeping, with over 80% of our healthcare clients now using cloud-based software such as Xero.
Xero has a range of excellent features which can help improve efficiencies and reduce practice managers’ time commitment to daily bookkeeping. Some of our client’s favourite features are the bank feeds and bank rules.
Xero can link to the practice bank account so that transactions can be automatically imported without requiring manual input. Bank rules can then be set up so that Xero recognises where certain transactions will always need to be posted.
- Accuracy
The use of automated features, such as bank feeds and rules, are not only great time-savers, but they also reduce the risk of human error. When dealing with a large volume of transactions, mistakes are not unusual, so automation can help ensure that the data entered is accurate. This can be vital if the data is being used to make business decisions.
- Real-time information
Digital accounting software is cloud-based, meaning that the information is ‘live’ and can be accessed by whoever you choose to give access to. This may be the partners within a practice (access can be restricted to ‘read only’ to avoid any unintended changes!) who may want to see certain financial information or, more commonly, your accountants – this will allow your accountants to have discussions with you based on up-to-date information, rather than using historic accounts. This, again, can be a huge help when making important decisions within the practice.
- Reporting
There is a wide range of standard reports available from Xero, which will be able to give you important financial information. Aged receivables and aged payables reports are useful reports for many of our clients to ensure that they are receiving the income they expect on a timely basis and that invoices are paid by the due date. Xero doesn’t just limit you to the standard reports. It allows you to create your own reports to give you exactly what you (or the partners) want to see – our team is on hand to help you with this.
- Paper reduction
Many of our clients who have already transitioned to using digital accounting software are seeing a significant reduction in the amount of paper used – both being received and sent out. Xero allows you to create invoices within the software and send them out directly from Xero. You can also embed invoices received straight into Xero, meaning that you do not need to keep folders full of paper copies!
For more advice on your accounting software, contact Conor Fields or your usual BHP Healthcare contact.
