According to research from the ICAEW, over 40% of businesses that will be affected by Making Tax Digital (MTD) for VAT are not yet aware of this, despite the April 2019 deadline edging closer.
Accountants therefore need to step in and educate both their staff and clients around MTD. They must take on the role of MTD adviser, helping their clients prepare for the upcoming deadline and staying abreast of updates so their clients continue to be compliant even after next April.
Firms may also choose to update their service offerings and their pricing structures to help clients meet obligations in the most efficient and effective way for future growth.
Adjusting to the demands MTD are throwing at us means accepting and embracing change. We will share some ways to do this and benefit from it.
What you need to consider for MTD
MTD will more than likely bring about more regular interactions between accountants and their clients, which in turn means closer ties will be built and a solid growth opportunity for accounting firms will form. Accountants therefore need to think about how they can maximise this time they will be spending with their clients.
Accountants consequently need to be trained to understand MTD in the capacity that they can answer client questions and guide clients appropriately.
This is why having key individuals working specifically on MTD in accountancy firms is so important. Firms can choose to have MTD champions as well as senior leadership representation relating to the new regulation.
Another consideration is workflow and cashflow. MTD will likely mean that firms will be billing their clients more regularly, but they must also be aware of altering spending patterns, which might need to be adjusted in line with revenue.
Finally, remember that MTD is a strong marketing opportunity. Through more frequent contact with clients and a successful rollout of MTD by the deadline, there is a great opportunity to sell other services to clients and gain more new business by proving MTD success.
How accountants can develop successful MTD service plans
How might accountants develop new MTD service plans effectively? The key to this is being open to changes in pricing, being flexible with changing work packages, and reassuring clients of the advantages of a new plan.
The accountant must also become the expert in MTD, the trusted adviser. They must stay up-to-date and know everything there is to know about the new regulation; clients will trust their accountant to prevent them from being non-compliant and incurring fines as a consequence.
Firms can then share this knowledge and provide through webinars, events, and regular communications both digitally and face-to-face. They must encourage their staff to partake in these just as much as their clients.
MTD service plans are dependent on the will and skill of the client base, including their willingness to adopt change and their ability to learn news skills to take advantage of the technologies available.
Building a subscription model
The world is going subscription-based. Whether you watch programmes on Netflix or get your favourite magazine through your door once a month, much of the entertainment in our lives comes from a subscription, and the working world is starting to do the same.
Regular monthly fixed fees allow your clients the breathing space to plan ahead and appreciate your services.
A subscription-based monthly process also allows you to have regular touch points with your client to address major problems before they arise, and therefore support a stronger advisory relationship overall. Regular contact negates the requirement for crisis management.
One of the biggest challenges for any subscription-based business is maintaining client interest in the services on offer. This where focus on customer experience and creating new ways to add value to clients comes in. Get creative with how you communicate with customers: sending newsletters, organising regular face-to-face contact, and picking up the phone when you can.
The success of a subscription model comes down to understanding your clients’ needs, pricing according to expectations, and being pro-active in terms of renegotiation if the service is no longer profitable.
Moreover, it is important to focus on client retention, as repeat work forms the core base and will contribute most earnings.
Recurring work can be systemised, streamlined, and automated in most cases, therefore creating the opportunity of more profit than what can be gained from ad-hoc infrequent tasks.
What are the do’s and don’ts of building subscription models?
- Offer different pricing packages. You will win more business if you allow clients to commit to a lower package and scale later. Ensure you are clear as to what the entry service includes.
- Provide several payment options. You could easily lose business if you do not offer direct debit, credit card, or payment on invoice.
- Be clear in your proposal as to what services are covered, but, at the same time, use this as an opportunity to educate them as to what else is available.
- Be clear as to the tasks your firm will undertake and the responsibilities of the client.
- Remind your clients regularly of other services you offer; the easiest way to grow revenue is from existing clients.
- Hide hidden extras – business owners subscribing expect to have everything covered.
- Underestimate the business costs of servicing monthly invoices. Create rules, then apply automation and robust systems from day one.
- Forget it is all about client experience.
- Be afraid to try new technologies and explore new routes of client contact. The key to subscription modelling is efficiency in all processes. Though face to face meetings are great, a better use of your time could be online through Skype or Zoom – this builds a reputation of being a more progressive firm.
The key benefits of subscription services are better client relationships through regular contact and a clear expectation of the work performed and certainty of cashflow for the client and accountant alike. Rather than chasing payments at random monthly intervals, clients pay regularly each month, which equates to releasing time for developing and growing your practice.
What next for accountants?
MTD has the potential to bring many benefits to businesses, to accountants, and to the economy, but those who want to maximise its potential must understand it fully and reap its benefits.
Accountants can do this by accepting the change that is going to happen and viewing it as a vital opportunity for growth. There is no longer scope to keep holding on to the old ways of submitting tax returns; the future is about to be ingrained in law and the only successful way to do this is to celebrate it.
Specifically, accountants should be considering adapting their service plans and pricing models to squeeze out all the advantages of MTD.
Equally important is getting everyone on board with this. Firms must accept the new regulation, accountants must become experts in the subject, staff must be trained in relation to it, and clients must have training and learning materials available to them so they understand and feel confident about next April’s deadline.
Find out more about building subscription models and developing service plans in preparation for Making Tax Digital.
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