From XU Magazine, 
Issue 17

Business finance in the digital age: How accountants can benefit from technology and why it is so important

The technological transformation of our society is changing habits, and with it many business sectors and professions. While a background in economics or mathematics used to be desirable, it’s now tech know-how that will become more and more important for accountants. Initiatives like Open Banking or Making Tax digital will accelerate this transformation, so accountants should embrace the digital world, otherwise they may lose out on clients in the long run.
This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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By now, there’s a variety of accounting software that can make an accountant’s life a lot easier. Cloud accounting, cash flow forecasting and tracking are a few of the benefits emerging through digitalisation. In order to make the most of it, we need a rethink of our habits.

Rethink data transmission and workflow

The way we handle paperwork and data, concerns accountants as well as businesses in general. A recent study revealed that businesses waste 125 hours every week due to mismanaging paperwork, and storing physical paperwork puts 66% of UK businesses at risk.

This could lead to low efficiency, late payments, and therefore, unsteady cash flow. After all, if your cash flow forecast is the stack of paper on your desk, it’s easy to lose track of things! Up to 90% of businesses say that cash flow issues are the main reason for failing or holding them back from growth.

Half of UK enterprises admit that late payments are a big problem, whether it’s paying their customers or being paid late themselves. The main issues causing late payments, according to 49% of respondents are the high number of paper invoices received. Using advanced tech may result in better efficiency and prevent late payments.

Open Banking as an accelerator

Open Banking will potentially accelerate a digital approach to handling paperwork and other administrative burdens. For instance, Open Banking will make it possible for businesses to combine banking and accounting services into one system. Accountants and bookkeepers using Open Banking software will be able to instantly access their clients’ financial data. This will make the process much easier and faster. After all, waiting for documents to be sent over or data to be entered manually can cause frustration; Instant access will make the job much more efficient.

Not only can these new tools reduce admin, they also help accountants keep their clients happy. By using these time-saving tools, accountants can now offer additional advisory services.

Having said that, almost every business will struggle with cash flow at some point, but access to finance still proves to be a gauntlet — especially when it’s urgent. Bank lending isn’t suitable for every small business. That’s not a bad thing, it just means every business is different and may have special requirements that bank lending is not designed for. In this case, working with alternative providers can help.

Funding Options matches small businesses with more than 50 of the UK’s leading lenders to source the best funding option for their situation — whether they’re fighting for survival, looking to grow, or simply need finance to pay a VAT bill. In a world where every business owner can set up travel insurance within 5 minutes online, Funding Options is aiming to do the same for business funding.

The benefit from partnerships

This is why more and more banks are partnering up with fintechs. Both sides have realised that rather than working against each other, they need to collaborate for the greater good in order to gain the most for businesses who want to access finance.

“If you want to win going forward as a bank in [a] world that changes so quickly and that is increasingly digital, you have to be purpose driven” - Ralph Hamers, CEO of ING Group.

He further explains:

“Given the fact that people and corporations spend more and more time in the digital world, [...] you have to make sure that you’re either connected to some of those digital platforms out there or you have to become a digital platform yourself.”

In order to do so, finance professionals need to be open — to new consumers and producers, to third parties, and even to competitors.

For this reason, ING and Funding Options have partnered up to help business owners access funding even if they have been unsuccessful with their bank. For Funding Options this means accelerating international ambitions, because the problem Funding Options solves in SME lending is a global one.

Giving businesses cash flow when it’s most needed, before more problems emerge that could damage the business in the long term. As trusted advisors, accountants and bookkeepers can identify cash flow issues early on. Many business owners lose confidence when it comes to seeking out business finance — especially when they have been rejected by their bank.

Through technology and partnerships, accountants can help their clients regain confidence and financial safety. Eventually, this may lead to increased revenue and growth for both the client and the accountant.

Why leave it there?

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