Chat with us, powered by LiveChat How is fintech changing the accounting world?

How is fintech changing the accounting world?

How is fintech changing accounting?
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    What is fintech?

    Fintech, or financial technology, is the usage of any technology to provide financial services via software, online platforms, or apps such as online banking, mobile payment apps, or even cryptocurrency.

    Fintech is a broad category that consists of various kinds of technologies; the primary motive of fintech is to change the way consumers and businesses access their finance from traditional financial services. 

    Are there tax implications for fintech?

    The tax implications for tech and fintech companies vary based on the business growth stage, level of profitability and type of service the business provides.

    If the business is in the start-up or early stage, it usually makes losses due to its heavy investment in research and development. An accountant at this stage would be focused on preserving cash flow by claiming research and development tax relief.

    Companies that have been operating successfully for several years would be highly vulnerable to tax risks. Hence at this stage accountants will give high priority to tax risk management and compliance.

    There are some main tax issues fintech firms should consider, such as research and development tax relief, international tax, VAT recovery, profit fragmentation and transfer pricing.

    What accounting services do fintech businesses need?

    If you are a fintech business, firstly, we would like to applaud your courage, entrepreneurial skill and innovation. We also understand how challenging and dynamic your business environment is.

    If you are inexperienced or worried about how accounting works for your business type, at WIS accountancy we are here to assist you.

    Our motive is to understand your business type and nature in depth and add value to your business, helping you comply with all regulatory requirements, act proactively, and forecast accurately through having a thorough financial understanding of your business.

    We are skilled in adapting to the growing dynamic needs of our clients. We make sure our clients negotiate their accounting, tax and regulatory requirements with ease.

    Our team of fintech accounting experts specialised in offering the following services:

    • Tax planning and structuring
    • Preparation of annual accounts
    • Filing corporate tax returns
    • VAT management
    • Payroll management
    • Preparation and filing of personal tax returns

    How fintech is transforming the accounting industry

    Let’s see some of the prominent ways in which fintech is transforming the accounting industry:

    Unprecedented access to data

    Anytime access to data is possible in ways never seen before. This is the main catalyst for the emergence of cloud-based accounting software. Financial information can be accessed anytime from anywhere in the world by anyone who has access, on a real-time basis. 

    Fintech companies, due to their technological advancement, have access to real-time financial information and reporting. This allows them to make decisions in advance and react instantly to evolving financial situations.

    This also provides better insights about budgeting, forecasting and resources management.

    Automation

    Artificial intelligence and automation are two key drivers for fintech-influenced changes in the accounting industry.

    Automation, concerning processes like credit control, forecasting, invoicing, cash flow reporting and reconciliation, has significantly reduced manual working and therefore drastically cut time taken.

    This frees up the time and resources of the business and its accountants and allows them to focus more on the strategic aspects and take a more calculated approach.

    Improves productivity and decision-making

    With streamlined automation, real-time access to data and reports, more accurate forecasts and cash flow analysis, businesses get ahead. Having all this on their side, business owners become proactive rather than reactive.

    They can plan ahead and can make budgeting plans better and put contingencies in place as fintech provides a far clearer look into the future to make more informed decisions. 

    What changes are there within fintech accounting?

    With the development of fintech financial data is flowing faster than ever. 

    Payment gateways like Stripe, and invoicing and billing programs like FreshBooks, along with more advanced cloud accounting software, are examples of applications that continue to reinvent the way fintech accounting is automating its business functionality.

    Though not all fintech companies are completely modernised, they realise the basic truth that creating manual invoices and payments is costly and outdated. Most cloud-based accounting software can automate the accounting, bookkeeping, and tax filing functions of a fintech business. 

    Automation will cut costs and facilitate businesses getting paid quickly. Customers will benefit from greater efficiency, along with both lower prices and higher value for the services delivered.

    However, while this does not mean that traditional accounting software like QuickBooks, and bookkeepers/accountants, are not playing an essential role in accounting, the importance of this traditional software is reducing day by day. 

    Automation also impacts fintech employees in various ways. Employees should embrace the new technology rather than look at it as a threat to their jobs. With more automation time is saved and this time can be productively spent on training, increasing the client base, or even improving work-life balance.

    Both fintech companies and their accounting service providers should be abreast of changing trends so that they can reinvent fintech industry roles.

    The skill sets of accountants are changing

    Fintech is a great evolution for businesses, but that doesn’t mean that it is negative for accountants. Fintech is turning around the tradition. 

    Having said how fintech has made business owners more proficient at managing their finances and bookkeeping, the importance of accountants might be expected to reduce, which would create fear amongst accountants. But the reality is quite the opposite.

    It is true that fintech has replaced much of the heavy administration work that accountants have been historically tasked with.

    On the other hand, it has created space and time for accountants to dive deep into strategic thinking, forecasting and advising.

    Hence, accountants now have the time and headspace to make more analytical decisions. Accordingly, their roles are evolving more into consultancy.

    Fintech is an excellent tool that will be useful for everyone by streamlining and improving efficiency if implemented well. It transforms both profession and service.

    Irrespective of the stage your business is at, as experienced accountants, we can assist you in the preparation of accounts and compliance with regulations and thereby allow you to focus more on the strategic aspects of your business.

    If you need further assistance with accounting for fintech, feel free to call us on 0203 0111 898 and we will be happy to help.

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