The Modern Accountant Weekly Newsletter | 📣 Is Your AP Slowing You Down? Here’s What to Fix First

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Editors Pick 📣

Are Your AP Processes Slowing You Down? Here’s What to Fix First

Accounts payable might not be flashy—but when it’s inefficient, it quietly eats into time, margins, and morale. For fast-growing firms, optimising this core process is key to scaling smoothly.

This week, we’re spotlighting Modulr’s ultimate guide to accounts payable—a practical resource for accountants and finance leads looking to streamline workflows, reduce errors, and improve supplier relationships.

Inside the guide:

• A step-by-step overview of the AP process

• Real-world examples of high-performing AP teams

• Strategies to improve cash flow and visibility

• Actionable tips on introducing automation without the headache

💡 Whether you’re refining internal operations or supporting clients through growth, this guide offers the practical tools to modernise payables and unlock efficiency.

👉 Read the guide here.

Expert Opinion 🙌🏻

Why Manual Reconciliation is Quietly Costing Accountancy Practices Valuable Time and Profit

From conversations with accountants serving niche sectors such as property investment, owner-managed businesses, and post-Brexit international trade and customs, a recurring yet overlooked challenge consistently arises—manual reconciliation. For accounting teams at firms serving cross-border operations (made more complex by continually evolving post-brexit trade and customs regulations), manually matching transaction data across multiple systems, banking providers, customs declarations, and client records is far from trivial. These subtle yet persistent mismatches can quietly drain resources, increasing operational costs and reducing profitability.

Take property investment as an example. Complex property portfolios often involve numerous transactions—tenant payments, supplier invoices, mortgage payments, and service charges—all flowing through separate accounts and financial institutions. Each transaction presents a new potential point of discrepancy, demanding rigorous, time-consuming manual checks to maintain accuracy.

Similarly, post-Brexit trade and customs have significantly amplified reconciliation complexities. Accountants dealing with cross-border trade now face intricate reconciliations involving multiple currencies, VAT obligations, customs duties, and extensive import/export documentation. Each international transaction increases the risk of errors in reconciliation, potentially leading to costly financial and regulatory penalties if not meticulously managed. What's surprising is the amount of people who still rely on outdated, manual practices.  

Industry benchmarks suggest manual reconciliation errors can cost professional practices up to 3-5% of their transaction volume annually—translating directly into lost revenue and heightened risk exposure.

However, forward-thinking accounting practices are increasingly adopting embedded payment automation as a sophisticated solution. Embedded finance seamlessly integrates automated, API-driven payments within existing accounting workflows, eliminating manual matching processes. For instance, real-time transaction matching through embedded APIs significantly reduces reconciliation tasks from days to minutes, proactively flagging discrepancies, simplifying VAT reconciliation, and automatically aligning customs duties payments with corresponding import/export documentation.

By subtly upgrading reconciliation processes with embedded finance, modern accountancy practices can quietly boost profitability, minimize operational risk, and enhance the quality of service they offer clients—all without disrupting established workflows.

Industry Insights 🔎

BUSINESS ACQUISITION

MHA Acquires Baker Tilly’s Cyprus and Greece Businesses in £24 Million Deal

MHA’s £24m acquisition of Baker Tilly’s Cyprus and Greece operations marks a bold leap in the firm’s European expansion, fresh off its AIM listing—an unmistakable signal about the surge in cross-border mergers among accounting firms aiming for greater scale and efficiency. Of the purchase, £6.5m is in cash and £17.5m in shares, with a clever move to earmark 10% of the price for employees, undoubtedly to secure talent and maintain continuity amid change.

Notably, Baker Tilly South East Europe brought in £19.4m in revenue and £2.5m in pre-tax profits for 2024, supported by a 400-strong workforce. Strategic moves like this highlight the intensifying consolidation drive in professional services, accelerated by private equity money and the rising value of geographic presence. However, MHA’s ongoing regulatory scrutiny in the UK is a timely reminder that with rapid growth comes increased oversight and heightened expectations.

ACCOUNTANCY INDUSTRY

Making Tax Digital Represents Both Challenge And Opportunity For UK Accountants

Making Tax Digital (MTD) is about to shake up the UK accountancy scene, as nearly 82% of accountants say it’s their top concern for 2025—yet almost 80% also spot a major opportunity here. What’s fascinating is how MTD’s push for frequent digital updates promises greater client visibility, leading to better advisory services and a real chance to upsell. Still, preparedness is a sticking point, with 34% admitting they’re not ready for the April 2026 rollout for higher earners.

AI takes second place as a potential game-changer, expected to streamline processes and help firms reach new clients. The benefits of early MTD adopters are pretty clear—45% report saving up to 40 hours per year, which HMRC estimates totals between £603m–£915m across the industry. Ultimately, the shift isn’t just about compliance; it’s about embracing a digital culture, prioritising client education, and gearing up teams to thrive in the eCommerce era.

AUDIT REGULATION REFORM

ACCA Calls For FRC To Align SME Audit Standards With International Practice

Audit requirements shouldn’t be a one-size-fits-all affair for SMEs. The ACCA’s push for the Financial Reporting Council (FRC) to adopt a more proportionate approach—focusing on a business’s complexity over its size—makes complete sense. With SMEs making up over 99% of all UK private sector businesses and driving more than half the turnover, it’s vital that regulatory frameworks don’t swamp smaller firms in red tape or obscure audit value behind needless complexity.

Aligning UK standards with the International Auditing and Assurance Standards Board’s (IAASB) less complex entities framework could bring international consistency and clarity for both practitioners and businesses. Simplification shouldn’t mean a drop in quality; instead, it's about ensuring audits remain relevant and scalable, especially as some firms grow in revenue, but not necessarily in operational intricacy. Overall, smarter, complexity-focused audit standards will better support SME growth without sacrificing rigour.

ACCOUNTING TECHNOLOGY

Xero Adds Integrated Bill Pay and Workpapers Tools for Accounting Professionals

Accounting technology is powering rapid evolution. Xero has introduced integrated bill payment and workpapers solutions—making life easier for accountants by streamlining payments, reducing manual entry, and offering secure, auditable digital records. Notably, Xero’s push mirrors a larger trend of automation, with Aiwyn, Fathom, and Adaptive all unveiling AI-driven platforms that promise real-time financial insights, smarter workflows, and reinforced compliance, tailored for distinct verticals such as construction.

Meanwhile, there’s significant movement in partnerships, acquisitions, and talent. Vertex’s $15 million investment in Kintsugi signals confidence in AI-native tax compliance, and companies like Digits and Avalara are joining forces with payroll and legal expertise to create unified eCommerce financial ecosystems. All told, the surge in open-source toolkits, AI integration, and cross-industry collaborations are reshaping how firms manage, analyse, and act on financial data.

ACCOUNTING TECHNOLOGY

Continuous Technology Investment Is Essential For Growth In Client Advisory Services

Continuous innovation in CAS (Client Advisory Services) is being powered by technology, yet there’s a noticeable gap between firms recognising its importance and consistently investing in it. While CAS firms are enjoying median growth rates as high as 17%, only around half are truly committed to ongoing technology advancements. Those keen to remain competitive need to see technology not as an add-on, but as the backbone of modern advisory, freeing up accountants from repetitive tasks so they can deliver more valuable, high-level guidance.

Real transformation happens when accounting firms choose to modernise—think AI-driven automations and streamlined processes, as seen with Jitasa’s improved gross margins. Ultimately, the firms who continually update and refine their tech stack will not just attract clients looking for insight and agility, but also build more resilient, profitable businesses. Standing still risks losing both clients and top talent in this evolving sector.