Tune up your tax season workflow

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Another tax season is upon us. And that means taking a look at how your office and your staff handle the inevitable deluge of tax returns, especially those that come in at the last moment, or dribble in piece by piece.

During the hectic few months of scrambling to get return data in, processed and filed, an efficient workflow is a must. And workflow software, whether generic or specifically designed for tax season, can be a huge time- and effort-saver.

To help you face this daunting endeavor, we asked a virtual roundtable of eight major vendors of workflow software for their take on three vital questions:

  • What are the major developments in tax workflow software this year?
  • What do tax preparers need to do to make the most of their workflow systems?
  • And what major mistakes are tax preparers making in managing their workflow?

Looking for more

As with other areas of practice in accounting firms, technology has had, and continues to have, a profound impact on how the tax return process is handled.

According to Greg Pope, vice president of marketing at SurePrep, “We’re seeing firms adopt client-facing workflow technologies at an increasing rate. Firms want to provide the same technology-
driven experience that clients are enjoying in other industries like banking, investing and ride-sharing. Decades-old paper processes no longer cut it. No one enjoys opening the mailbox in January to find it stuffed with a thick envelope from their CPA. That feels like homework. Today’s tax clients expect convenient, mobile technologies that allow them to easily collaborate in a way that minimizes their time commitment and reduces stress.”

David Cristello, CEO of Jetpack Workflow, expects to see significant advancement in machine learning and “smart software” applications: “Complexity in tax returns and the financial system will continue to increase, thereby creating more rules, process changes, and advanced knowledge required to adequately triage corporate returns. This will actually drive up the workflow complexity for corporate returns, as more data and new inputs will have to be considered. However, individual tax returns will continue to be commoditized and advancements in machine learning and AI will continue to decrease this as a viable (standalone) service for most firms.”

Jetpack’s director of firm success, John Bowman, added, “New insights on tax advantages/savings will automatically surface to tax professionals (i.e., tax platforms will begin to auto-suggest tax deduction opportunities), thereby making their advisory services more profitable and valuable. However, more firms will enter into tax advisory services and that will drive price pressure on some firms. But given it’s still a niche service, there’s plenty of room for growth.”

As with many applications, the cloud has had, and will continue to have, great influence on the tax workflow process. Ian Vacin, chief success officer at Karbon, noted that, “There has been a major increase in firms’ interest in online tax workflow, as practitioners view it as a critical tool for their success. In addition, we see more and more firms utilizing remote workers as a solution to their scaling and seasonality problems. This has increased the overall need for tax workflow solutions, but also in the specific features that those workflow solutions need to provide to handle the unique needs for insourced and outsourced resources (e.g., increased cloud-based applications, increased user permissions, increased client/work visibility, and more detailed, sophisticated workflows).”

A shortage of staffing resources and the need for a better look into the status of work in the firm are also concerns that Ray Barlow, senior vice president of XCM, addressed: “With staffing shortages continuing to be a reality for accounting firms, the ability to allocate resources effectively is critical. Resource allocation software maximizes efficient assignment of staff resources to help serve clients, while continuing to provide growth opportunities for firms and for individual employees. The ability to ‘pool’ resources and effectively move work to the next available preparer, rather than assigning each tax return to a particular preparer, can help automate a firm’s tax prep process. At XCM, we are also seeing the importance of data analytics in managing the tax preparation process. Partners require intelligence related to the status of all of their client engagements, as well as the productivity of their staff. Non-financial data analytics can help firms manage their tax season with actual 24/7 insight into what is happening in their firm. Data analytics are a critical tool to help firms manage the compression of tax season.”

Thomson Reuters Tax & Accounting’s proposition strategy lead, Louie Calvin, said that there’s a need to move beyond the tax return.

“Firms know they must shift from tax compliance to advisory in order to remain relevant,” he said. “Advanced client collaboration tools and real-time client accounting systems facilitate a shift to a ‘continuous tax engagement’ (a.k.a., the 365-day tax return) instead of the typical once- or twice-a-year engagements. The result is a win-win. Clients benefit from year-round strategic advice and the professional accountant benefits from clean books come year-end that can be integrated easily into the tax system.”

Making the most of what you have

Many preparers already have workflow software that addresses the flood of work that tax season entails, as well as other work year-around in the practice. But are they really using the software to its maximum potential?

“It’s all about the tech stack and automation,” Patti Newcomer, vice president of marketing for the ProConnect group at Intuit, said. “Tax preparers need to make the entire data journey digital, including document collection, tax return delivery, signature capture, and payment authorization to eliminate billing steps. Automation can’t happen if the data isn’t digital. And integrating these new workflow tools with the tax products will increase the overall capabilities of firms, helping to automate compliance work and freeing up more time to deliver advisory services to clients.”

Karbon’s Vacin added, “Each workflow engine in the market has its own unique way of conquering the problem. You need to choose the right product for how you want to work and then update, modify and build your tax workflow for the design pattern that the workflow engine you choose supports. Copying and pasting your workflow from one product to another will miss much of the benefits you obtain from switching to a more efficient solution.”

And Jetpack’s Bowman pointed out another direction to maximize their workflows: “Tax preparation is really no different than any other workflow. It’s a job you have to manage with a due date. To make the most of your workflow systems, you need to start treating the work you do as jobs and apply job management best practices to do the work. For example, one best practice is to become familiar with the idea of ‘risk management’ in job management. Basically, risk management is minimizing any potential risks or threats to completing your projects on time, whether it’s receiving information from clients, proper internal processing and centralization of information, or final signatures and payments. It’s important to identify the risks (or bottlenecks) and address them before the upcoming tax season.”

“Making the most of your workflow system centers on two key aspects — review and training,” said Jim McGinnis, executive vice president and general manager for the U.S. professional market at Wolters Kluwer Tax and Accounting North America. “Firms should review their workflow and make changes to their business process to leverage the latest enhancements that their solution vendor has made. And staff and partners need to keep current with the changes to their existing workflow systems. This can be done by attending training webinars or by participating in an annual user conference offered by the solution vendor. User conferences are especially valuable, as they provide firms and their staff with an opportunity to see the latest enhancements in action and talk with their peers about ways other firms are leveraging the technology to get the best ROI.” McGinnis also pointed out that command of data took a front-row seat this year, as advanced technologies in data analytics, artificial intelligence and machine learning, blockchain, and 5G have started to change the way firms do business.

SurePrep’s Pope added, “First and foremost, tax preparers need to offer mobile technologies that are designed with the taxpayer in mind. If it’s not easy for the client to use, they won’t use it. And if they don’t use it, the technology offers no benefit to the firm. Once the choice is made, firms need to give clients sufficient notice that the change is coming. If you plan to offer your clients a new technological option, we recommend sending a letter and an email three to four weeks in advance. Let the client know what to expect and give them time to ask questions.”

“Think about the onboarding process. Put yourself in the customers’ shoes and walk through your firm’s new client onboarding steps. If you haven’t already, explore paperless online applications which automatically add new clients to practice management systems, tax and workflow systems,” suggested Thomson Reuters’ Calvin.

Mistakes are part of the process

Implementing and maintaining any sophisticated system is a challenge, and mistakes are common, especially when there’s no set plan in place for implementation and ongoing usage. Our vendor panel offered some sage advice on how to minimize going off the rails in using and managing workflows.

“Managing workflow begins with everyone understanding it,” Philip Phares, AbacusNext’s director of education, told us. “Tax preparers should understand how things are billed, and billers need to understand how a tax return moves through the office. These seem like simple ideas, but I have seen office workflow come to a screeching halt because the complete workflow methodology was not understood by all team members. In addition, you need to have a workflow solution that reinforces this, as it should provide a single location for all of your workflow items and allow the office to work as a single, informed unit.”

Consistency is important, and a place where mistakes can creep in, XCM’s Barlow noted: “From onboarding clients, to assigning work to staff, to actual service delivery — consistency matters. The ability to manage, track, and provide accountability for all those transactions in one place can improve workflow and ensure complete visibility to every client engagement. But at the end of the day, the major mistakes we see tax preparers making tie back to consistency, and can be addressed by optimizing business process and using a workflow technology to uphold that optimized business process across the team.”

Clinging to old ways is another potential problem according to SurePrep’s Pope: “The biggest workflow mistake you can make is getting stuck in outdated processes and old ways of thinking. What’s worked for the last 20 years will not work for the next 20. Most firms have a lot of room for improvement, in terms of both internal process and client-facing workflows. An optimized tax workflow requires constant iterative improvement, and the firm of tomorrow is always trying to identify and remove friction.”

Karbon’s Vacin pointed out another potential stumbling block: “In terms of the tax workflow itself, most tax preparers miss the balance of creating a simple checklist and building a workflow that can enable the firm to grow. You want your workflow to be light (e.g., simple task titles) but provide enough detail (e.g., task descriptions) for the most junior person operating the workflow to know how to complete the task at hand. In addition, your tax workflow should work for you by bringing the client into the workflow. Look for solutions that can put the client to task and chase the client for the necessary documents, answers, signatures and confirmations that are the biggest contributors of lag time in the workflow. Lastly, break up your workflow into sections so that you can visually see your work as it moves across the major work phases and keep people on task to keep the work moving.”

“There are two mistakes I see tax preparers make when managing their workflow,” said Intuit’s Newcomer. “The first is letting clients define their workflow. Clients will do what is easiest for them, which should be a better, more automated process that delivers more confidence. The second, and arguably more impactful, mistake is defining their client relationships around transactional tax return filings instead of establishing advising and coaching-based client relationships. When the tax preparers focus on advising clients, they are able to collect data earlier, utilize the tools in their workflow more efficiently, establish tax plans well in advance of tax season, and ultimately make a sustainable difference in their clients’ financial lives.”

Finally, Thomson Reuters’ Calvin offered this advice: “Client expectations have changed, and clients now expect their tax and accounting firm to interact with them in a similar manner as all other businesses that contribute to their success do. The firm’s leadership must focus on making the client experience more digital and convenient for their clients. Traditional firms are now getting increased pressure from competitors that offer extreme ease and time savings — basically allowing individuals to complete their tax return entirely through an app.”

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