A-Level results day: Why more young people than ever have entrepreneurial ambitions

Posted by & filed under Social mobility.

A-Level results days in the 21st Century tend to follow a familiar pattern, and for those of you who have witnessed many of them, you’ll be aware of the drill by now.

But as many AAT students past and present will profess, university is not the only route to a successful career after completing your school studies.

And this summer, young people have told us that their ambitions don’t end at getting a successful job in the workplace – just under half of them have ambitions to set up their own business at some point in the future.

Young people have strong entrepreneurial spirit

We spoke to over 1,000 16-24 year old’s during July, and while 43% told us they wanted to start a small business one day, it was those from lower social-economic backgrounds (49%) who proved to be the most ambitious. Over half (51%) believed that becoming an entrepreneur was an accessible option for them.

We’re proud to say that many of our students and members from more disadvantaged backgrounds have been empowered by AAT in their hopes to achieve a successful career in finance. Check out some of their stories here as part of our #AATPowerUp social mobility series.

Accountancy skills = Transferable skills

We know that gaining finance skills through our accounting qualifications gives people the skills that count for any industry, as every sector needs financially-savvy employees.

Despite failing his first year of college and not going to university, Akash Ruparelia MAAT / AATQB went on to succeed as part of the first group to graduate from the Leadership Through Sport and Business (LTSB) programme back in 2012.

This programme gave him AAT accounting qualifications while working with the Tottenham Hotspur Foundation to give him coaching and leadership skills. Ruparelia, now 24, became a fully qualified chartered accountant earlier this year.

“AAT gave me the foundational accounting knowledge I needed to start out in my career,” he says.

And it’s clear from our survey that young people agree with Ruparelia’s approach. 40% of them identified financial management skills as essential to one day running their own business.

Upskilling will be important in future careers

Our survey also highlighted that over 60% of young people expect to upskill during their working life, due to the changing nature of the job market. More than half said they are willing to gain a new qualification such as a degree, while 38% would be prepared to change career and 37% would undertake an apprenticeship.

In part, it’s likely young people’s expectations around having more than one career during their working life that has led to this desire to continually learn and upskill.

One in five 16-24 year olds that we surveyed expect to change careers twice during their working lifetime (23%), dropping to 14% for those that expect this to happen three times. Around 1-in-6 (16%) believe they will change career once, with the same amount not expecting to change career at all.

Access to a variety of sectors

If you’ve received your A-Level results today, congratulations on completing your schooling – no doubt a great deal of hard work and graft has already gone in. But if you haven’t got what you wanted, an AAT finance qualification is an accessible option that will give you the finance skills you’ll need to access sectors from fashion to football to fitness.

And these skills will be essential if you one day decide to start your own business.

AAT will be sharing various success stories across all industries, including those who have set up their own business as a result of gaining AAT accounting qualifications, on social media via #skillsthatcount.

Study tips: Sales and purchases – part 5

Posted by & filed under Foundation Certificate, Students.

The fifth and final article of our series on sales and purchases.

Study Tips: Sales and purchases series

This is the last article in the sales and purchases series.

If you’ve missed the other four, then please start at part one and work your way through, as the knowledge and understanding of business basics covered is essential.

We’re going to conclude the series by having a more in-depth look at cash and credit transactions in double entry bookkeeping systems, using the purchases function to illustrate how everything fits together. 

In part four we discussed the sales, and demonstrated that the only real difference between a cash and credit sale is the length of time it takes for the receipt to end up in the bank.

The difference between cash and credit purchases is exactly the same – a cash purchase has to be paid for straight away but paying for credit purchases can be delayed by the length of the pre-agreed payment terms.

Purchases, purchase ledger and the purchase ledger control account

Let’s start by being clear about purchases, purchase ledger and the purchase ledger control account (PLCA).

  1. Purchases
    • The goods or services a business buys in order to make the goods or provide the services it sells.
    • The value of purchases is recorded in the ‘Purchases’ account in the general ledger, that starts each financial year with a nil balance and is increased each time a purchase is entered.
    • Are a sub-category of expenses. Expenses are day to day running costs, such as utility bills.
    • Records the value of both cash and credit transactions.
  2. Purchase ledger
    • Is the group of individual credit supplier accounts.
    • Is a subsidiary ledger as it is not part of the double entry process.
    • Entries into individual supplier accounts are memorandum posting, that are repeats of the actual double entry postings that occur in the PLCA.
    • Records activity of credit transactions only.
  3. PLCA
    • The account that controls and summarises activity in the purchase ledger.
    • Is a general ledger account and therefore part of the double entry process.
    • Records all the entries related to the credit purchases process – purchases, purchase returns, discounts received, payments etc.
    • Records activity of credit transactions only.

Returning to our example of the sale and purchase of stationery for one last time, we’re going to conclude by looking at it from Adam’s point of view. 

Sales and purchase scenario

He bought the stationery from Emily so she was his supplier. Adam is a photographer, so the stationery is an expense to his business as opposed to a purchase.

Therefore, if we look at it as a cash transaction, the entries in Adam’s accounts would be:

However, we know that Emily is one of Adam’s credit suppliers and they have an agreement that allows him 14 days from the date of invoice to pay for the goods he buys.

This is a credit transaction and once Adam receives the invoice he needs to record the expense and that he owes Emily £65.32 – the accounts equivalent of an IOU.

Recording credit transactions

The process of recording credit transactions starts with day books.

Adam’s purchase day book is below:

Day books are just a list of credit transactions (in this case goods and services purchased) and are not part of the double entry process.

However, they’re where the double entry postings start. The highlighted figures all need entering into the accounts. The totals at the bottom are entered into the general ledger accounts and are the double entry. The individual invoice totals will be entered into the individual credit supplier accounts in the purchase ledger.

They’re not double entry posting though, only memorandum entries.

Once posted Adam’s accounts will show:

That was stage one of the credit transaction.

Stage two will need to be completed once Adam pays the invoices.

Here’s what his accounts look 14 days later:

We’re going to finish by highlighting a couple of useful differences between the accounts.

Behaviour of account balances

We’ve already said that the ‘Purchases’ account is categorised as an expense and, in part four, that the ‘Sales’ account is income.

Both expense and income accounts start the financial year with nil balances, which increase through the year. This is because their job is to record the value of the particular expense or income.

Control accounts and individual accounts in both subsidiary ledgers however, have balances that both increase and decrease throughout the year. Their balances continue from one year to the next as opposed to being returned to nil.

This is because they’re asset/liability accounts and their job is to record all the activity to do with the complete process of credit transactions – stage one when the purchase/sale is recorded and stage two when the payment/receipt is recorded.

Previous study tips will help if you are unsure of account categories and how to increase and decrease them.

VAT-exclusive (Net) amounts and VAT-inclusive (Gross)

Expense and income amounts will always be posted with VAT-exclusive amounts as those are the business’s figures. 

The VAT is either owed to HMRC or can be reclaimed, so it’s separated from the business’s figures.

However, control accounts and individual accounts in both subsidiary ledgers will, like the bank account, always be posted with VAT-inclusive amounts because that’s how much the business will have to pay its suppliers or expects to receive from its customers.

Purpose of accounts

If Adam wants to know how much he currently owes his suppliers, then he needs to look at the balance on his PLCA, which shows him £264.36 is outstanding.

However, if he has a query from Emily, then the PLCA balance is no use to him, as it’s a summary of all the activity to do with credit purchases.

Therefore he’ll need to look at Emily’s individual account in the purchase ledger, which will show him the details of all the transactions that have taken place between them.

Finally, if he wants to know how much he’s spent this year on purchases, he’ll need to look at the balance on the ‘Purchases’ account, as that will show him the value of his purchases to date, regardless of whether they were paid for on a cash or credit basis.

Read more on AAT Comment:

Browse the full range of AAT study support resources here

Excel tips: Creating financial statements series part 2 – How to avoid errors when using the sort functions

Posted by & filed under Advanced Diploma, Excel tips, Students.

Excel tips: Creating financial statements series

Working with spreadsheets can make accounting tasks much more efficient and reliable once we have learnt to use the required functionality. However, in order to achieve that we have to combine accounting knowledge with spreadsheet skills and for many of us, bringing both areas together is a real challenge. 

In this article we’re going to use the sort function to alter the presentation of an extended trial balance (ETB) in preparation for the creation of year-end financial statements.

Click here to download the ETB we created in the last article.

The first tab in the spreadsheet contains the ETB and the second, the year-end adjustments. The accounts in the ETB aren’t listed in any particular order and if you click on any of the cells you can see that they all contain either original entries, links or formulas. 

Sorting the ETB

In order to make the presentation of the ETB more helpful for the purpose of creating the financial statement we are going to change the order of its rows. However, sorting information can cause all sorts of problems if not done carefully, for example, not selecting all the information can result in it becoming mixed up and unless we realise straight away, it can be difficult to use the undo function:

There’s also a challenge using the sort function when a worksheet uses formulas that operate across a number of rows because they will no longer work as intended, once the order of the rows has changed. This applies to some of the cells in our adjustment columns. Therefore, we are going to create a copy of the worksheet before we start, as a backup. Right click on the ETB tab at the bottom of the screen, select Move or Copy, tick the Create a copy box, indicate where the copy should be in the order of tabs and then press OK:

Now we can return to the ETB tab and sort it alphabetically by account names. First we select the data range A6:I29, being careful to not include the profit or total rows, then use the Sort & Filter button on the HOME ribbon.

Checking for errors

As we are aware that the formulas in the adjustment columns are unlikely to still be working correctly we can check them against our copy. A quick comparison shows that the closing inventory and insurance prepayment adjustments are still okay, as is the original entry for the irrecoverable debt. However, the link to the receivables row is now incorrect, as is the depreciation formula and link to the accumulated depreciation row.

Before we amend these errors, it is worth doing a further advanced sort to separate the SoPL accounts from the SoFP ones. Select the data again, A6:I29 but then choose the Custom Sort option from the Sort & Filter drop down menu:

Make sure that the My data has headers box is not ticked, then select column F from the Sort By drop down list. Now press Add Level and select column G, then press OK:

Now all the SoPL accounts are in the top half of the ETB in descending order of value and the SoFP accounts are still in alphabetical order in the bottom half. Be mindful of the closing inventory though, it is included in both statements and there is a green triangle showing in cell G20, which can be ignored as it is just bringing an inconsistent formula to our attention:

Correcting the errors

However, we have some #REF! error messages showing that can’t be ignored but at least we are already aware that they have arisen due to the sorts altering formulas that work across rows. So, now check and correct the entries in the adjustment columns. Be careful to double check all the adjustments, because even if a figure is showing it may still be incorrect. 

In this case, E10 need to equal D28, and E29 should equal D11. The formula in D6 must be corrected to: (B26-C27)*0.25 and then linked to E27. The error messages in the profit and total rows should resolve themselves once the depreciation formula is corrected.

A comparison with the copy we made enables us to check all the figures are now the same as they were originally.

The ETB is now in a much more useful order for us to use to prepare a statement of profit or loss and a statement of financial position.  You can follow how to do that in the next article on how to use basic functionality when creating financial statements.

Read more tips on Excel here

Browse the full range of AAT study support resources here

Nikolay Lozev finds success studying AAT in Bulgaria

Posted by & filed under Inspiring stories.

Nikolay Lozev is among the first alumni of the School of Finance and Accounting for Young Professionals. A programme that AAT and MDV Professional Education launched together in 2016 in Bulgaria.

Here he tells his story of how he chose his career path and continues to develop with an AAT professional certification.

How did you decide what to study?

Ever since I was a child, I watched my parents develop a successful business, attending meetings and building a stable future for themselves and our family. It was then that I realised that I wanted to be part of this environment – to know how a company operates and to have the skills to achieve similar results.

These were the main reasons that I took the decision to study Business Administration at UNWE – the leading economy university here in Sofia.

What did you enjoy most whilst studying?

During my studies, I learned a variety of subjects, but finance and accounting were definitely my favourites. It was then I realised these were the languages of real business. Without knowing these areas well, you cannot understand exactly what is happening in any company’s operations.

How did you develop your skills?

I felt that what I was learning was not enough, so I started looking for other ways to develop my skills. Initially, I began to re-read from my textbooks on the fundamentals of accounting. I worked part time as a life guard, but instead of just resting in my spare time – I paged through the material again and solved almost all the question examples.

How did you first hear about AAT?

When I came back, I joined an internship program for several months at a local accountancy firm. Soon afterwards, in 2016, by chance I saw an advert for MDV Professional Education.

At that time, the team was organising their first edition of the School of Finance and Accounting for Young Professionals and I decided to register directly. It was during this programme that I first heard of AAT and their qualifications.

Did you find a job easily?

Although I was the youngest and least experienced candidate, I managed to qualify for one of the top rankings in the final exam. Thanks to my efforts and the invaluable help of the MDV team, I managed to find a job as a financial specialist at a large holding company operating in the real estate investments.

I am extremely grateful to MDV for their support over the past few years. Today I actively practice everything I have learned in their classrooms and at the university. 

Have you continued with your studies?

Soon after graduating from my bachelor’s degree, I began my studies in accounting and control. At the same time, MDV had announced a Foundation Certificate in Accounting scholarship.

I applied for it immediately and have recently passed the first of my exams with 93% success rate. The material is extremely practical – real mini case-studies are solved and I like learning this way. I hope to gain equally good results with the other levels of this internationally recognised qualification and I will continue my AAT studies with great enthusiasm.

Further reading

It’s great to hear how studying AAT has helped Nikolay fulfil his passion for finance and accounting to achieve some amazing results. For more inspirational stories:

Why do we still use cash?

Posted by & filed under Employers, Future of accounting.

In our previous article, we explored the pros and cons of a cashless society, and what the impacts on bookkeepers and accountants would be. Viewpoints were positive overall, but why is physical money still around?

Alexandra Bond Burnett, MD of Blue Arrow Accounting says says “There is a tradition to cash, and about how it communicates the value of money, that will need to be addressed.”

When credit cards arrived, there were fears that people might spend too much and get into debt as they weren’t seeing the actual money leaving their hands. Is something similar going to happen if we go entirely cashless?

“Actually,” says Bond Burnett, “what the challenger banks like Monzo, Starling and Tide are doing is including the budgeting and expense reporting when you use them.” This applies context to your spending, she says – and it’s having that context that’s essential.

With these modern banks giving you so much more insight and awareness of your spending via card, maybe the biggest challenge to going cashless is the necessary mindset shift.

Cash acts as a visual prompt

But these shifts in how we use – or cease to use – cash mean that it’s important to think about how we see money.

As well as running her own practice, Bond Burnett is a speaker and presentation skills coach at Bond Ambition. “I teach this in financial storytelling. If you deliver a report and say profits are up £5 million last year, it can create blank faces – there isn’t any context. I say, what’s the human transaction?

No one has ever seen five million pounds. But if you say, for every 49p in the pound, our not-for-profit gets another penny – you can understand it, and it becomes tangible information.”

This becomes a real issue in our potentially cashless society; how will we teach children about the value of money? Early maths books routinely use coins as a way of teaching how to count.

Cards are accepted virtually everywhere

“We are almost at the point where there is no longer anything you need to carry cash for,” argues Della Hudson, Director of Hudson Business Advice and author of The Numbers Business: how to grow a successful cloud accountancy practice. “As a result, I don’t think people will even carry a few coins around any more.”

Why do we have cash at all? Hudson asks. “For many years, for many people, it was mainly the pub! But you can buy a meal or a drink on a card now and no one bats an eyelid.”

The drive towards cashless is something that will evolve, Hudson believes; “you don’t have to push people into it, it will just eventually happen.”

Young people “simply do not want cash,” she says, observing from personal experience that “children with a paper round give their parents the cash to pay into their accounts, to buy things with cards online!”

Tightening up cyber security

This leads us to another caution about cashless; is the security around the technology strong enough?

Alexandra Bond Burnett is not so sure. “The amount spent on cyber security is vast, and the personal losses when someone gets caught out can be severe. A lot of business owners I know – intelligent, savvy people – have been caught out.”

It’s common, she says, because the techniques used are so effective – playing on people’s fears of financial security, rushing people into thinking something is urgent, or using fear of authority as a lever to fraud. Bank transfer frauds or ‘push payment’ scams as they are sometimes called, affected some 80,000 victims in the UK last year.

The answer may be better financial education – “this all needs to be taught, and everyone, young and old, needs to be aware of what happens.” For Bond Burnett, “it’s vital to educate end users in terms of their financial safety.”

But the “arms race” between financial services technology, and criminals rages on – ultimately, if something has a lock, there will be a way to break in.

In Summary

“Facial recognition and AI payments are becoming more commonplace”, says Bond Burnett; “and as with most technologies, this can be scary to begin with but it’s going to be a boost for local economies.” 

“I simply don’t believe there’s any need for cash any more,” concludes Della Hudson. “The only thing keeping it in our pockets is people’s attitudes to it – and those attitudes are changing fast.”

A cashless society is perhaps inevitable; but if it happens we will need…

  • Better financial education. It’s essential that young people understand the value of money and it needs to be understood that children currently learn much of this from coins.
  • Better security education. Whilst legislation is appearing to help consumers who have been the victims of crime, understanding how scams work and knowing how to be personally financially educated is more important than ever.
  • Technology backups. Financial cybercrime could seriously damage businesses and the operation of essential infrastructures if there is no widespread use of cash to overcome a temporary problem, and data breaches potentially cause problems for individuals.

The advantages of cashless are, however, clear…

  • It’s easier both for businesses to get paid, and for customers to see what they’ve been paid. Personal finances are therefore clearer because you can manage your budgets and have a much better real-time view of your finances.
  • There are significant opportunities for businesses at pop-up shops, “on the move” selling such as festivals, and in areas where there are no ATMs, to sell effectively to people without having to rely on cash.
  • Tax evasion and money laundering are likely to be far lower when cash is replaced by electronic transactions, because there is always an electronic trail. Theft is likely to be lower as there is less opportunistic availability.
  • It’s easier to exchange currencies and travel safely if you don’t need to carry cash – but it can be a useful ‘belt and braces’ back-up.

In summary

Physical cash is tangible and familiar; it’s traditional in our society. Moving on from that is not going to happen over night, but it looks like we largely have the technology and infrastructure in place to transition. Whilst consideration is required for teaching children about money and its value without coins, this could be seen as an opportunity for improving financial education in general, rather than a barrier

People clinging to the familiar, comfortable way may be the main reason we still use cash; is it time to let go?

For more on related topics:

How the workplace can be made open and friendly for people with disabilities 

Posted by & filed under Social mobility.

According to the latest government statistics, 51.7% of people with disabilities are in employment, compared to 81.7% of people without disabilities.

Only 38.2% of those aged 16-24 years old with disabilities are in work. Employment rates vary considerably depending on the level and type of disability or health condition, with less than a quarter of people with learning difficulties, a speech impediment or mental health conditions in employment.

The Equality Act 2010 was brought in to prevent any disability discrimination in employment and recruitment and yet there is still so much disparity. By overlooking people with disabilities, businesses are missing out on a great pool of talent.

As part of our #AAT PowerUp social mobility campaign, we’re focusing on how and why you should be encouraging people with disabilities to join your workforce.

How should you encourage people with disabilities to join your workforce?

Supporting social mobility by creating a workplace that is inclusive and fair for all is really important in promoting social equality and will improve your workforce in the process. Initiate an inclusion scheme so it’s clear to potential applicants that there are opportunities for them and that they will be helped.

Awareness of the importance of having diverse and flexible working conditions should be embedded in the company values and shared across the whole team with training.

When recruiting, don’t only focus on experience and qualifications but look for the potential in an individual. Having a disability doesn’t mean they will be less capable at the job. Always give fair feedback, whether it’s during the application and interview process or when people are employed. 

Ask yourself if a wheelchair user could start at work in your office tomorrow and consider the practical adjustments that should be made to ensure that your working environment is accessible to all.

Alterations your business could make could include

  • Changing the recruitment process – modifying assessments to ensure they don’t disadvantage people with particular disabilities and allow extra time during tests.
  • Allowing changes to working patterns.
  • Fitting access ramps and adjustable desks.
  • Looking into assistive technology.
  • Arranging coaching and assistance from a support worker or another colleague. 
  • Installing audio-visual fire alarms.

The benefits to the individual and the employer

For a person with a disability, being given an opportunity to work can be life-changing. And by encouraging people with disabilities to join your workforce you will be inspiring the rest of your team – raising staff morale and retention.

People with disabilities are often highly self-motivated so will be a great influence on working culture. Adopting an attitude of being adaptable to people’s different needs will encourage teamwork. Colleagues might have to find alternative ways to communicate and work together.

AAT Comment spoke to Christina Heller who has dyslexia and dyspraxia, but has also landed her perfect job. Christina identified a few tricks to help her work effectively: “I use a coloured ruler to keep my place when doing credit control. Colour-coded notes and calendars help jog my memory. And CRM software is particularly useful, as it enables me to write notes on a customer’s account.”

What support is available?

  • Access to Work funding can be applied for by employees and the self-employed to help with the cost of making reasonable adjustments.
  • Fit for Work offers free, expert and impartial advice to anyone looking for help with issues around health and work.
  • Disability Confident aims to help organisations improve how they attract, recruit and retain disabled workers.

Key takeaway

The best way to ensure a satisfied and productive workforce is by putting a real focus on health and wellbeing. Understand that everyone is different and give people some autonomy and flexibility to decide what would help them do their best work and then support them with that.

Invest in training, mentoring and coaching so that everyone is equipped to contribute to an inclusive and encouraging working environment.

In summary

As part of the Equality Act 2010, employers are legally obliged to make reasonable adjustments to help disabled job applicants and employees to do and progress in their jobs. But this should by no means be the sole reason that it is done. Promoting inclusion for all through training and other adjustments will have exponential benefits for your entire team and business, as well as for wider society.

Your next reads:

What AI can already do for your company

Posted by & filed under Artificial intelligence.

Love it or loathe it, there’s no denying artificial intelligence (AI) is set to transform accountancy like never before.

Over the next month, we’ll be examining what companies could be doing right now to harness the groundbreaking potential of these technologies. First up, the AI that’s already available for accountancy firms today…

The robots aren’t after your job

Whenever the words “AI” and “accountancy” are mentioned in the same sentence, it’s usually accompanied by doom-and-gloom soothsaying about how invisible robots will take our jobs and – just maybe – spell the end of the human race too.

With the World Economic Forum (WEF) forecasting more than half of all workplace tasks will be carried out by machines by 2025, artificial intelligence (AI) is predicted to disrupt industries ranging from aviation to banking.

Experts also believe AI’s benefits will outweigh these losses. For accountancy firms, this means quicker and more accurate audits, not to mention phasing out mundane tasks disliked by many in the profession, such as endless inventory counts.

The need for an AI strategy

The robots might be coming, but one recent Microsoft study found more than half of UK firms have no AI strategy in place. Part of this reticence comes from fears over the cost of such technologies. But there also seems to be a lack of understanding about how AI could boost business.

In fact, ignoring AI could be putting some businesses at risk: the Microsoft report also showed organisations using AI outperform their AI-absent counterparts by five per cent.

Becoming digitally literate

“There’s a shockingly low level of digital literacy,” says Steve Wells, COO of Fast Future, a foresight firm behind , a forthcoming book on accountancy’s future. “It isn’t just accounting professionals who don’t understand AI, but many of their clients aren’t ready for it either. The PwCs and EYs of this world will be fine, but those small accountancy firms who aren’t sure what their future is could be displaced by software…”

Today, there’s an increasing number of accountancy firms in the UK using AI to boost productivity and improve accuracy. And the AI technologies they’re using are often cheaper, more accessible and less scary (there’s not one job-snaffling killer robot in sight) than many think…

Robotic Process Automation (RPA)

What does it mean?

Robotic process automation (RPA) is the most common type of AI found in modern accountancy. It’s a software solution that automates many tasks – typically the type of monotonous admin chores that take up much of accountants’ time. Tax preparation, inputting data from spreadsheet shambles, categorising invoices: it can all be done by RPA.

Why use it?

Put simply, RPA frees up more time. Some auditing duties that usually take days or weeks to complete can now be processed within a matter of minutes. For example, the accountants for the Volvo Group previously spent four full days every month validating all financial reports sent to the Swedish carmakers. With RPA, this process now takes around two minutes.

RPA doesn’t just speed things up. It also has the potential to remove human error to – handy in a profession where copying and pasting info from spreadsheets can result in costly mistakes that can destroy clients’ businesses.

RPA is also relatively cheap too: its platforms can be integrated into existing software such as Sage or Xero, all without writing a single line of code.

How RPA is currently being used by accountants:

  • to collect data from spreadsheets before transferring this information into either a centralised general ledger or existing systems
  • calculating book-tax differences
  • preparing tax returns
  • processing invoices. Instead of spending, say, five minutes processing each invoice, RPA can do it within a matter of seconds
  • retrieving data from bank statements and transcribing details from PDF invoices
  • calculating whether price and quantity are different across sales invoices, sales orders, and other documents.

Where can I find it?

There are various RPA software providers, with Blue Prism and UiPath and Automation Anywhere among the most popular.

Cognitive Insight

What does it mean?

If RPA helps accountants with manual and repetitive tasks, then cognitive insight goes one step further: it sifts through vast volumes of data to detect patterns and interpret them. These interpretations are used to make predictions too. Like a robotic Nostradamus, if you will.

Why use it?

Cognitive insight technologies can perform feats ranging from facial recognition to identifying speech, thanks to being embedded with machine learning (systems that learn how to do complex tasks themselves, rather than humans teaching them).

However, for businesses, it’s particularly useful for predicting future trends and what customers might buy (it does this by pinpointing probabilistic matches across databases, which provides new analytics data). In accountancy, cognitive insight can be a great help during the audit process.

The patterns that it detects can not only spot potential risk and fraud, but also tell clients how they can improve their business performance and save money.

How cognitive insight is currently being used by accountants:

  • some firms use cognitive insight technology to extract terms from contracts before matching it to invoice numbers. This removes the need to painstakingly read each document, but also can identify any products/services that haven’t been supplied yet.
  • identifying risk and fraud during the audit process. By learning regular data patterns, the AI can pick up on any inconsistencies or fraudulent behaviour.
  • using a client’s historical internal data to predict future trends for that business. For example, if you have a retail client, cognitive insight will curate data on their weekly revenue and gross profits. The analytics on their daily/weekly sales and best/worst-selling products could inform them where savings could be made within the business.

Where can I find it?

Fluidly (fluidly.com) is an intelligent cashflow engine that can be integrated with Zero, Sage and QuickBooks to produce up-to-date forecasts of cashflow.

Cognitive engagement

What does it mean?

Cognitive engagement largely refers to AI-powered activities that engage employees and/or customers. It could take the form of a chat-bot that suddenly appears on a company’s website and responds to your queries in natural language. Or it could be a coffee chain such as Starbucks pinging you serving suggestions by text before you even approach the store, based on your buying history, the time of your order and the GPS in your smartphone.

Why use it?

The algorithms learn from previous customer interactions, giving companies a chance to improve service by offering a more personalised, bespoke approach; useful in an age when consumers are more brand-disloyal than ever before. Not only that, it also enables companies to provide customer support 24/7 too.

How cognitive engagement is currently being used by accountants:

  • chat-bots that schedule meetings with clients, and/or allow them to pay for your services inside the bot
  • intelligent agents offering round-the-clock customer service, such as password requests to technical support
  • intranet/internal websites that answer employees’ questions on subjects as IT, benefits and HR policy.

Where can I find it?

Should you want to improve customer service via a chatbot, popular providers include Aivo, Botsify, Chatfuel and ArtiBot. You can also use an AI-powered email application to engage with customers, such as Phrasee or Adobe Campaign.

Summary

As accountancy firms increasingly embrace AI, the day-to-day jobs of staff who work within these companies are set to change drastically.

Uptake might be slow at the moment, but it’s believed any firm that adopts AI – whether it’s automating tasks through RPM or more sophisticated analytics software – will future-proof themselves themselves against any disruption, as well as have a competitive edge over any rivals that don’t possess this technology yet.

For more on AI and digital skills:

Career profile: Practice bookkeeper

Posted by & filed under Bookkeepers, Career, Career profiles.

Bookkeeping isn’t just about calculators, spreadsheets and ensuring the numbers add up.

Carole Alexander is director of Carole Alexander and Associates, which specialises in bookkeeping for small businesses. In our interview, she talks about the importance of staying on top of employment law, ensuring accounts make sense to clients and playing the psychologist for worried business owners.

What led you to pursue a career in bookkeeping?

After starting a family, I ran a procurement department in the Home Office. I completed a part-time RSA bookkeeping course, and soon realised I could do bookkeeping for my own clients instead of working for somebody else. I did the AAT NVQ4 in 2000 while building my business, then formed a limited company with my business partner Lorna Bennett in 2012. Since then, we’ve helped lots of small businesses and start-ups, and even put full-time bookkeepers into some businesses we’ve helped grow. It’s so nice to see them fly.

Where can AAT take you?

Check out AAT’s bookkeeping qualifications.

Find out more

What does a typical workday look like for you?

They’re all completely different. But I’ll usually go out to clients in the morning, work on their computers, collect information, then go back to the office for 11am. I regularly receive email queries from local accountants that I can then raise with our shared clients. I try to meet all our clients quarterly, regardless of whether they’re VAT-registered, to go through management accounts and discuss where their business is going. Sometimes people will drop in for a meeting without an appointment, usually when they have something new on the go and want some advice.

What are the main challenges involved in your role?

Even if we’re not doing payroll for a business, getting clients to appreciate the legal side of employing somebody else is crucial, so we need to know more about employment law than you might think. For example, we support several catering businesses that rely on casual part-time labour, and we help them understand things like they can’t keep workers going for 12 hours without a rest.

What should students thinking about a career in bookkeeping know about the job?

We probably deal with forty businesses, and every single client has a different package, so my advice would be take what you learn during your studies but be open-minded and malleable. Somebody that’s setting up a little retail shop might have £200 to spend on new advertising, whereas someone in the construction industry might have £1 million to spend. I can start talking ratios for a big industrial unit and the managing director will understand, but you’ll probably have to find a more everyday language for the lady that runs a local wool shop. Communication is key: if you can’t make a spreadsheet make sense to a client then there’s no point in doing the spreadsheet.

What aspects of the role might students be surprised by?

When you go into bookkeeping, you think you’re going to be talking to people that know know how to run a business, but they often don’t know as much as you’d expect. We have a couch in our office, and it’s like being a psychologist sometimes. A client will come in with a worry that can take you two or three hours to sort out, whereas the actual bookkeeping for them might take an hour a week. If you can’t get on their wavelength you won’t be able to have them as a client, so it really is all to do with communication skills.

What are the benefits of Continuing Professional Development (CPD) for a bookkeeper?

I can’t stress enough how important it is to keep up with CPD as a bookkeeper. We’re always on the internet or going on courses because the law and regulations change so much. We have some good accountants to call on when we don’t understand something ourselves, but they don’t usually have the time to give us the full story, so we need to be on top of what’s happening.

Where can AAT take you?

Check out AAT’s bookkeeping qualifications.

Find out more

How to win over staff without increasing salaries

Posted by & filed under Employers.

When it comes to keeping staff happy, salary is still the number one priority, according to the AAT Salary Survey 2019. But how can you keep staff happy with limited budget and resources?

Salary and core compensation package were also cited as the top motivation by 28% of respondents in a separate survey by B2B International’s Business & Marketing. But the key bit of information here is that work environment and atmosphere (24%) were also major contributing factors. This was closely followed by flexible working policies (21%), work-life balance, benefit packages and reputation (all 20%).

The main takeaway from these figures is that operating on a shoestring budget does not mean you’re doomed to lose your best staff; take a look at our alternative incentives below.

Give them birthday/special occasion days off

Alison King, managing director of Bespoke HR  says: “Giving staff a day off on their birthday or for something important like moving house is a simple but effective idea and fairly easy to manage with a good holiday calendar system.”

King recommends “including this in any recruitment marketing too, as it demonstrates your company’s commitment to caring for staff.”

Get staff involved in decision-making

Zoe Whitman, Founder of But the Books consultancy, says: “I always try and make sure my team know what’s happening in the business and what I’m working on. I try and involve them in any strategic decisions and keep them involved when we’re pitching for new work.”

Getting staff involved in strategic decisions helps them develop their knowledge and skills and makes them feel involved, Whitman believes.

Take them on holiday

If you do have some leeway with budget, then why not take your team on holiday, says Alastair Barlow FCCA, Founder and Partner at flinder accountancy firm. “We offer an all-expenses paid annual ski trip week where we discuss, share and work on our strategy – we call it #flinderTakesThePiste.”

The trip is a huge perk for employees and a brilliant way to reward them, says Barlow. “They get excited about it months beforehand and talk about it for months afterwards. We find it super valuable for engagement, motivation and team work.”

Run volunteer days

“Numerous studies have shown that employees, particularly the millennial generation, are motivated by a company’s ethos,” says King, of Bespoke HR.

“Those businesses with a strong corporate social responsibility focus tend to attract and retain the best talent. So running volunteer days for a charity or cause of their choice is a good morale boost and reflects well on the company.”

Start a mentoring scheme

“Identify the skills within your workforce and consider where these can be best shared, for example – a senior manager could offer a member of staff advice and guidance on career progression, whereas a graduate could offer insights into social media,” says King.

“Even if mentors and mentees only meet once every few months, mentoring has been shown to improve confidence, demonstrates a supportive working environment and enhances job satisfaction.”

Opt for a co-working space

Barlow, of flinder Accountants, says choosing a co-work space was one of the best things they ever did for the business.

“From a practical reason, it meant we could be out and about meeting clients all over London and then jump into one of the many other co-working spaces in the same group, grab a coffee and charge the Mac before our next meeting,” he notes. “It gave us both a quieter environment than a Starbucks to hold calls and also a great location to meet people too.”

It also gave them more flexibility. “Being based in a co-working space gives us that flexibility to upsize when we need to without the pains of long contracts. It means we can stay agile and that we don’t have to pay excessive rent for empty desks,” Barlow says.

Create a good working environment

Yoga yurts, break-out areas, ping pong tables, Friday drinks trollies and roof gardens are just some of the ways innovative ways employers have made their workspace an enjoyable place to be. Choosing the right location is also essential, says Whitman.

“As a fairly new business we do have a tight budget but a nice working environment wasn’t something I could compromise on for the team. I chose a modern Harbourside office with a good kitchen, a cafe upstairs and lots of natural light, over a much cheaper option because I felt the Harbourside space would give the team and real sense of pride about where they worked.”

Listen

Finally, don’t forget that listening is one of the most important things you can do and it doesn’t cost a thing.

“We recently ran a team survey to collate both quantitative scores but more importantly qualitative areas we can improve on. Listening to the team and implementing suggestions where possible goes a long way to keeping people engaged and motivated,” says Barlow.

In summary

Whilst salary is still a key driver for staff, there are many other ways to incentivise; from a team holiday with a potential corporate discount, to simply ensuring they feel heard. Ask your team what would best motivate them, and you might be surprised by the range of responses you get. Just taking an active interest in their happiness could be an important first step.

Read more on cultivating a positive working culture for staff here:

Could the UK go cashless?

Posted by & filed under Bookkeepers, Employers, Future of accounting.

Turkey plans to be entirely cashless by 2023. But such a top-level desire, in such a short space of time, brings considerable challenges. Should the UK follow suit?

Della Hudson is Director of Hudson Business Advice and author of The Numbers Business: how to grow a successful cloud accountancy practice. “I do like the idea of a cashless society, and I do feel we’re definitely heading in that direction. The danger is we go too fast and end up excluding a small group of people.”

That group might include the poorest in society, those who find themselves outside the system, and those who are less able or willing to be technologically up-to-date – such as some of the elderly.

“Some of those potentially excluded can’t get bank accounts for example,” Hudson says. “However, the banking sector is changing too – so there might be a push towards greater accessibility for those sectors.”

From cost to benefit

Hudson points to considerable progress from the ground-up in terms of businesses going cashless, in spite of bank fees acting as a potential barrier. Anyone living in a UK city, for example, will have noticed the occasional café, bar or restaurant becoming “card only.”

“There’s a sandwich bar I know,” she says, “that has gone cashless because they’ve seen how much better it is to get people through the payment process as quickly as possible.” Paying by cash “is the main thing limiting their capacity in the very busy lunch period.”

Businesses like this can work hard persuading people to pre-order, “but now that contactless is so fast, stopping cash payments – with all the associated delays of fumbling for cash, counting out change, opening and closing the till, totting it all up at the end of the day and taking the cash to the bank – it becomes more appealing.”

Visit the FSB for advice on going cashless with your business.

The benefits to SMEs go even further. “It saves on paperwork, as you can feed directly into Xero, Quickbooks or whichever system you are using. And nowadays, there are costs incurred in paying coinage into bank accounts; so that’s another consideration making going cashless a positive thing.” 

Better by a country mile

Alexandra Bond Burnett, MD of Blue Arrow Accounting makes the point that going cashless is becoming increasingly necessary, if not essential, in rural areas.

“Beneath my office there’s a stationers and gift shop. Being able to use products like iZettle and SumUp makes it so easy for small businesses – you can set up and get going, and it’s no longer the case that paying by card is going to penalise the SME.”

For the customer, such changes are attractive too because “you can make a small payment; previously, you would need to spend at least £5 to justify the retailer accepting your card.”

The notion that we need access to cash “is dying out fast,” Bond Burnett says. “While this is no bad thing in itself, it has been accelerated by the changing dynamics of banks – with local branches closing down and not being replaced by ATMs, it is becoming vital outside the cities.”

Challenger banks such as Monzo, Starling and Tide “are filling a gap that’s been created.”

Tax advantages

For both Hudson and Bond Burnett, whilst the Government is not actively driving the change towards a cashless society, HMRC are likely to be strongly in favour of it.

“Not having cash also means advantages in terms of anti-money laundering initiatives,” says Della Hudson; “you have a fully electronic audit trail, instead of a paper trail.”

For Alexandra Bond Burnett, “the ideal agenda for HMRC is that they are working towards a fully digital process for tax, with the intention of significantly reducing or eliminating the tax gap.” Currently estimated at 5.6%, tackling the tax gap is arguably HMRC’s prime motivation behind its considerable investment in Making Tax Digital.

And being cashless definitely helps. “This is a good thing,” Bond Burnett says; “we are now seeing 100% digital companies and 100% digital accountants increasing rapidly in number, and that’s just the start of things.”

Making the world go round

What about the impact of going cashless on accountants? Della Hudson laughs. “Anyone who has ever done incomplete accounts will know how to answer that! It simplifies our job because you will be able to confirm easily whether missing cash is in or out of account.”

It also helps commercially, Hudson says; “even if you consider yourself to be purely about compliance, all accountants have at least an element of advisory and we should help our clients do what’s right for them.”

As an example, Hudson offers the kind of client whose businesses are most likely to be affected by the move to cashless – those who use cash a lot such as plumbers, electricians and domestic engineers. “When you’re on the move, it was previously hard to manage non-cash payments. But now, you can generate a quote from your phone; do the work; press a button to turn it into an invoice; plug into your provider; and the customer is able to pay there and then.”

Finally, will it work in Turkey – and if it does, is this next for the UK? “In areas where computer literacy is highest,” says Bond Burnett, “that’s where the momentum will happen fastest. It’s essential to look after the people who fall through the cracks, however, and it will be interesting to see how Turkey addresses those problems.”

Della Hudson agrees: the bottom line is that “there are compelling reasons to go cashless, but we have to bear in mind those members of society who can’t.”

A cashless society brings with it some potential positives…

  • It can be a powerhouse for small, rural economies.
  • It is advantageous to the young, who feel much less attached to cash.
  • It is a key weapon in the fight against tax fraud and in reducing the tax gap.
  • And it should also help with cash flow for small businesses.

… and some potential issues needing further consideration…

  • Those who don’t like making electronic payments, or who do not have bank accounts, need to be looked after.
  • “Consider also charities and schools,” says Alexandra Bond Burnett, “who often raise money for good causes by bucket collections of small change. There needs to be some kind of concession put in place there.”

In summary

We’re slowly moving towards a cashless society from the bottom-up in the UK, with card-only SMEs becoming more widespread. Some rural communities have been forced into it through a lack of local branches/ATMs, but the efficient, paperless nature of paying by card is now outweighing the associated bank fee for many.

The main drawback of going cashless is that some people are still heavily reliant on physical money, and we have to ensure they can still function. Could your business go cashless, or is it already there?

Read Part 2 of this series where we ask, why do we still have cash at all?

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