From Brexit to Covid-19, 2020 has been a disruptive year for UK finance departments. But now that we’re finally starting to see the light at the end of the tunnel, businesses are turning their attention towards the tasks at hand that will allow them to return to what is being deemed as the ‘new normal’.
One of these areas is around UK financial regulations, which change on an almost daily basis. Businesses have to become better at dealing with developments in order to stay competitive, now more than ever.
So, as the dust starts to settle, what are the key questions finance departments across the UK need to ask to make sure they’re not caught flat-footed?
From Brexit to Covid-19, 2020 has been a disruptive year for UK finance departments. But now that we’re finally starting to see the light at the end of the tunnel, businesses are turning their attention towards the tasks at hand that will allow them to return to what is being deemed as the ‘new normal’.
One of these areas is around UK financial regulations, which change on an almost daily basis. Businesses have to become better at dealing with developments in order to stay competitive, now more than ever. So, as the dust starts to settle, what are the key questions finance departments across the UK need to ask to make sure they’re not caught flat-footed?
Making Tax digital: an opportunity for businesses
There are several reasons why it is essential to do so. One is that HMRC has been very clear that it wants to become one of the most advanced digital tax administrations in the world. That means other taxes, probably starting with corporation tax and self-assessment, will soon follow MTD for VAT.
Rather than regarding MTD as a compliance issue alone, it is best to see it as an opportunity. A part of the current MTD legislation which is often missed is that you have to keep records digitally, so the sooner you upgrade to a digital process for every part of your finance function, including invoices, the better. Storing them digitally in the cloud is much easier than keeping paper invoices on file for the six years which is required by law.
What’s more, this will bring business benefits including being able to offer something more competitive to clients and suppliers, and greater efficiency, efficacy and accuracy.
How can a digitalised AP process facilitate a business’ Duty to Report?
Duty to Report legislation, which came into force in the UK in 2017, means that companies over a certain size have to provide a lot of detail about their payment practices to the Department for Business, Energy and Industrial Strategy. It is designed to protect small businesses from the £2billion they lose every year due to late payments. But it isn’t just how long it takes you to pay invoices which the government wants to know.
Companies must also report whether they use e-invoicing, which is a platform where suppliers can upload and track their invoices. Digitalising your AP process including portals of this type will not only help you to comply with Duty to Report legislation, but it makes your company a more appealing option for suppliers.
When your AP process is digitalised, it is easy to see at any one time which payments are due or late. That makes it much easier to stay on top of them. The legislation is an opportunity to embrace automation and good practice, and it will leave a clear and secure audit trail.
How does an automated AP streamline the process for contractors and subcontractors?
If contractors can upload their invoices to a supplier portal and track progress from there, it gives them greater transparency and control over the process. Rather than sending invoices which may be treated differently each time, the contractor knows that their invoice will be automatically categorised and validated for payment.
Eliminating manual tasks creates greater accuracy and efficiency throughout the entire process for both contractor and employer.
Businesses in the UK and indeed globally are actively preparing for the negative impacts of COVID-19, focusing their resources on supporting customers over what will certainly be a challenging period.
Minimising disruption on the legal side and complying with financial regulations will only help businesses focus on customer-care strategies and the changes needed to facilitate this new business environment, helping support the economy and protecting the resilience of the financial department.
I want to get more information on UK legal requirements in Accounting.
