Research from cloud accounting software provider Xero found that there is a high expectation that accountants should be up to date with the latest accounting technology with only 6% of small business owners saying that it is not important.

Despite this, eight in ten (78%) accountants still work off computer spreadsheets and a fifth (18%) still use a paper ledger, used as far back as the 13th century, to manage accounts.

Xero’s ‘Digital or Die’ report found that half of accountants (48%) are worried about being left behind as technology rapidly changes around them, up from 22% in 2016. More than a third (35%) feel this way as they do not think there is enough education and training to ensure accountants can keep up with the pace of digital change and upcoming legislation.

Only 17% are prepared for upcoming legislation such as Making Tax Digital and a further 25% are not aware of Making Tax Digital at all despite 25% of small business owners believing that it is their accountant’s responsibility to keep them updated with legislative changes.

Damon Anderson, director and partner at Xero, comments: ‘Over the next few years, small businesses and their accountants will need to embrace digital or run the risk of quickly being extinct. Our report shows that one in ten small business owners and a fifth of accountants in firms still use paper ledgers - a tool that dates back to the year 1299 - with many losing hours to menial administrative tasks. It’s time to work smarter.

 ‘The UK accounting industry is entering a new digital age, driven by unprecedented changes in accounting technology and a perfect storm of regulation from Making Tax Digital, Payment Services Directive 2 to GDPR. We want to encourage practices to take the first step in ensuring they remain relevant by embracing the latest technology.’

Shaun Robertson, director of qualifications at the ICAEW adds: ‘Some accountancy professionals fear being “left behind” by the speed of change, which is why it’s so important to learn about the benefits, opportunities and challenges of new technologies.

‘In some cases, technology such as AI may supersede human efforts, however, it does not replicate human skills and intelligence. We need to recognise the strengths and limitations of different forms of technology, and build better understanding of the best ways for humans to benefit from computers.’

Xero’s Digital or die report is available here. 

Report by Amy Austin