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Boosting cash flow for employers – Additional Information from ATO

Posted by Ram

· 26/03/2020

Boosting cash flow for employers – Additional Information from ATO

Eligibility

You will be eligible to receive the cash flow boost if you are a small or medium business entity, including not-for-profit organisations, sole traders, partnership, company or trust that:

held an ABN on 12 March 2020 and continues to be active
has an aggregated annual turnover under $50 million (generally based on prior year turnover)
made eligible payments you are required to withhold from (even if the amount you need to withhold is zero).

Eligible payments include:

salary and wages
director fees
eligible retirement or termination payments
compensation payments
voluntary withholding from payments to contractors.

In addition, you must also have either:

derived business income in the 2018–19 income year and lodged your 2019 tax return on or before 12 March 2020
made GST taxable, GST-free or input-taxed sales in a previous tax period (since 1 July 2018) and lodged the relevant activity statement on or before 12 March 2020.

We will generally determine whether you are a small or medium business entity based on your most recent income tax assessment for a prior year. However, where you do not have any income tax assessments for prior years, you may still be eligible if we are satisfied, based on other information we hold, that you are in business and would have an aggregated annual turnover under $50 million.

We may also give you further time to provide us notice that business income or supplies were made. This will generally be the case where you have a lodgment deferral in place. If you did not have a lodgment deferral in place, you will not become eligible if you lodge or amend returns for those periods now.

Schemes

You will not be eligible for cash flow boosts if you (or a representative) have entered into or carried out a scheme for the purpose of:

becoming entitled to cash flow boosts when you would otherwise not be entitled, or
increasing the amount of the cash flow boosts.

This may include restructuring your business or the way you usually pay your workers to fall within the eligibility criteria, as well as increasing wages paid in a particular month to maximise the cash flow boost amount.

Any sudden changes to the characterisation of payments made may cause us to investigate whether the payments are in fact wages. If the payments are wages, we may consider the characterisation of past payments, including whether they should have been subject to PAYGW and whether super guarantee contributions should have been made. You may also have FBT obligations that have not yet been met.

please read the full statement below link

https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/In-detail/Boosting-cash-flow-for-employers/

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Categories : KG Business Management

Economic Stimulus – Up to now

Posted by Ram

· 22/03/2020

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Economic Stimulus – Up to now

As you may be aware, the Australian Federal / State Government has announced an economic response to the Coronavirus and its threat on the Australian economy. This has resulted in the introduction of various taxation and cash reliefs. Please see below for a breakdown of the stimulus package and determine whether or not you or your business can benefit. We have summaries varies governments initiative for your benefit. We only focused on business benefits.

Fed Govt Economic Stimulus – 2

The Government is providing up to $100,000 to eligible small and medium sized businesses, and not‑for-profits (including charities) that employ people, with a minimum payment of $20,000. (100 per cent of PAYG withheld, with a minimum $20,000 payment and up to a cap of $100,000 over 9 months)
Coronavirus SME Guarantee Scheme – Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
Providing temporary relief for financially distressed businesses – Temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent.

Fed Govt Economic Stimulus – 1

Increasing the instant asset write-off Lifting the threshold to $150,000 (from $30,000).
Investment Offering businesses a time-limited incentive to invest, by accelerating depreciation deductions.
Supporting apprentices and trainees Wage assistance to help small businesses to keep their apprentices and trainees

NSW

Waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20)
Bring forward the next round of payroll tax cuts by raising the threshold limit to $1 million in 2020-21;
$80 million to waive a range of fees and charges for small businesses including bars, cafes, restaurants and tradies
More than $250 million to bring forward maintenance on public assets including social housing and crown land fencing;
$500 million to bring forward capital works and maintenance

VIC

Payroll tax refunds for the 2019-20 financial year to small and medium-sized businesses with payroll of less than $3 million.
The same businesses will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021.
Commercial tenants in government buildings can apply for rent relief – a move private landlords are also being encouraged to undertake – and 2020 land tax payments will be deferred for eligible small businesses.
The Government will pay all outstanding supplier invoices within five business days. The private sector is urged to do the same where possible.
Waiving liquor licensing fees for 2020 for affected venues and small businesses.
$500 million to establish a Business Support Fund. The fund will support the hardest hit sectors, including hospitality, tourism, accommodation, arts and entertainment, and retail

$17,500 grants for small businesses with a payroll between $1 million and $4 million.
The $1 million payroll tax threshold (announced in October 2019) will be brought forward by six months to 1 July 2020.
Businesses impacted by COVID-19 can apply now to defer payment of their 2019-20 payroll tax until 21 July 2020.

QLD

Establish a $500m concessional loan facility, comprising loans of up to $250,000 to eligible businesses. These loans will come with an initial 12-month interest free period, to assist businesses retain staff during the downturn.
Extend the payroll tax deferral measure, originally for businesses with taxable wages of $6.5m or less affected by natural disasters, to all COVID-19 affected businesses with taxable wages of $6.5m or less. This will extend the due date for the lodgement and payment of remaining 2019-20 payroll tax returns to 31 July 2020.

TAS

Interest Free Business Loans for Small Business – $20 million in interest free loans to small businesses in the hospitality, tourism, seafood production, and exports sectors. The loans will be available to businesses with a turnover of less than $5 million to purchase equipment or restructuring business operations and will be interest free, for three years.
Payroll Tax Waivers – Payroll tax liabilities will be waived for hospitality, tourism and seafood industry businesses for the last four months of 2019-20.
Improving Small Business Cash Flows -Payment terms by Government agencies will be reduced from 30 days to 14 days; and
Targeted Small Business Grants Program for Apprenticeships and Traineeships – The targeted Small Business Grants Program provides a $5,000 grant for businesses that hire an apprentice or trainee in the tourism, hospitality, building and construction, and manufacturing industries.

If you need any help please let us know.

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Categories : KG Business Management

Tags : Economic Stimulus

PERSONAL LIABILITY FOR GST STARTS 1/04/2020

Posted by Ram

· 28/02/2020

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PERSONAL LIABILITY FOR GST STARTS 1 APRIL

Like PAYG, non-payment of GST will attract personal liability for Directors under the Director Penalty Regime in 2 ways:

Unavoidable liability

Fail to lodge Business Activity Statements (BAS) and Income Activity Statements (IAS) within 3 months of the due date for lodgement.
Lock down Director Penalty Notice will attach Personal Liability to a Director immediately and regardless of the appointment of a liquidator, the liability will be unavoidable.

Avoidable liability

Lodge BAS and IAS within 3 months of due date for lodgement but not remit payment
Personal Liability for Company tax liability will be avoidable if a Director Penalty Notice is acted on within the 21 day period allowed.

This change to the Law passed both houses of Parliament on 17 February 2020 under the Treasury Laws Amendment (Combating Illegal Phoenix) Bill 2020

Other Significant Changes in the Bill

Introduction of the Creditor-Defeating Disposition s588FBDB (the Phoenixing Provisions)

Enables ASIC, at its discretion, to void phoenix transactions upon request by a Company liquidator, if such a transaction occurred when a company was insolvent and it occurred during the 12 months immediately preceding the date of liquidation.
ASIC may then order the return of the property subject of the disposition to the insolvent Company.
ASIC may order the person to pay an amount that in ASIC’s opinion, represents some or all of the benefits that person received directly, or indirectly, because of the transaction.
In making these types of orders, ASIC must have regard for the conduct of the company and its officers, the circumstances, nature and terms of the disposition, the relationship between the company and the person and any other relevant matter.
The Court may set aside the ASIC order if application is made within 60 days of the order issued or if the Court is satisfied the order should not have been made.
The new amendments also expand Director and Officer’s Duties to Prevent Creditor-Defeating Dispositions s.588GAB and also not to procure or encourage such transactions – which appears to be aimed at (un)licensed advisors S588GAC

No Backdating of Director Resignations s203AA

Director resignations will take effect

If ASIC is notified within 28 days that the person stopped being a director
Otherwise, the day written notice is lodged with ASIC.

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Categories : KG Business Management

Old -v- New Directors – Personal Liability

Posted by Ram

· 08/07/2019

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Old -v- New Directors – Personal Liability

Recently in Substance Technologies Pty Ltd [2019] NSWSC 612 the Court considered personal liability for Old (resigned) and Newly appointed Directors for insolvent trading.

While an Old Director may be liable for insolvent trading on debts incurred up to the date of resignation, a New Director can become liable for interest on debts, as well as certain existing debts, incurred by the Old Director.

As liquidators, we often see Old directors resigning, believing they can avoid liability, and New directors being appointed who are often family members or friends believing they are helping out. However:

“An incoming director must familiarise themselves immediately with the Company for which they are now responsible and, if they discover the company is trading whilst insolvent, must act promptly to wind up the company…” Rees J said.

And this is particularly important for existing tax debts as a director has 30 days, starting on the day of appointment, before he/she will become liable to director penalties equal to all the Company’s unpaid PAYG withholding and unpaid SGC liabilities from 1 April 2012.

This means that unless a New Director either:

causes payment of the ATO debt; or
the appointment of an Administrator;
or Liquidator

within the 30 day period, they will become and remain personally liable for the tax debt that was created by the Old director prior to their appointment.

Resigning the directorship within 30 days will not remove the personal liability for the New Director (or Old Director).

To avoid personal liability requires the New Director to exercise one of the 3 options listed above, within 30 days.

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Categories : KG Business Management

Tags : CFO, CFO as service, CFO Service

Integrated business planning – How to successfully use it !

Posted by Ram

· 14/03/2019

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Integrated business planning – How to successfully use it !

The adoption of integrated business planning (IBP) over the last ten years has allowed organisations to develop an agile approach to planning and execution in an increasingly challenging external environment. It has also demonstrated its value in enabling the finance function to deliver excellence in its emerging role as a business partner across the organisation.

Whilst the deployment of IBP represents a significant organisational change, considerable insight on the key success factors for the execution of IBP has now been accumulated. This deployment learning is crucial when planning the adoption of IBP, and, as outlined below, the finance function plays a key role in this.

IBP as presented in this article is not integrated thinking or integrated reporting, as they might be used in developing an integrated report using the International Integrated Reporting Council’s Integrated Reporting Framework. The use of the terms “sustainable” and “sustainability” in the context of this article refer to adoption of an IBP approach as outlined in the article and not the adoption of a multi-capital approach to sustainable management.

IBP is a specific process for using specific business goals to develop precise financial and operational resource requirements with the goal of minimising risk and maximising either cash flow or profit. As presented in this article, IBP is an operational planning system with origins in supply chain planning systems. Sustainable growth in IBP refers to the maximum rate of growth that a company can support without taking on new financing, and not to broader environmental, social, and governance factors that are taken into account in a broader definition of sustainability.

Deployment insights

The graphic “Key Success Factors for IBP Deployment” summarises four points for effective adoption of IBP based on deployment experiences over a wide range of industry sectors.

Key success factors for IBP deployment

Source: Camelot Management Consultants.

Historically, due to its evolution from sales and operations planning (S&OP), IBP has often been seen as a supply-chain-centred process. However, experience shows that the enterprise-wide benefits of the process are not achieved or sustained when deployment is approached in this way.

A key feature of IBP deployment is the creation of genuine cross-functional collaboration to deliver enterprise goals as reflected in the key success factors:

Cross-functional C-suite sponsorship:IBP entails significant change not only in processes and systems but also in mindsets and behaviours across the business. For this reason, strong senior leadership sponsorship is critical. Furthermore, the cross-functional and interdependent nature of IBP has been shown to be more successfully deployed when the collaborative character of the process is reflected in the C-suite’s sponsorship of the programme. In particular, joint sponsorship by the key functional leaders (finance, commercial operations, and supply chain) has proved very powerful in role-modelling the teamworking that underpins effective IBP.
Senior enterprise leadership:Ideally, IBP deployment should be led by a senior manager with either a commercial or financial background and strong cross-functional awareness and connections. This differs from the traditional handling of IBP (and S&OP), as outlined above, where supply chain leaders have often been tasked with deployment. This senior enterprise leadership provides the credibility and commercial acumen to lead change across the various parts of the business.
Building cross-functional teams:Most organisations are not set up, either structurally or culturally, to excel in cross-functional working. It is therefore essential to invest time to support the development of the cross-functional teams that are at the core of creating value through IBP. This goes beyond basic team building to include, for example, the development of team-based reward-and-recognition approaches and cross-functional metrics and goals.
Coaching and mentoring:In common with many organisational changes, IBP deployment has often focused on the process and system aspects (which are undoubtedly important). However, applying new cross-functional leadership practices and executing a new corporate process requires hands-on support, especially for managers working in IBP for the first time. Coaching and mentoring have been shown to be very effective approaches for rapidly building new capability and driving quick wins from the process.

In addition to these broad deployment learnings, it is also clear that the finance function has a critical role in ensuring successful and sustainable deployment of IBP in four key areas:

CFO sponsorship

As one of the key C-suite sponsors, the CFO has a very significant role in the sponsorship of IBP adoption. IBP leads to a major change in the philosophy and execution of business planning (typically a key part of the CFO remit), from major annual or biannual activities to a rolling monthly financial planning cycle. This change has far-reaching effects across functions and, hence, the road map for change and its organisational benefits must be strongly owned and promoted by the CFO.

An important part of this sponsorship role is working directly with C-suite peers to maintain a disciplined adherence to the IBP process, especially in the early stages of deployment. IBP sets out a clear and structured approach for performance review, empowered decision-making, and forward planning. This approach can often challenge existing ways of working amongst senior leaders who over time have built personal networks and practices that allow them to access business data and make decisions, often from a siloed perspective.

A key role of the CFO is therefore to model the behaviours of the senior leader within IBP, supporting and leveraging delegated responsibilities in the IBP cycle and not overriding decisions outside the designated process.

CFO sponsorship of IBP is also critical across the finance function itself. The IBP approach shifts current practices in business and financial planning and creates new and increased expectations for finance staff to operate as business partners with a broader influence beyond the traditional accounting role.

The role of the finance partner in IBP is vital (as described further below), and, hence, the CFO must engage and inspire the team to respond to this opportunity. Whilst extending the expectations of the finance staff beyond the core of traditional accounting to a broader business role is exciting for many, it also presents challenges.

Leading this functional shift as part of IBP deployment is a key role for the CFO to ensure that high-quality finance support is present throughout the various cross-functional IBP teams and when decisions are made.

Cross-functional partnerships and influence

Finance leaders play a key role on the newly formed IBP teams to build the connection between commercial and supply chain teams. Traditionally, these teams have often not established an open and trusting partnership, with the supply chain team often seen as a back-office or “arms-length” provider to the commercial organisation. However, the finance team is typically experienced at working across teams in the process of aligning and reconciling financial plans.

This experience, and the trust built with these teams, enables finance to play a critical role in focusing the cross-functional IBP teams on enterprise outcomes and metrics. Over time, trust and collaboration is built through the positive experience of executing IBP, but finance is often a key catalyst to accelerate this.

A key foundation for enterprise-optimised decision-making in IBP is rigour and transparency to create a common, cross-silo view of business performance and outlook. This is a crucial role for finance, leveraging its traditional strengths in management accounting and financial stewardship.

An important feature of IBP is the application of standard data sources, definitions, and metrics (typically supported by the business ERP system). This consistent foundation for situation analysis and decision-making is essential in aligning cross-functional perspectives and creating transparency for decision-makers. This can often be problematic in the early stages of IBP adoption, where there can be considerable resistance to letting go of silo-based data or interpretations.

Here finance has a key responsibility to help educate cross-functional partners on the new data sets and metrics and their importance in supporting decision-making optimised at the enterprise (rather than the silo) level. Finance members of IBP teams often also take on a “champion” role to ensure adherence to this new approach in the monthly IBP meetings, and this has been shown to both improve the quality of individual IBP team outputs, but also the overall flow and decision-making efficiency of the overall IBP cycle.

Investing in new skills for finance

Given both the key role of finance in deploying IBP, and the degree of change in the finance team to deliver this, it is vital that the function invests to build the capabilities required.

Key finance capabilities for IBP

Source: Camelot Management Consultants.

This capability development can be categorised into three themes, as shown in the graphic “Key Finance Capabilities for IBP”:

Cross-functional leadership: Finance leaders have an important role in supporting the integration of the new cross-functional teams that are central to IBP and in enabling strong, coherent team outputs. Capability development should include the rational, task-focused aspects of building cross-functional teams, such as aligning around common goals, agreeing roles and responsibilities, and defining team metrics. However, it is important that this is complemented by capability building in softer topics such as an understanding of team dynamics, personality types, generational differences, and communication styles, and how to translate this understanding into effective team leadership.
Business acumen: The finance role in IBP demands a broad judgement of business issues to understand and influence responses to risks and opportunities. A common element of this role is also the development of scenario plans and advocating the optimal business response. It is important that finance staff members are able to leverage strong analytical inputs with business credibility. This can be developed, for example, through job rotations across functions and with coaching/mentoring support within finance.
Advising and influencing business leaders:IBP delegates decision-making throughout the various cross-functional teams. This requires that the decision-maker in each case is briefed in order to ensure that rational, enterprise-optimised decisions can be made. Finance has a key role to play in this, and this often creates a need for relatively junior finance staff to build their capability and confidence in advising and influencing the relevant business leader. Developing skills in presenting, influencing, and negotiating are therefore key for finance staff as increasing demands are made by IBP.

New mindsets and behaviours for finance

Expanding finance’s traditional skill base can be a key mindset change for the finance function, which requires clear direction and sponsorship from the CFO, as well as engagement and support from all functional leaders.

A further success factor for finance staff working in IBP is the ability to balance the need for championing financial rigour whilst adopting a dynamic and agile approach to driving the business.

The rolling monthly cycle requires a major mindset change from traditional (typically annual or biannual) financial planning processes. Monthly IBP discussions focus on changes, outliers, and closing performance gaps; and a key strength of the process is the ability to dynamically create robust updates to the business and financial outlook. This discipline brings finance closer to the operational edge of the business and is a key asset in ensuring the resilience and relevance of the business plan and associated financials. The capacity of finance to adapt to this new way of working is a key success factor in IBP, providing a competitive advantage in a volatile and complex market environment.

Source : FM

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Categories : KG Business Management

Tags : CFO, CFO as service, CFO Service, Management Consulting, outsource accounting, outsource CFO, outsource payroll

Problem-solving – Creating a culture of blameless

Posted by Ram

· 04/02/2019

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Problem-solving – Creating a culture of blameless

Companies that fail exceptionally have the potential for greatness.

Finance is complex, and whenever you have complication and uncertainty, it is a given that things will go wrong at some point. When they do, the best way to deal with those mistakes is to use them to learn and grow. And the only way an organisation can be aware of issues while they’re still small-scale is to create an environment in which employees and managers at all levels feel safe voicing their concerns and thoughts.

“The reality is human beings will make mistakes,” said Amy C. Edmondson, Novartis professor of leadership and management at Harvard Business School and author of The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation, and Growth. “When we’re in novel settings, beyond just mistakes, we’ll also have failures that aren’t, strictly speaking, mistakes because no one’s ever been in that situation before. The most important thing is that you hear about what went wrong in a timely way because that’s how you can jump on it and avoid larger-scale problems.”

Companies that foster a culture of blameless problem-solving have the potential to learn from what goes wrong, and also to innovate, through smart experimentation, while companies that habitually blame individuals are in danger of running into large-scale disasters without a hint of impending doom, according to Edmondson.

Here are some tips for creating a workplace environment in which people feel they can speak up about what’s happening and collectively work hard to improve and avoid big problems:

Promote smart experimentation. Experimentation is how companies innovate and develop tomorrow’s new offerings, but you want to make sure that the experimentation strategy is a smart one. Organisations should never experiment on a grand scale in uncertain domains. Experiments need to be big enough to get valid data about their viability, but not so big that the potential failure will be devastating to the business.

“For organisations to create a culture that doesn’t blame or punish mistakes, they must embrace entrepreneurship culture,” said Ebrima Sawaneh, a Lagos-based accountant and finance blogger. “Every employee should be trained and empowered to innovate solutions without fear of being punished if they make genuine mistakes. Employees should be encouraged to report any mistake, and organisations have to clearly set what is acceptable and create a line of sight.”

Once you have a clear experiment strategy of an appropriate scale, you must make sure that everyone’s expectations are aligned.

“Everyone (high and low) must know that this is an experiment, and the nature of an experiment is we don’t yet know what will happen,” Edmondson said. “Make sure everyone is aware of the fact that this may or may not work, and in both cases, what happens will provide great data.”

Invite input. Leaders need to make it clear to people that their voice is not only expected but also welcomed.

“A lot of times, especially when they are nervous that there might be layoffs, people have the tendency to hold back,” Edmondson said. “There’s an implicit belief that no one ever got fired for silence. I think the job of leaders is to flip that around. In the complex, uncertain industry in which we operate, the people that we’re not hearing from are not of much value.”

Because the tendency for employees is to remain silent about issues, leaders need to be proactive in inviting input. It’s one thing to say, “I’d love to hear from all of you,” but it’s another to turn to a specific employee and ask, “What do you think of this situation? I’d love your thoughts.”

“After painting the situation we find ourselves in in such a way that it becomes clear that voice is necessary, leaders must be proactive in asking ‘What are you seeing out there? Is there anything not going well? What are you excited about?’” Edmondson said.

Foster psychological safety. In her latest book, Edmondson discusses why it matters for company performance that people feel psychologically safe to speak up and what leaders can do to help bring it about.

“I don’t mean to say we have to get rid of all fear,” Edmondson said. “I think it’s fine to be afraid of missing a deadline or afraid of the competition. It’s not fine to be afraid of one another or the boss.”

Edmondson explained that while managers have an outsized influence on the climate at work, any employee can make a more psychologically safe space for colleagues simply by showing up with a spirit of openness, asking questions, and truly listening.

“When you listen thoughtfully to a colleague or a subordinate, you are making a difference. You are making work life that much more safe and enriching,” she said. “In addition to asking questions, when you say things to colleagues, subordinates, or managers such as ‘I made a mistake’ or ‘That didn’t work out the way I thought,’ it sets a shining example of a learning orientation. If you model a learning orientation and interest in others, you will make that small difference, in your vicinity, in helping create a learning organisation.”

Sawaneh agrees that fostering psychological safety can help create a high-performing financial organisation.

“When people fear that they will be blamed for mistakes, it can affect their active participation and sometimes result in their being too careful,” he said. “The key resource of accounting firms are their people, and when individuals are less concerned about mistakes, they will be willing to delegate, create a learning culture, become team players, and embrace change.”

Avoid stretched goals and closed ears. While there are several examples of organisations doing a good job of creating a culture of blameless problem-solving, there are also examples of companies that have faced the consequences of squelching safe and open communication.

Wells Fargo’s recent failure, in which millions of accounts were created without consumers’ consent, is one such example. According to Edmondson, the bank’s initial cross-selling strategy wasn’t fully in touch with the reality of customers’ limited wallets, which created immense pressure to have more and more products per customer, leading employees to activities that became fraudulent and problematic in other ways. Had employees felt able to speak up, push back, and say what they were learning, the strategy might have been tweaked.

“A recipe for failure is stretch goals and closed ears,” Edmondson said. “When managers, getting the messages from on high, are saying, ‘You better deliver on this,’ the implied rest of that sentence is, or else. People will deliver, at least on the illusion of creating the desired results, so then what you will often see is the illusion of good performance rather than good performance itself.”

Develop a productive response to bad news. Psychological safety in the workplace can be shattered the second a boss erupts in anger over a reported failure.

“Leaders need to train themselves not to overreact emotionally to bad news,” Edmondson said. “They need to pause, breathe, and disrupt what might be the natural, instantaneous reaction of emotion or disapproval, and say, ‘Thank you for that clear line of sight. Now what should we do next? What are your ideas? Here are my ideas.’ It’s what I call a productive response to bad news, as opposed to a natural, in many ways normal, response to bad news.”

Source : GCMA

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Categories : Resources

Tags : Accounting, CFO, CFO Service, Management Consulting, outsource accounting, outsource CFO, Payroll, Strategic Decisions, virtual CFO

Finance innovators- Watchlist for future

Posted by Ram

· 04/02/2019

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Finance innovators – Watchlist for future

At a recent accounting conference in Malaysia, the chief executive of the Malaysian Institute of Accountants opened the first panel discussion by presenting statistics from a World Economic Forum report on the future of jobs. In the report, accountants and auditors are classified under “redundant roles” that will see steep decline in demand over the next few years due to automation. Minutes later, one of the most popular questions from the audience was “How accurate are those statistics?” It reflects a sense of incredulity amongst professionals in the accounting and finance industry. Change can’t be that soon, can it?

You may share the same sentiment. You may have heard buzzwords like automation and artificial intelligence generate chatter in the office or at networking events. They have become ubiquitous in our business vocabulary, yet they are minimally understood. Perhaps you can’t help wondering, “How many of these new technologies are truly ‘disruptive’ and not passing fads?” (History tells us: Whatever is practically useful and reaches a tipping point in adoption survives).

Experts are saying that these new tools are not an evolution of current technology. Rather, it’s a revolution. Klaus Schwab, executive chairman of the World Economic Forum, wrote that the scale, scope, and complexity of this revolution is “unlike anything humankind has experienced before”. And these changes are not limited to technology. Climate change is also affecting the availability of natural resources like water and arable land. It is forcing businesses to rethink the sustainability of their practices.

There’s a silver lining amidst these changes: We are only at the beginning, and there’s still some time to learn about them. Management accountants are needed now more than ever to help navigate this tumultuous time. We dug deeper into six must-know topics from a recently published watchlist by the Association of International Certified Professional Accountants and listed resources to help you learn more. Here’s to future-proofing your career.

1. BLOCKCHAIN

Invented as the technology behind bitcoin ten years ago, blockchain has garnered greater attention in recent years as a technology with the potential to transform financial transactions, supply chain management, and even large portions of the internet. A blockchain report by the American Institute of CPAs defines it as a distributed public ledger that makes a record of every transaction and adds it to a chain of all the transactions that have come before. In accounting and finance, blockchain may enable firms to create immutable and continually updated financial records that are difficult to tamper with. In other industries, companies such as Walmart and Pfizer have completed blockchain pilots to improve food safety and track medicine.

Large and consistent investments into blockchain startups are an indication of interest in the technology. In 2017, venture-capital funding for blockchain startups was up to $1 billion, according to a McKinsey report. In the same report, the consultancy identified some sectors that are inherently more suited for blockchain implementation; namely, financial services, government, and healthcare. In the short term, blockchain’s value lies in cost reduction, but meaningful scale is still three to five years away, according to the report. Some cite its instability, high cost, and complexity as causes for its stuttering path toward mainstream adoption.

Bottom line: Experiments with and implementation of blockchain will continue in 2019 as more applications are identified. But meaningful scale of blockchain implementation to realise its full value in reducing costs and generating revenue is still a few years away.

2. ARTIFICIAL INTELLIGENCE

Artificial intelligence (AI) refers to a branch of computer science that strives to create software that mimics human intelligence. AI-related applications already have been implemented in operations and finance to automate repetitive processes. In 2019, 20% of US organisations plan to implement AI enterprise-wide, according to a PwC survey.

Far from a single technology, AI is an umbrella term that covers a number of areas, among them machine learning, natural language processing, and deep learning. Banks are using AI surveillance tools to prevent financial crime, and insurers use automated underwriting tools in decision-making. In an FM magazine interview, UBS wealth managers spoke about building robo-advisers and using AI and natural language processing to conduct due diligence on the bank’s clients.

The software the bank built can conduct quicker and more convenient know your client (KYC) and anti-money laundering (AML) checks compared to a human worker. It parses hundreds of pages of search engine results for negative news and conducts checks on a potential client’s criminal history — a task that would have demanded a significant amount of a human employee’s time.

Technology expert Amy Vetter, CPA/CITP, CGMA, CEO of The B3 Method Institute, said in a series of video interviews with the Journal of Accountancy that “there are many who look at the technology that’s coming … that we’re going to be disrupted and accountants will go away. And I do not believe that is the case at all.” Instead, new technologies will free up time for finance professionals to provide analysis of financial data, she said. For that to happen, finance professionals will have to train on new technologies, whether through courses or hands-on experience. Communications skills will also be pivotal to help accounting and finance professionals explain their analyses effectively.

Bottom line: AI technology is already implemented in various finance functions and industries. The first step is to learn more about AI — its opportunities and limitations. Its potential is in freeing up human workers to provide more value-added services. Great opportunities await the eager student.

3. ROBOTICS

The inconsistent use of vocabulary to describe robotics, sometimes called automation, has created much confusion. Some may even imagine a physical robot sitting in an office. Robotics here refers to robotic process automation (RPA), and quite simply it’s a class of software used to process transactions, manipulate data, trigger responses, and communicate with other digital systems.

Although not an entirely new phenomenon, RPA’s capabilities have improved remarkably over time. Rob King, author of Digital Workforce and vice-president of education at RPA Academy, said in an Association podcast that “RPA has definitely arrived”.

Last year, FM magazine got an inside look at how a Koch Industries subsidiary successfully implemented RPA, freeing up almost 50,000 employee-hours after less than two years of implementation. At the company, RPA was used to automate invoice transactions and track third-party labour.

In 2019, companies will continue to explore RPA implementation and reskill employees to adopt the technology. Research firm Gartner estimates that global spending on RPA will reach $2.4 billion in 2022, compared to $680 million in 2018.

Bottom line: Robotics’ capabilities have matured over time. More companies will want to use RPA to automate repetitive tasks, increase efficiency, and reduce costs. Most large enterprises will embrace RPA in the next few years. For smaller firms, the cost barrier to implement RPA will gradually diminish.

4. NATURAL CAPITAL CONCERNS

The only nontechnology trend on this list, but no less significant, is natural capital concerns or environmental risks, which have been brewing in the background for years. We would need 1.7 planets to sustain our current global levels of consumption, according to the World Wildlife Fund (WWF) Living Planet Report 2018. The study estimated that at our current rate, we are using up natural resources faster than they are replenishing themselves. In relation to the Financial Times WWF Water Summit last year, Margaret Kuhlow, WWF’s finance practice leader, wrote that businesses need to get serious about water risks and disclose greater asset-specific location data to identify water investment opportunities.

Former New York City mayor Michael Bloomberg has led the establishment of the Task Force on Climate-related Financial Disclosures (TCFD), encouraging organisations to provide voluntary financial disclosures related to climate that can paint a fuller picture of their businesses. Momentum has also been gathering on nonfinancial reporting. FM magazine reported on a recent debate organised by Oxford Saïd Business School where speakers posed arguments on whether standardised nonfinancial reporting should be mandated for it to be useful to investors. “We need to make sure that climate change, biodiversity, and inequality are dealt with in the future. … There is an urgency,” said Paul Druckman, former CEO of the International Integrated Reporting Council, an organisation that advocates for natural capital and other nonfinancial information to be included in corporate reporting.

Bottom line: Businesses are realising that environmental sustainability must be given greater consideration in business decisions. In 2019, there may be greater support and practice of disclosing climate-related information in corporate reporting.

5. BANKING EVOLUTION

Last year in an issue of the IMF magazine Finance and Development, Stefan Ingves, the governor of the world’s oldest central bank, Sweden’s Riksbank, pondered the question, “In a cashless society, what would legal tender mean?” The question is not far-fetched because Swedish society has almost stopped using paper money, preferring transactions through cards and digital platforms.

Other than changing consumer preferences, banking is also evolving because of the rise of bitcoin and other cryptocurrencies. Although many do not consider cryptocurrency a reliable substitute for cash due to its price volatility, consumers and businesses are already performing transactions using these virtual currencies. Among many are Microsoft, Subway sandwich shops, and e-commerce site Shopify.

In 2019, Sweden’s central bank is expected to issue its first cryptocurrency, e-krona. In the UK, the Bank of England published a working paper last year to understand the implications of a central bank-issued digital currency. In this banking evolution, traditional functions of banks as clearing houses will also change, causing banks to rethink their business models. According to Deloitte, 2019 will see retail banks race to be digital leaders in embracing a mobile-centric customer experience, while fintechs attempt to devour a larger piece of the market share by providing faster payments that work seamlessly across borders.

Bottom line: Debates on whether cryptocurrency can be money will continue in 2019. But consumer preference for hassle-free banking introduced by fintechs is already the standard baseline. What happens in fintech doesn’t stay in fintech — “Why can’t I pay with my e-wallet?”

6. QUANTUM COMPUTING

IBM kicked off 2019 by launching the world’s first stand-alone quantum computer, the Q System One, for commercial applications. Quantum computers are radically different from today’s computers. Instead of running on bits, they run on quantum bits or qubits, and promise to surpass even the fastest supercomputers of today. But don’t run off to get a quantum computer just yet. IBM is not producing quantum computers for sale, and the quantum computer’s processing powers are only accessible through IBM’s computing cloud, similar to what the US’s Rigetti Computing and Canada’s D-Wave are offering. More importantly, the Q System One is still an experimental device used to figure out how quantum computers might work.

Winfried Hensinger, professor of quantum technologies at the University of Sussex, told The Verge that “it’s more like a stepping stone than a practical quantum computer. … Think of it as a prototype machine that allows you to test and further develop some of the programming that might be useful in the future.”

That said, banks like Barclays and JP Morgan Chase are already experimenting with quantum computing. IBM, as quoted in the American Banker, said that organisations are interested in using quantum computing to develop a competitive advantage. Financial institutions are testing it to help minimise risk and maximise gains from their portfolios.

In the US, a law was signed in December to provide $1.2 billion over five years to boost US quantum technology. In China, quantum technology was deployed in the Micius satellite to develop new forms of secure communications.

Bottom line: Albeit in its infancy, quantum computing will have huge political and economic implications once the technology matures. It will be enterprise-ready when it can deliver reliable performance. IBM expects revenue from its quantum computers in two years.

Source : GCFM

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The No. 1 job billionaires and multimillionaires held before they got filthy rich

Posted by Ram

· 29/01/2019

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The No. 1 job billionaires and multimillionaires held before they got filthy rich

And why it’s important for all of us to do that job, too

Many now-uberwealthy people held sales jobs before they made their millions.

There are billions of reasons to do this job.

Many of today’s self-made billionaires and multimillionaires held a sales job, or jobs, when they were younger — a fact they consider crucial to their current success, according to research conducted by sociologist and historian Rainer Zitelmann and published in his recent book “The Wealth Elite.”

Zitelmann interviewed 45 individuals, whose net worth ranged, on the low end, from 10 million to 30 million euros (roughly $11.4 to $34.2 million) to, on the upper end, several billion euros (more than $3 billion), and whose wealth was either entirely self-made or built on inheritances that were later multiplied.

“To date, researchers have either underestimated or totally ignored the critical role of sales skills in self-made, ultra-high-net-worth individuals,” Zitelmann tells Marketwatch. “Among those in our study, it was the factor they themselves considered [to have] played the most important role in their success.”

Indeed, roughly two in three said that their talents as sales people had been a “significant” factor in their financial success. More than one in three said they owed 70% or more of their success to their sales talents.

So what sales jobs did they have early on? They sold everything from costume jewelry and cosmetics to used car radios and wheel rims — and even old egg cartons that could be used as noise insulation.

Plenty of wealthy celebrities and CEOs say they did sales work before becoming rich, too. Kanye West was a salesperson at the Gap; both Johnny Depp and Jennifer Aniston were telemarketers; and Netflix CEO Reed Hastings was a door-to-door vacuum-cleaner salesman. “I loved it, strange as that might sound,” Hastings told his former college newspaper. “You get to meet a lot of different people.”

And a separate study of thousands of CEOs from LinkedIn found that sales manager was one of the five most common first jobs for CEOs (consultant was No. 1 on that list — and it, too, is a role that typically requires sales skills).

Experts say it’s no coincidence that successful people have strong sales skills. “Sales skills are very valuable,” says Cheryl Palmer, founder of career coaching firm Call to Career. “Every company runs on sales.”

Even if you don’t plan to run a company, sales experience is essential, experts say. “Everyone needs a basic understanding of their strengths and how to sell them, because no one else is going to sell them for you,” says Randalyn Hill, a relationship-development specialist with career coaching firm Ama La Vida. “Throughout your entire life and career, you need to advocate for yourself and sell your worth. This will help you get clients, negotiate salaries, secure promotions. The ability to sell yourself is crucial in many aspects of your career journey.”

So how do you get sales experience if you have none? Palmer suggests applying for positions that are commission-only, as they may be easier to get. “This is a no-risk proposition for the company. If you do well, they make money. If you don’t, they don’t lose anything,” she explains.

You can also learn to excel at sales in a side gig. Hill says you could consider looking for a weekend shift as a barista (upselling customers on drinks, for example) or at retail stores, especially those with unusual offerings, as “you learn how to give convincing advice and sell them on a product they aren’t sure about.”

There are also plenty of classes that can teach sales skills. Look online for courses (Cornell’s online education offerings include the subject, for example) and at your local university, or consider grabbing a book on the topic.

And don’t worry if you aren’t instantly good at it, says Hill: “Almost all selling is uncomfortable at first, but, the more and more you do it, the stronger you get.”

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Working For A Boss Who Supports You

Posted by Ram

· 29/01/2019

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Working For A Boss Who Supports You

Employers seek loyalty and dedication from their employees but sometimes fail to return their half of the equation, leaving millennial workers feeling left behind and unsupported. Professional relationships are built on trust and commitment, and working for a boss that supports you is vital to professional and company success.

Employees who believe their company cares for them perform better. What value does an employer place on you as an employee? Are you there to get the job done and go home? Are you paid fairly, well-trained and confident in your job security? Do you work under good job conditions? Do you receive constructive feedback, or do you feel demeaned or invisible?

When millennial employees feel supported by their boss, their happiness on the job soars — and so does company success. Building a healthy relationship involves the efforts of both parties — boss and employee — and the result not only improves company success, but also the quality of policies, feedback and work culture.

Investing In A Relationship With Your Boss

When you’re first hired, you should get to know your company’s culture and closely watch your boss as you learn the ropes. It’s best to clarify any questions you have instead of going rogue on a project and ending up with a failed proposal for a valuable client.

Regardless of your boss’s communication style, speaking up on timely matters before consequences are out of your control builds trust and establishes healthy communication. Getting to know your boss begins with knowing how they move through the business day, including their moods, how they prefer to communicate and their style of leadership:

Mood: Perhaps your boss needs their cup of coffee to start the day. If you see other employees scurry away before the boss drains that cup of coffee, bide your time, too.
Communication: The boss’s communication style is also influenced by their mood. Don’t wait too late to break important news. In-depth topics may be scheduled for a meeting through a phone call or email to check in and show you respect your boss’s time. In return, your time will be respected, too.

Some professionals are more emotionally reinforcing that others. Some might appear cold, but in reality, prefer to use hard data to solidify the endpoint as an analytical style. If you’re more focused on interpersonal relationships, that’s your strength, but you must also learn and respect your boss’s communication style.

Leadership: What kind of leader is the boss? Various communication styles best fit an organization depending on its goals and culture, but provide both advantages and disadvantages. Autocratic leaders assume total authority on decision-making without input or challenge from others. Participative leaders value the democratic input of team members, but final decisions remain with the boss.

Autocratic leaders may be best equipped to handle emergency decisions over participative leaders, depending on the situation and information received.

While the boss wields a position of power over employees, it’s important that leaders don’t hold that over their employees’ heads. In the case of dissatisfaction at work, millennial employees don’t carry the sole blame. Respect is mutually earned, and ultimately a healthy relationship between leaders and employees betters the company and the budding careers of millennials.

A Healthy Relationship With Leaders Betters The Company

A Gallup report reveals that millennial career happiness is down while disengagement at work climbs — 71% of millennials aren’t engaged on the job and half of all employed plan on leaving within a year. What is the cause? Bosses carry the responsibility for 70% of employee engagement variances. Meanwhile, engaged bosses are 59% more prone to having and retaining engaged employees.

The supportive behaviors of these managers to engage their employees included being accessible for discussion, motivating by strengths over weaknesses and helping to set goals. According to the Gallup report, the primary determiner of employee retention and engagement are those in leadership positions. The boss is poised to affect employee happiness, satisfaction, productivity and performance directly.

The same report reveals that only 21% of millennial employees meet weekly with their boss and 17% receive meaningful feedback. The most positive engagement booster was in managers who focused on employee strengths. In the end, one out of every two employees will leave a job to get away from their boss when unsupported.

Millennials are taking the workforce by storm — one-third of those employed are millennials, and soon those numbers will take the lead. Millennials are important to companies as technology continues to shift and grow, and they are passionate about offering their talents to their employers. It’s vital that millennials have access to bosses who offer support and engage their staff through meaningful feedback, accessibility and help with goal-setting.

In return, millennial happiness and job satisfaction soar, positively impacting productivity, performance, policy and work culture. A healthy relationship between boss and employee is vital to company success and the growth of millennial careers as the workforce continues to age. Bosses shouldn’t be the reason that millennial employees leave. They should be the reason millennials stay and thrive in the workplace, pushing it toward greater success.

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Decision Making – Quantitative Intuitive

Posted by Ram

· 29/01/2019

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Decision Making – Quantitative Intuitive

How managers can develop the ability and confidence to ask the right questions, spot patterns, and process that information in parallel with an understanding of the wider business situation.

At the heart of good decision making in today’s fast and complex environment is the ability to see how things fit together—and perhaps more crucially, spot when things do not have a good or logical fit—quickly and effectively, and leverage these connections to derive insights and make prompt data-driven decisions.

Together with my colleagues, Chris Frank, a senior executive at American Express, and Paul Magnone, at Google’s cloud platform, (see also Chris and Paul’s book, Drinking from the Firehose) we have noticed that managers and executives are often fearful of relying on quantitative data in making business decisions. There seems to be a misconception that in order to be able to effectively make data-driven decisions, you have to be a ‘quant’ or a ‘math wiz’. We believe that this misconception generates a lot of unnecessary stress and, more importantly, a lot of good business decisions are not being taken.

What sets apart better leaders is the ability to see the same data as others (and everyone sees lots of similar data these days) but make some different conclusions and derive different insights from it. The key to doing so is to learn to quickly and effectively synthesize, rather than merely summarize, the information presented. We believe and show that this does not require you to be able to solve logarithms or square roots in your head, but rather develop the ability and confidence to ask the right questions, spot patterns, and process that information in parallel with your understanding of the wider business situation.

To help managers build these skills, we have developed a concept, a framework, and a set of tools which we term Quantitative IntuitionTM. Formally, we define this as the ability to make decisions with incomplete information via precision questioning and business acumen driven by pattern recognition. This requires a parallel view of the issues that matter rather than just a logical sequence of thoughts to see the situation as a whole.

Asking the Right Questions

One of the key elements to acquiring this acumen lies in ‘precision questioning’. This is the element that we see as being least prevalent in data analysis and where the real work needs to be sweated to achieve improved performance. In today’s world, the smartest person in the room is no longer the person who has the answers, but the one who asks the right questions to get the desired outcomes. With data drowning us on all sides, the usual “Can we look at the data and see what it tells us?” is likely to lead to a long journey with little results and insights.

We offer some techniques to approach data differently, beginning with IWIK, a method from Paul and Chris’s book, which stands for what is it that “I wish I knew.” We found that starting a group meeting around data-driven decision making with this deceptively simple question is extremely effective in quickly directing the data-driven discussion on the important issues and honing in on the fundamental issue that needs to be answered. It also has the benefit of often unearthing the data required as having already been acquired and being used elsewhere, when group members say “hey, we have that already, we got it when we…”.

Driving Backwards to Move Forward

A second approach is backward data-driven decision making, where you start the data-driven journey with the decision you would be making and then extrapolate backwards to see what analysis and data you would have needed to be able to make the decision. This approach requires the manager to put in a lot of thought and energy at the outset of the data-driven process to determine what the proposed decision and analyses might be. Executives are often reluctant to spend so much time early on in the process, thinking about the problem, decision and analyses to be done, but it is a well spent effort as it almost guarantees that the data-driven process will result in actionable outcomes.

In order for Quantitative Intuition to become second nature—that is, intuitive—a series of learning steps need to be climbed. Initially, we do not know what we do not know, we are ‘unconsciously incompetent. We then become aware of what we do not know and become ‘consciously incompetent’. We can then learn it, so we become ‘consciously competent’. And finally, we use it so often that we cease to be aware of using it consciously, becoming ‘unconsciously competent’. This is the stage of intuition that we strive for in our Quantitative Intuition program.

This is one of a series of articles published in a new eBook from Columbia Business School.

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