The accounting, bookkeeping and tax compliance landscape is going to look very different in the next three to five years. You are going to be wanting more from your financial data and you deserve it to stay competitive and relevant in the fast moving and shifting business landscape.
According to an article in AdAge, “Five Jobs Robots Will Take First”, one of those is that of your traditional accountant (or the accountant you as a small business owner are most likely to know). The article explains that “Robo-Accounting is in its infancy, but it’s awesome at dealing with accounts payable and receivable, inventory control, auditing and several other accounting functions that humans used to do”. Already your most basic accounting software can deal with recurring transactions, bank rules, and transaction classifications whilst maintaining a fully auditable transaction trail. Coupled with machine learning you can only imagine where this is going to end up.
In a recent article published on the accountants daily website title “How the tax profession can stay relevant”, a number of accountants are complaining that the ATO has “stepped over the line and is taking processing and compliance work away from accountants and tax advisors. “The ATO response is one which I wholeheartedly agree with where they “suggest that the ATO isn’t reducing the traditional work of accountants. Technology and technological change is.”
I believe this change is for the good and accountants will now have to adapt by understanding their clients better and times spent on compliance data entry would be better spent on helping the client to understand and interpret their financial data enabling them to make better decisions.
Accounting is a simple set of binary rules, yes or no! Lets be honest, data processing has definitely created more jobs than it has eliminated. Along with this human error has crept in at the same time still allowing for any rules or controls to be overridden or bypassed.
As a business owner, what does this mean to you? Simply put it is going to reduce your long term overhead costs, increase your efficiency, accuracy and validity of financial transactions.
But! Here is the catch, as a business owner you are going to need a very different skill set! You are going to have data at your fingertips and lots of it. But, data is useless if you don’t know what it means and how to interpret it. Your transactions are going to be recorded automatically, your tax will be submitted and paid with a single click!
Now what? How will you know if there will be enough cash to pay your next tax bill, pay your employees or pay your suppliers. You are going to need to track your key metrics and understand how they are going to impact your business in the future. Now is the time to start investing in budgeting and forecasting, when you are always looking in the rear-view mirror you are going to miss whats coming up
You are going to need to understand and apply a few of the following metrics:
- Liquidity Ratios
- Profitability Ratios
- Efficiency Ratios
- Debtor turnovers
- Inventory turnovers