How to make accounting digital

Making Tax Digital is a government program to make submitting tax returns easier and more efficient, and to help ensure that these returns are more accurate. The principal way that that these goals can be achieved is by “going paperless”:

avoiding the need to collect piles of VAT receipts and other important pieces of paper by using digital documents instead.

So “going paperless” is really another way of saying “going digital” – and should therefore be seen as part of many charities’ existing digital transformation projects.

An important part of this is making accounting digital. Think about this: charities are striving to become more data driven in everything that they do. By digitising paper records including invoices, expense receipts, and other financial documentation, these charities can unlock a valuable new source of data about their financial activities. And that’s not even to mention making accounting easier, more efficient, and more accurate.

So what does your charity need to do?

The first step is to identify which types of documents you want to target for going paperless. It’s not necessary to do everything at once, so you may decide to start with just a few categories such as expense receipts including bus or train tickets that your staff use in the course of their work, and invoices that your charity receives.

Once you have done this, the next stage is to split the documents into two categories: ones that arrive at your charity in digital form (this includes invoices that are emailed to you as Word or PDF documents), and ones that arrive as paper documents (such as invoices that are posted to your charity’s offices, and paper receipts which staff bring in after working out and about).

Digitising your paper documents

The good news is that the world is becoming increasingly digital, and that means more and more organisations are beginning to offer financial documents including invoices and receipts in digital form. But until this becomes universal you are going to have to convert your paper documents into digital ones if you want to go completely paperless.

There are two ways to digitise a document. The traditional way is to place the document in a scanner, where it held flat while a digital image of the document is produced under controlled lighting.

Scanners cost anything from about £50 for a basic one to a few hundred pounds for more fully featured ones with document feeders. Larger charities can also opt to outsource their scanning to a third party.

A more modern approach is simply to take a photograph of the document using a smartphone camera. The problems with this method are that unless the camera is held directly over the document  its shape will be distorted,  and unless the lighting is perfect the image will likely have shadows on it, making it harder to read.

The way around these problems is to use a document scanning app such as Adobe Scan or Abbyy FineReader PDF. This type of app can correct the shape distortion caused by photographing a document at an angle, as well removing shadows.

Scanning apps also have other useful features such as the ability to detect that edges of a document so only the document itself is captured, rather than including some of the surface that the document is resting on.

Many also have an “autoscan” feature” which will take a photograph automatically when the document’s edges have been identified. This makes it much easier for the user to hold the camera steady because they don’t have to press a button on the screen to take the photo.