With the right software, tax practice firms are driving forward digitalisation and automation – both within their own organisations and for their clients. These areas, in conjunction with process consultancy for tax practice firms, are becoming increasingly important. Software providers now therefore offer far more than just the right tools.

On the Friday talk show „hsp live at 11“, hsp Managing Director Paul Liese spoke with Matthias Glahn, who has been Managing Director of BMD GmbH for 23 years. During the talk, they discussed the digitalisation of tax practices and IT-based process optimisation.

BMD offers tax advisers a cloud-based portal for their core business of bookkeeping and annual accounts. However, an increasing number of clients were also approaching Matthias Glahn about the subject of procedural documentation – and that is how he eventually found his way to hsp.

For Matthias Glahn, the tax consultancy sector is clearly undergoing a transformation. For years now, he and his company have been driving forward the digitalisation of tax practices. „The pandemic has given digitalisation in the sector a real boost,“ notes Matthias Glahn. „Suddenly, there’s a real need for it.“ More and more tax advisers have realised overnight just how useful – and indeed necessary – digitalisation is for their work.

Automation frees up resources

Digitalisation is paving the way for the automation of standardised and repetitive processes within law firms. Matthias Glahn puts it plainly: „It’s a waste of time and resources to have a tax clerk type up a bank statement and assign it to the correct accounts.“ Automating such tasks could free up valuable resources. And specialist staff can be deployed much more productively: in advising clients.

This is because the field of tax consultancy is undergoing change: „Firms must increasingly adapt to move away from their bread-and-butter business and simple tax returns towards providing consultancy services,“ says Matthias Glahn. Tasks subject to professional restrictions are likely to be phased out in the coming years, so tax advisers will need to reposition themselves to remain competitive. The BMD Managing Director draws particular attention to the lurking foreign competitors. To be able to hold their own against them, tax firms must equip themselves with the right software support. And, indeed, tap into new areas of activity, such as digitalisation and process consultancy.

However, to tackle digitalisation properly and realise its full potential, it must not begin only within the tax practice. Digitalisation starts with the clients. Matthias Glahn explains: „I said this years ago: The major challenge will be to prepare the profession so that tax practices can not only deal with the technically relevant issues, but also with IT and digital matters, and are able to recognise the importance of digitalisation right from the start.“ What software do clients use? How do their processes work? What are their document workflows like? Tax advisers must address these questions as a matter of priority. To do so, however, they must reorient themselves: moving away from traditional tax returns towards advisory services. It is important not to patronise clients or force them into digitalisation, but rather to support them. „I see the firm as a link in the client’s value chain, as an external service provider,“ says Matthias Glahn. „It is the adviser’s task to integrate themselves into this chain as smoothly, gently and unobtrusively as possible, whilst disrupting the company’s processes as little as possible.“

Process documentation provides a starting point for process consultancy

Procedural documentation It has been a mandatory requirement under GoBD since 2015 and is the ideal tool for tax practice to drive digitalisation and process optimisation amongst their client base. Thanks to this collaboration, tax practice firms have a good understanding of their clients„ figures and processes, and a relationship of trust is already in place. This advantage should be harnessed to drive new projects in the future. When drawing up procedural documentation, the processes within the company are defined. This paves the way for optimising individual workflows within the company, as well as in collaboration with the firm. “That brings us to the process chain or value chain,„ says Matthias Glahn. “This is where tax firms can provide support using tools, optimise processes and, for the first time ever, achieve seamless, digital processing of the tax return process.” This is where tax firm software comes into play, automatically transferring data from clients to the tax firm. For example: if clients create a new customer in their software, this is automatically transferred to the firm’s software. Invoices can also be automatically transferred to the firm. Manual transfer is no longer necessary; the data is always synchronised and up to date on a daily basis.

To tap into this business sector, manufacturers of tax practice software not only provide the right tools but are also increasingly offering advisory support. At the hsp Academy, for example, a training course to become a digitalisation consultant has recently been launched, whilst BMD offers a ‘digitalisation licence’. At the hsp Academy, the focus is not merely on imparting knowledge; all lecturers are available to answer questions during regular live calls, and hsp subsequently supports tax practice firms with their initial projects involving clients.

Added value for the law firm and its clients

Incidentally, this new area of business does not necessarily have to be taken on by a tax clerk. The training course can be undertaken by anyone with an interest in the subject who has a background in business. A digital mindset and a sense of curiosity are also helpful.

Once the tax practice is properly set up, the next step is to win over clients. The key here is to sell the benefits of digitalisation. Matthias Glahn: „I firmly believe that people take action when they recognise added value for themselves.“ For clients, the advantages of digitalisation include, for example, being able to handle their payments on time via the firm’s portal, whilst the firm takes care of cash flow and handles the issuing of reminders. Furthermore, the processes and documents are then GoBD-compliant. Ultimately, clients also save on part of the fees, as the firm needs to spend less time on bookkeeping. The firm, in turn, can develop a new business area for itself through process consultancy, thereby positioning itself more effectively in the market and distinguishing itself from its competitors.

It is important that tax advisers lead by example. „Make use of all the opportunities offered by digitalisation within your own practice,“ advises Matthias Glahn. „The more you invest in digitalisation now, the better equipped you will be in a few years“ time.”