Great work starts with great data
The advice you give clients is only as good as the data you’re working with. As well as alerting you to data that’s missing or simply not quite right, Dext Precision provides you with proactive insights, all of which mean your team can offer greater value to clients. Here, our Global Head of Practice Solutions, Katie Hoare, shares four ways you can use Dext Precision to get ahead of your clients’ data, reduce your workload and improve your firm’s profitability.
1. Overdrawn Directors’ Loan Accounts
Problem: Overdrawn directors’ loans can cause all sorts of problems for accountants and clients alike – from dividend planning to S455 issues and more.
Solution: Use Precision for your remuneration and tax planning strategy conversations.
With Precision, you can create a practice level report that flags all the businesses that are close to their year end with overdrawn balances on their directors’ loan accounts. You can even include their reserves balance in the report for dividend planning.
This can be used for general tax planning between the tax and accounts team, and for proactive conversations with the client while there’s still time to make changes. You also get P11D insights in real time, so you can avoid any last minute panic when it’s time to submit yours to HMRC.
In the Focus area of Precision, you can also build a task management flow which pulls from real-time data, and include tasks to check the following:
- Director’s loan account balance
- Has the £2k dividend allowance been used up?
- Dividend status (Have any already been declared?)
- Expense account review (for any codes that are likely to contain private items that need to be adjusted for, such as entertainment)
- Multi-coded contacts (eg. Check Mileage claim – often with changes in team members processing transactions, petrol receipts can slip into motor expenses one month and then DLA the next)
- Net assets insights are great when there is a change in dividend tax rates when considering things like:
- Should dividends be accelerated?
- What could the potential reserves be? (Net assets may not all relate to P&L reserves but they definitely give an indication)
I remember this happening when HMRC brought in higher rates of dividend tax. We had to go through every client to identify whether there was scope to declare any further dividends in the most tax efficient period. This would have been considerably easier with the reports from Dext Precision (especially as you can tell whether the client records are up to date or not).
2. Changes to Locked Periods (Historical transactions)
Problem: Removing the lock dates from a previously closed period in your general ledger can cause discrepancies in your reporting.
We’ve all been there. Whether it’s certain clients, or members of your own team, when lock dates are adjusted, new transactions are subsequently posted into that once closed period.
I remember rolling forward my opening balances in my AP solution, then comparing them to those in my bookkeeping solution, and wincing at the number of discrepancies in the data. I’d then create a spreadsheet to compare the two, then a list of journals that needed posting.
The whole thing was made even more complicated when, to my despair, some of the differences arose in the control accounts – a journal alone wouldn’t fix it. Like I said, I’m sure we’ve all been there.
Solution: Use the Historical Transactions report in Precision to see whether the data matches up
This is a real game changer. The Historical Transactions report compares the data at Companies House with the data in your general ledger. If the data matches, no further work is needed.
If it finds there have been changes, though, you can set a specific date period for Precision to look at (I would suggest the date when the accounts were finalised). Precision then provides you with a list of all transactions that match this criteria and adjust your journal for you.
3. Improve Recoverability (Fee reviews)
Problem: Right now, there’s a lot of discussion in our industry around different pricing strategies, from time-based, to value-based, fixed fee and so on.
If a fee has been agreed with a client upfront – or even if it hasn’t – most struggle to challenge what they charged the previous year (plus 3% for inflation), irrelevant of the amount of time spent processing the job. That’s often because we don’t have the information readily available to do it any other way.
Solution: use Precision insights to regularly review data with your clients to ensure the fee is accurate and maintains a good level of recoverability
You may do this by reviewing fee levels based on:
- Number of bank transactions
- Level of turnover in any given period
- Level of the health score percentage
With Precision, you can assign different review month flags against a client and build flag-based reports. You can review these on a monthly basis, providing you with a list of clients whose fees need to be assessed to ensure their metrics are still in line with how much they pay.
You then have an opportunity to contact these clients (avoiding scope creep) and discuss their package with the data to prove they need further services to hand.
4. Year-end Insights
Problem: Providing valuable insights that can be used to make a tangible difference in your clients’ businesses can be difficult, overcomplicated and, therefore, often avoided or overlooked.
Solution: Use the Precision Customer Reliance Graph to flag customers that make up a large proportion of your sales income
Business performance and, more specifically, customer and supplier reliance is currently a very topical advisory piece for business owners. Like Brexit and Covid-19, there are plenty of external factors impacting our supplier chains. That can cause problems if your clients are heavily reliant on one or two, so it’s critical businesses can see what they’re spending and where.
With Precision, you have all the information you need to have this conversation with your client at the click of a button. There’s also a similar report for Supplier Reliance.
We’ve previously mentioned net assets and how valuable it is to be able to report on this number across all your clients. At a client level within the Business Performance report in Precision, there’s also a graph for Net assets and trends over the past 12 months which, as we know, can massively impact the credit rating for a company.
Again, this is a great discussion point for a client meeting, especially if it is approaching year end. What could potentially be done to ensure net assets are at least equal to, or greater than, those disclosed in the previous year’s accounts submitted to Companies House?
One of the great benefits of sandbox reporting within Dext Precision is that you can report on almost anything to get the insights that YOU need. Similarly, a report can be created by/for every team member within the practice. A more junior member of the team may want completely different insights to a partner. When you work strategically with the Dext Precision team, we can even help you build these tailored reports to provide the invaluable insights and flows that each person needs.
As we’re sure you know, the advice you provide clients hinges on the quality of your data. That being said, there are plenty of things that may undermine its accuracy. From changes to locked periods, to bad visibility, it can be increasingly difficult to ensure the data you’re working with fits the bill.
With this in mind, we hope you can now see the role Dext Precision has to play. We have solutions for every hurdle – whether that’s in-depth reporting, insights, or simply better conversations with your clients, Precision does a lot to ensure you’re always one step ahead of the data.
If you’d like to find out more about these problems and how Dext Precision helps, join us for our webinar on March 17th. We’ll be taking you through each scenario via live product demos from one of our experts. To book your spot, simply click the button below.