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Regulations your finance management system should follow
Blog //18-02-2020

Regulations your finance management system should follow

by Andrew Hicks, Former Chief Financial Officer

What Regulations should your finance management system follow?

Any future-facing financial management software should come with built-in reporting and legislative capabilities. But what regulations should your system follow, and how do you ensure it does the job of keeping your organisation compliant?

Among all the challenges facing finance teams today, regulatory compliance is one that often catches them out. While the wider business invests in systems for growth, performance and innovation, many organisations retain outdated financial management systems to meet fast-changing regulatory reporting requirements.

This is not the best approach in an age where digital transformation is entwined with business strategy. It creates unnecessary extra workload for your people — valuable time which could be better invested elsewhere. It can also leave organisations open to crippling fines.

This is avoidable with the right technology.

Future-facing functionality

When choosing a core financial management system you need to make sure it has future-facing compliance functionality. It needs to enable your organisation to manage multiple business units and view data from across the entire company while including powerful reporting and legislative capabilities.

This has become more relevant in recent years as the increasing number of regulations and the growing need for operational transparency is placing more strain on the finance function. And those without the right processes or software are needlessly spending excessive time, money and resources on an administrative function which, these days, can easily be automated and augmented with new technologies.

What are the regulations for finance management?

The main legislation which impacts finance teams focuses on tax filing, data protection and financial reporting. Let’s go through them.

  • Making Tax Digital

Making Tax Digital (MTD), which came into effect on April 1, 2019, means all businesses with a turnover above the VAT registration threshold of £85,000 must submit returns digitally. To do this they need a software solution that can connect to HMRC systems via an application programming interface (API).

A 2019 Federation of Small Businesses (FSB) survey found that a third of small firms still use paper invoices, 29 per cent use paper receipts and bank statements to track their finances, and half of VAT-registered small firms did not have the right software in place before April 1, 2019. According to our own research, only 57 per cent of UK organisations were prepared for MTD before it came into force, and 35 per cent admitted they didn’t even know whether they were prepared.

The idea of MTD is to make efficient, accurate submission to HMRC. Just two of the benefits of digital financial management software is that it removes human error and increases the speed of reporting.

To make sure you choose the right provider for MTD, look for a vendor that is listed as a supplier supporting MTD legislation. Ideally, it should have been working with HMRC, and be committed to developing its products in line with HMRC updates and requirements.

Our new MTD online portal, Business Tax Portal, for example, works alongside any finance system. Here’s some more advice from our Chief Technology Officer, Jon Wrennall, for taking the pain away from choosing MTD software.

  • GDPR

General Data Protection Regulation (GDPR) has been enforced across Europe since May 2018. It relates to any business which holds the personal data of anyone based in the EU, which could be customers, employees or prospects. The fine for non-compliance is four per cent of annual turnover or €20million, whichever is greater.

When choosing financial management software, you should seek out applications with an in-built GDPR module. Here’s a handy guide to GDPR.

  • Charities SORP

The charity Statement of Recommended Practice (SORP) sets out how charities should prepare their annual accounts and report on their finances. As such, it also covers the Statement of Financial Activities (SoFA) reporting capabilities.

For reporting periods starting on or after January 1, 2019, all charities in the UK and Republic of Ireland must follow the second edition of the Charities SORP (FRS 102), which was released in October this year.

  • Other public sector regulations

To stay ahead of compliance, charities and other public sector bodies, like schools, colleges, NHS trusts and social care organisations, should seek out vendors with specific functionality for public sector financial management, such as SORP and SoFA reporting capabilities, built into the system.

Anticipate and interpret

Compliance is about identifying, managing and taking action to meet relevant laws, policies and regulations. A compliance management framework is a structured set of guidelines that details an organisation's processes for complying with regulations, specifications or legislation.

But due to the increasing number of regulations and the growing need for operational transparency, more organisations are looking for ways to enhance these processes while reducing workload. Compliance already takes up an increasing amount of admin time. So, many organisations are supporting their compliance management frameworks with financial management software to anticipate and interpret new rules.

Removing the burden

Finance software should deliver complete financial visibility over your entire business,  from within the same system, so finance teams can track key performance indicators (KPIs). It should have extensive reporting, via dashboards, to deliver actionable insight for informed decision-making.

It should have the highest data security. And, of course, it should help your organisation meet internal, statutory and regulatory reporting requirements. Cloud-based financial management software delivered as a service is the most flexible and scalable approach.

It helps you stay see what’s up ahead and prepare reports in the right way, from the right perspectives, and according to the right guidelines. It helps finance teams do all this quicker, more efficiently, and far more accurately than using traditional methods. And it helps your organisation remain agile enough to respond rapidly to changes in the fast-moving legislative landscape.

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Andrew Hicks

Andrew Hicks


Former Chief Financial Officer

Andrew joined OneAdvanced in December 2015 with 15 years’ experience in senior finance roles. He is now leading the Group’s strategic and operational finance, legal and HR departments.

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