What accountants need to know about AI
Artificial intelligence (AI) will dramatically change the accounting profession. Historically, our biggest challenges related to skills shortages and succession planning. While those challenges remain, AI adds another dimension: how do we transition ourselves and our staff from compliance-focused accountants into proactive, entrepreneurial business advisors?
Not all change needs to be feared. AI will also bring many advantages to accounting professionals and consultancies. We just need to know how to prepare for them.
But first, what is AI?
Getting to grips with AI can be intimidating. At its most basic, AI is software that allows computers to perform tasks and generate insights that previously could only be done by humans. It’s going to impact every business in every industry, with the biggest impact happening in data management.
With AI, information will flow automatically between accountants and stakeholders, and will make it easier to interpret, analyse, and report on data. Empowered with new information, accountants will no longer be number-crunchers; they’ll be able to provide business-changing advice to their clients.
Essentially, AI will automate repetitive and mundane tasks. Think of it as outsourcing lower-level jobs to technology.
But understanding AI is one thing; implementing it in your consultancy is an entirely different matter. As with the adoption of any new technology, there will be side-effects. Here are a few that we are already witnessing in the industry:
Change is already underway
We already use AI and machine learning in our everyday lives. Most of the time, we don’t notice it, because it’s become natural. Soon, these trends will feel just as natural in the accounting profession:
- Chatbots and virtual customer support – AI is already being used in business to perform administrative tasks, like booking appointments, answering phone calls, and reading emails and text messages. Soon, it will be the norm for a bot to assist your customers.
- Auditing – By being able to validate and analyse data in near real-time, the auditing process is now faster and more streamlined. Analytical testing that used to take a human hours to complete can now be done in minutes using AI – and with fewer errors. Think of what you could do with all those extra hours.
- Tax compliance – Imagine having an army of bots who can complete clients’ tax returns – accurately, and at a fraction of the time it would normally take you. With time savings come cost and capacity savings that can be channelled back into your business.
Don’t worry if AI still sounds complicated and unachievable to you. It’s ok to be cautious of new technology but you shouldn’t avoid it – not when everyone else is embracing it. Rather, commit to starting small and starting slowly – you have total control over the implementation of AI in your business.
Here are five steps to get you started:
- Step one: Don’t wait until you have no choice but to implement AI, unless you want to be left behind and made redundant. Start today and take small steps forward every day. Slow and steady wins the race.
- Step two: Don’t fear failure. Try something different and give it your all, like implementing an AI project within one team, in one department. If it doesn’t work out, chalk it up to experience and try something else. Commit to success and it will happen.
- Step three: The tools that have served you well until today will not likely serve you in future. Once you accept this, it’s easier to adopt new technologies sooner.
- Step four: Develop your softer, non-technical business skills – they’ll become crucial in your shift from accounting practitioner to business advisor and partner.
- Step five: Celebrate small wins, like your decision to experiment with AI in your consultancy. Treat each success and setback as a learning and apply it in the pursuit of your next goal.
The world is changing quickly. We can’t wait for technology to come to us because, by then, it might be too late. We need to nurture our ability to adapt to change and move with the times if we want to stay relevant.
By embracing AI, we’ll be rewarded with the time and capacity to develop our knowledge and skills that will make the transition from accountant to advisor smoother.
What makes a company a ‘People Company’?
Many of the world’s most innovative and progressive businesses have one thing in common: their employees come first.
We have a name for companies that prioritise the success of their people: ‘People Companies’.
But what does it mean to really put your employees first? Here are seven examples.
- People are positive
The last thing you want is for your team to spend their Sunday evenings dreading the next day. This is why it’s so important to give your employees meaningful work experiences. This doesn’t mean free snacks and a dart board in the break room; it means your employees feel engaged. It means they are inspired and empowered through projects that tap into their passions, values, and long-term goals. Simply put, being a People Company means understanding who each team member is as an individual and helping them be their best selves.
- Care is taken with a company’s brand
Inevitably, when it comes time to hire new people, candidates will research the company as much as the company researches them, which means your social media profiles should reflect your culture. Whether it’s Facebook, Twitter, or Instagram, social media is often how potential employees measure you against competitors. With this in mind, put thought and energy into managing these platforms and your image.
- Decisions are based on science
Another defining characteristic of a People Company is its ability to be proactive in its management of people by understanding their core motivations. This is done by harnessing the data pulled by People Science and using it when designing the processes and culture of the business.
- Reviews are a regular occurrence
People Companies know that annual appraisals are a thing of the past; rather, feedback is collected throughout the year. Through regular appraisals, performance improvements can be made faster, and a continuous and open conversation can flow between you and your team. Agile thinking not only benefits the way you approach your projects, but also the way you approach your team.
- Change is embraced
Flexibility in the workplace is a huge factor in attracting the most talented people. And once you have them, running a tech-savvy and mobile team is how you keep them. These new ways of working are being embraced for a reason – people expect the same immediacy in their work lives as they’ve come to rely on in their personal lives.
- Processes are automated
Being a People Company means using people systems within your HR department. Your employees want the freedom to manage things on their own – whether it’s setting objectives or booking a holiday.
Through automation, your leaders can free up their time to focus on their people, get feedback more quickly, and change course when needed. The iterative nature of this redesign means people companies are more productive and engaged than those that don’t put people first.
- Chief People Officers are a thing
To run a company that’s focused on its people, your HR team needs to evolve. People Companies hire Chief People Officers to run teams comprised of business psychologists, marketing and communication specialists, designers, and others.
Remember this: becoming a People Company means leveraging the newest science and approaches to create a positive work experience for your people.
Challenges and opportunities for SME accountants
According to an SMP Small & Medium Practices Survey, led by the International Federation of Accountants Global, certified public accountants (CPAs) all over the world experience the same opportunities and challenges. These include attracting new clients and staff, remaining up to date with the latest regulations and standards, increasing pressure to lower fees, and retaining current staff.
With technology growing rapidly, they are also pressured to use the latest hardware and software and to move to the cloud.
These are the four most common challenges facing SME accountant:
- Talent – The hunt for talent is fiercer than ever, complicated by the fact that workforces in general feel overwhelmed and unengaged at work.
- Technology – Despite the many benefits technology gives SME accountants – like increased productivity, process transformation, and automation – many accountants report feeling pressure to keep up with technology found both inside and outside their customers’ businesses. The fact that cloud accounting is necessary to move to the next level makes it a daunting change of pace.
- Time – As in many industries, time poverty is the most common challenge experienced by accountants. There is simply more that needs to be done than there is time to do it. This prevents CPAs from being proactive and involved with their clients; rather, they’re sinking deeper into the daily grind.
- Transformation – There is the possibility of tremendous growth thanks to new technology and new skills available to CPAs, which can be seen in the prevalence of consulting and advisory services. This can also feel daunting, but the key is to embrace the change rather than fight it.
How to stay ahead of the pack
Thanks to the growth of technology and globalisation, it’s best to embrace the drastic changes that are already underway, and to lean into the ones we know are coming. Here’s how to become an ‘anticipatory accountant’ and stay ahead of the pack:
- Don’t wait to change. Rather, spearhead transformation before you have no other option. This is the mark of an exceptional leader.
- Get with the times. Technology is the biggest driver of transformation. To be as efficient and effective as possible, harness the new.
- Upskill yourself and your team. While most of us know that technical skills need to be developed, often other necessary upskilling opportunities are overlooked. Emphasis should be put on training your team to become future-focused. Anticipation is a skill, even though it’s not often regarded as one.
- Guard your values. Fast-moving change can be unsettling. Make sure your team feels secure by highlighting which elements of the business won’t change.
- Make the most of this wild ride. After all, wouldn’t you rather be the disruptor than the disrupted?
A low-effort way to increase sales
Attracting new customers is hard work. But, once you’ve won their business, it’s a lot easier keeping them. That’s because these are the people who have already chosen your product or service and who have bought into your brand – so selling to them (again) makes more sense than trying to convince someone who’s never bought from you before.
Here are six ways to increase sales from existing customers:
- Get to know them
More importantly, understand why they keep coming back and what tempts them to leave. You can gather this type of customer feedback via a courtesy call or questionnaire and can use it to improve your sales strategy.
- Use social media smartly
Tap into your followers to improve your product or service. Test the waters of your new offerings on social media, or start a thread asking for their honest feedback. Social media is also a great way to check out what your competition is up to.
- Upsell and cross-sell wherever possible
Make the most of your customers’ support by expanding the value or range of what you offer. If your sales are mostly online, target specific customers based on their buying habits when in your marketing campaigns.
- Stay top-of-mind
Tell your customers when you release new or improved products or service offerings. A weekly newsletter is a great way to keep in touch.
- Show appreciation
Pinpoint which customers are the most loyal and high spending and encourage orders by offering them specials or discounts.
- Get people talking
Drumming up referrals through your existing customer base is a sure-fire way to bring in new customers. Incentivise them by offering discounts based on their recommendations to others.
- Target with care
Be cautious not to badger your customers with sales pitches that don’t relate to their needs. Ensure your sales campaigns are carefully targeted at the right people. If not, you could exasperate them and lose their trust. Rather than chasing a quick buck, focus on nurturing long-term relationships.
7 business benefits of cloud software
There is a reason so many businesses have embraced the cloud. If yours isn’t one of them, the question shouldn’t be if you will, but when.
If you’re still not convinced, here are eight reasons your business could benefit from cloud software:
- Work remotely
It’s estimated that 1.3 billion people now work remotely, with more people joining the ranks every day. By introducing cloud software into your business, you’re freeing yourself from geographic restriction as well as reducing your operational cost. It allows your team to work remotely while collaborating around the clock. For remote working to be successful, it needs to be seamless, and this is where the cloud comes in. It allows you to keep in touch with your team and to keep your finger on the pulse of your business at all times.
- Save money and space
Cloud software lets you avoid in-house IT systems, which rack up costly energy and operational bills. The cloud can also scale along with your business needs, without having to invest in more hardware.
- Enjoy simplicity
Consumers expect sleek, simple, and intuitive technology in all aspects of their lives, which is why most cloud solutions were created to resemble and function like many of the most popular sites. This is good news for your team, as it means mastering these tools is quick and easy.
- Stay compliant
Legislation changes quickly and often. As soon as employment law, tax, or data protection requirements are amended, cloud software is instantly updated, so that all necessary laws are adhered to.
- Live in the now
In a time of instant gratification, no one has a year to wait for software upgrades or improvements. With traditional software licences, you have to do just that – and pay for it each time. However, cloud applications constantly deliver the most recent versions without you having to lift a finger.
- Change your mind when you want to
Because cloud services don’t require installation and or capital outlay, you can easily switch to a new package or subscription plan to suit your current business requirements.
- Level playing field
Small business owners no longer need to be at a disadvantage due to their size. With project management tools, shared data, and accounting software, there’s no reason that your small business can’t compete with even the largest competitors.
The entrepreneur’s guide to accounting
The entrepreneur’s guide to accounting
The health of your business’s accounting and financial systems plays a big part in your success. While it’s tempting to hire someone to take care of your finances for you, or to ignore them altogether until tax season rolls around, managing your money smartly is a non-negotiable when it comes to running a successful business.
While no entrepreneur can be a master of all trades, it’s worth knowing the basics when it comes to your finances.
Here are eight things every new business owner needs to know about accounting:
- Know your growth number
So, you’ve spent weeks perfecting your business plan, painstakingly highlighting your vision – but have you outlined your financial targets? Even setting a baseline goal of 5% growth per year, for example, can keep you focused and make it easier to measure your growth.
- Consistency is key
Set aside time every day or week to update your accounts, so you can get into the swing of managing your revenue, costs, and expenses. Having oversight of your finances will help you to make informed decisions and spot any financial red flags before they become serious.
- Think ahead
Plot your income and expense projections up to the end of the financial year. This will help you to anticipate your future cash flow and makes it easier to adjust your operations in future.
- Value your time
Time is money. Entrepreneurs need to master time management because it’s one skill that can’t be outsourced. Keeping your most important vendors and customers happy is possible when you prioritise effectively and take care of the most urgent matters first.
- Keep a sharp eye on your costs
You need to know your expenses inside and out. Whether they’re essential to your business or are more general (like stationery and printing), knowing where your money is going and being strict with your internal purchasing processes is paramount when it comes to managing your finances.
- Guard your revenue
Being paid on time (in fact, being paid at all) can be a challenge. When invoicing your clients, be up front about when they can expect an invoice and what your payment terms are. Include these terms on the invoice itself and try to get the client to agree on them beforehand. Some clients might struggle to meet your payment terms; in those cases, you’ll need to compromise. Usually it’s easier to wait longer for payment than to take legal action.
- Do your future self a favour
Save yourself a stressful year-end by filing your financial documents every month. By storing your receipts, invoices, and other accounting documents in chronological order, they’ll be easily accessible whenever you need them.
- Automate as much as possible
There’s no reason not to make the most of the technology available to us within our businesses – especially when it comes to our finances. Use whatever accounting tools and software you can to lighten the load of your workflow, set reminders, and ease the general day-to-day financial responsibilities.
Startup Culture Podcast
Have you ever wondered why startup culture is synonymous with foosball tables, bean bags, and great snacks? Do these things really attract millennials? As a business owner, should you try shape a culture or let it emerge naturally?
In this episode of the Sage podcast, Vincent Hofmann chats to Business Design Consultant, Danielle Jaffitt, about what culture at work really means, how the founders’ beliefs shape a company culture, and what happens to culture when a company experiences rapid growth. They also chat about the effects of diversity on company culture, and some practical things you can do to make work more fulfilling for your employees”.
Listen to the podcast here.
5 accounting habits to break
There are countless surprises involved in starting a business. For those who haven’t had official training, accounting will likely be one of them. Managing your cash flow and balancing your books is no walk in the park. But, like it or not, the survival of your start-up hinges on the strength of your financial strategy. This means keeping efficient records and ensuring your cash flow is smooth and consistent.
While it’s admirable to try and manage your business’s finances and accounting on your own, you could be wasting a lot of time and effort that could be spent elsewhere in the business.
Here are five accounting habits your business needs to break.
Stop using spreadsheets
Regardless of how careful you are, if you’re capturing manual entries into spreadsheets, errors are likely. Rather than being forced to start from scratch each time you catch a mistake, it’s worth looking into cloud-based solutions.
Integrating your invoices and accounts, and automating your data-capturing processes not only saves you time, but reduces errors. In fact, in the Practice of Now research conducted by Sage, almost half of accountants said they’d like to automate their day-to-day diary management, number crunching, and data entry – with as many as 66% saying they’d like to invest in AI to streamline these repetitive tasks.
Stop putting things off
It’s tempting to ignore your financial admin until tax season rolls around, but this is another way you’re opening yourself up to easily avoidable errors. If the idea of setting aside 15 minutes each day is too daunting, then set aside just one hour a week to get all your financial ducks in a row.
Record income and expenses and chase those unpaid invoices. Not only will this improve your cash flow, but it will help you spot problems that can be remedied before they get out of control.
Stop giving away control
While it’s a good idea to ask for (and pay for) help when you need it, outsourcing your financial management as a whole can easily end up costing you more than it’s worth.
Rather, find a happy medium. Business solutions like Sage One are a great way to get the help you need to manage your finances, without handing over control completely. This easy-to-use solution also complies with tax laws automatically – eliminating any nasty surprises around tax season.
Stop trying to control everything
While it’s important to have sight of every aspect of your business, some things, like tax, belong in the capable hands of experts.
Stop using outdated systems and processes
Rather than kicking it old school with a shoebox filing system (which may be simple, but isn’t very efficient), consider doing the following:
- Scan your receipts. These can be saved to the cloud or linked to your online accounting solution.
- Name your receipts. Each one should be renamed with its date, vendor, and expense category.
- Organise your receipts. This is simpler than it sounds. Simply create a folder for each financial year and make a habit of transferring your receipts to it.
- Create one folder to rule them all. Now that you have all your slips organised in the correct folder, work on saving these in a master tax folder. Your future self will thank you.
If you’re concerned about the health of your business, having clarity about your finances is a non-negotiable. Rather than dealing with a disaster that’s already arisen, avoid them altogether with efficient record-keeping.
Why the future of accounting has nothing – and everything – to do with technology
University curriculums are battling to keep up with the rapid advancements in accounting and bookkeeping technology. As a result, graduates are entering the workforce at a disadvantage and will have to take charge of their own education if they want to be successful business advisors.
So says Nyemeko Njoli, a chartered accountant and chairperson of the Association for the Advancement of Black Accountants of Southern Africa (ABASA), speaking in a recent episode of the Sage #NextGenAccounting podcast.
“New apps and software solutions make accounting simple. When supported by artificial intelligence, these solutions perform many accounting functions faster – and better – than humans. The reality is, anyone can sell this technology, and businesses will go with the lowest price. Accountants need to differentiate themselves by figuring out how to complement these solutions. They need to learn new skills so that they can add value to their clients’ businesses beyond technology.”
Much to learn
Njoli recalls the days when he started his own consultancy. “I had an inkling that I could be a great businessman and sold the idea to my wife. The first two months were exciting – I even secured my first client. But then reality set in and I soon realised that running a business is not a natural skill – it’s something I had to learn. It’s not like being in a corporate environment, working for an established brand that already has clients and working systems and processes. Being on your own means you need to be able to sell yourself; you need to build your confidence to find clients.”
He says he didn’t learn any of this in school or at university – learning how to sell was something he had to teach himself. And quickly.
“When the clients weren’t coming to me, I realised I had to sell myself – and selling is a skill that doesn’t come naturally to accountants. No one teaches us how to sell. So, I had to navigate through that uncomfortable journey of not knowing what I was doing but also trusting my own learning process. I asked my own clients how they got clients, I watched YouTube and LinkedIn videos, I spent a lot of time at SARS figuring out their systems and processes. You can’t make a mistake with a SARS submission because it’s your client’s business on the line. None of this is in the theory we’re taught. I’m still learning. I’ve realised that there are no shortcuts – you have to get out there and learn.”
Bean-counter to consultant
Another skill Njoli had to learn fast was how to be a business advisor and consultant. He advises new accountants to first decide what sector they want to serve and what value they can add.
“Clients of large accounting firms have certain expectations, in terms of what reports they want to receive and by when. But businesses in the informal sector, where I work, have different expectations and perceptions of accountants. Most of their challenges are directly linked to the success of their business. My role now becomes more than delivering a report on time. I’m an advisor who helps them make a success of their business, by guiding them on strategy and trends.
“Many business owners in this sector survive month-to-month and don’t turn a profit. Their cash flow situation is precarious. For them, it’s not about the accounting package – taxi drivers don’t have time to click buttons and learn new systems. They don’t have the skills to manage their paperwork. That’s because accounting is not their primary focus. So, it’s up to me to make the accounting process as simple as possible – for example, by recommending easy-to-use apps. But the real value I bring to the table is the advice I give them – helping them to run their businesses better, to understand pricing, admin and quoting, and advising on how they can better interact with their customers.”
Njoli says there’s a perception in the informal market that an accountant’s role is to crunch the numbers, talk to the bank when a business needs funding, and get tax clearance certificates.
“As much as we need to educate ourselves, we also need to educate our clients, especially those in the informal sector. We need to show them how we add value to their daily operations and we need to tailor our approach to their needs, for example, by introducing them to easy tools. We need to build trusted relationships with our clients so that they know they can come to us for sound business advice, rather than just an accounting pack.”
“We’ve been taught that, as accountants, we’re going to arrive at a company and solve a certain problem. But, in the informal sector, some business owners might only have a Grade 4 education – it’s hard work convincing them to do things differently. Approaching them from a sustainability perspective and telling them what they need to do in order for their business to survive, is how you gain their trust. A lot of these businesses don’t understand cash flow and how it affects their business. One panel beater slashed his labour costs in half because he was trying to make me happy. In the end, it took twice as long to fix my car and he still had to pay his staff. He was operating at a loss. That was the perfect time for me to educate him about why he’s not making money – because he was under-pricing his service.”
He adds, however, that as much as it’s not about the technology, it has everything to do with the technology.
“We’ve become comfortable with the way things are in South Africa but that’s because we’ve been slow to adopt new technologies compared to international markets. But change is coming, and not enough people are investing the time to understand those changes, which means we can expect a lot of job losses. Industry bodies like SAICA are already changing the CFA exams to include topics like blockchain. Universities can’t keep up, so it’s up to us to make sure we stay current.”
3 types of late-paying customers and how to handle them
Most small businesses will have to deal with late-paying customers at some stage. According to our ‘Late Payments: The Domino Effect’ research, 52% of South African Small & Medium Businesses experience direct negative impacts from late payments, like:
- Struggling to pay bonuses,
- Being forced to pay their own suppliers late, and
- Delayed investments into their businesses.
We’ve identified three types of late payers, and offer tips on what you can do before, during, and after the job to get them to pay on time.
- Procrastinating Peter
Peter has no reason for paying late; you’re just not high on his priority list. He knows he’s doing it and may even avoid confrontation by ignoring your emails, phone calls, and messages.
Don’t let Peter forget about you. Send regular reminders, not only about the money he owes you, but also about the value you provide.
Our tips for getting paid on time:
Before you start any work, offer an early payment incentive or ask for 50% payment upfront.
During the job, keep Peter updated on progress and respond quickly to his emails, messages, and phone calls. If you’re too busy to send a detailed reply, send him a quick message, acknowledging his query and follow up as soon as possible. It pays to keep procrastinators in the loop – literally.
When wrapping up the job, nudge Peter towards paying. Let him know that the job is almost complete and remind him of the payment due date and your payment terms. In their book, ‘Nudge’, Richard Thaler and Cass Sunstein discuss how regular reminders and ‘herd behaviour’ can nudge people towards certain decisions – like paying on time.
- Perfectionist Penny
Penny generally follows processes to the letter. For example, she won’t process an invoice without a purchase order (PO) number. This is not a bad thing, since it safeguards both parties. But, sometimes, doing things by the book can result in delays.
Our tips for getting paid on time:
Before you start any work, understand exactly what needs to reflect on your invoice to avoid processing delays, and clearly outline your own payment terms. Ask Penny how long it takes to process an invoice and on which day of the month she makes payments, so that you know when to start following up.
During the job, send Penny regular progress snapshots, first drafts, and work-in-progress documents. This shows that you respect and are responsive to her needs. It also helps her to better project manage the job from her side. Remember, Penny values processes. Respect this and she’ll be less likely to push back, come payment time.
When wrapping up the job, let Penny know about your own processes. When the job is almost done, send her a message, saying how you’ll submit the invoice and what it will include (this shows that you paid attention). This way, she can correct any errors before you submit the invoice.
- Preoccupied Paul
Paul wears many hats and juggles many balls. While he generally pays on time, some months, things might slip through the cracks. Stay on top of his to-do list by checking in regularly, acknowledging his challenges, and suggesting easier ways to pay you. But be persistent because he’ll quickly forget again.
Our tips for getting paid on time:
Before you start any work, agree on payment terms upfront. You can ask when Paul would prefer to pay, but get it in writing. This way, when you’re chasing payment, it’s less awkward because he’ll know there’s an agreement in place.
During the job, remind Paul about your deliverables and check in regularly to find out if his requirements have changed. With so much on the go, he might forget to update you on changes.
When wrapping up the job, send Paul a mail letting him know that the job is almost complete and will require his approval/feedback soon. If you need to meet to discuss the project, book time in his diary now.
General tips for getting clients to pay on time
When sending your invoice
Use cloud-based accounting software, like Sage One, to automate the invoicing process and reduce errors that could delay payment.
Create a checklist of what your customer requires on the invoice, like VAT number, PO number, address, contact person, etc. As soon as one invoice is accepted without changes, save it as a template that you can duplicate and edit in future.
After the job is done
When reminding your customer that your invoice is due, don’t only talk about money. Provide feedback on how you felt the job went and ask if there are any loose ends that you need to tie up. This again reminds them of the value you provide and helps to build lasting relationships.
Once you’ve been paid
No matter what type of late-paying customer you’re dealing with, always acknowledge payment and send them a thank you note showing your appreciation.
Any conversation about money is awkward. Having these talks and setting agreements upfront makes it less so, and increases the likelihood of customers paying on time.