By Nick Levine Run your businessAccountants can change the way businesses lead27 Sep 2016 Rapid changes to technology, the macro economic landscape and compliance now mean that a long track record of success does not necessarily act as an indicator of future performance. Companies, which can innovate quickly, are able to challenge legacy businesses, brand names and disrupt business models.A pertinent example of this is Kodak, which was set up in 1888, and employed around 145,000 staff members at its peak. In 2012, against the backdrop of digital photo sharing app Instagram (with a staff headcount of 13) being purchased by Facebook for $1 billion, Kodak filed for bankruptcy.Accountants, in advisory roles as well as those practicing in industry, are well-placed to help companies navigate changes due to their experience working across different industries, deep sector knowledge, and underlying understanding of how different business models work.Interpreting data through cloud technologyThe increasing adoption of cloud accounting software is now giving accountants access to real time data for the first time. This is perhaps the greatest factor giving accountants the ability to pro actively advise on changes impacting on businesses.By seeking out and helping interpret trends in data, accountants can partner with other departments in the business in order to educate them about how changes to financial KPIs can act as an indicator of a failing or successful business.Additionally, most cloud accounting providers (QuickBooks, Xero and Sage One) have their own marketplaces of add-on partners. These enable third-party software integrations, and are inclusive of a number of functions including CRM, time tracking and marketing.These enable accountants to have insight into operational, as well as financial data. Cumulatively this insight gives accountants the ability to lead and advise on business decision-making, which can have a material impact on the overall well being of the business.Macro economicThe decision to leave the EU on 23 June created a raft of changes, and uncertainty, for business across the whole of Britain.Certain factors, such as the weakening of sterling have already had an effect on businesses that export overseas and purchase services or components from abroad for their supply chain.Currency movements can have either positive or negative implications for businesses, depending on their individual circumstances.A CBI industrial trends survey released in August revealed that the books of 505 of the UK’s largest export companies had risen to their highest levels since 2014.However, the implications of currency movements will not benefit all businesses. Anna Leach, head of economic analysis at CBI said, “The pound’s weakness is a double-edged sword as it benefits exports but pushes up costs and prices.”Accountants are likely to be the only people within businesses to have the nuanced understanding of how currency movements need to be navigated. They may choose to purchase a forward contract to lock in currency costs.Additionally, these changes will need to be viewed through a commercial lense as changing the prices of goods and services could increase or weaken demand, and effect gross and operating profit margins.Navigating complianceFrequent changes to accounting legislation and tax means that businesses must make a concerted effort to keep on top of compliance administration, and be aware of the effect which this can have on their underlying profitability. Fines will also accrue if businesses file late or make errors.New UK GAAP standards, with optional elements, need to be carefully considered by accountants due to the individual needs of the companies they serve. For example, FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime allows qualifying companies to report as “micro entities.” Whilst these filing requirements require reduced disclosures, and are less arduous, reporting under this framework may make it harder to transact with suppliers and other stakeholders due to less information being available to be assessed on credit worthiness.Forward thinking of accountants will also need to keep themselves up to date on the proposed Making Tax Digital, which plans to overhaul the existing taxation system for the digital age. Accountants in industry will need to navigate these changes to make sure that they do not result in lost revenue/unbilled time, whilst those working in industry will need to be aware of the operational effect that this will have on their business.Understanding the drivers of new business modelsSocial media, the internet and wider use of smart phones mean that longstanding business models are being disrupted.Freemium, the sharing economy and subscription commerce are all terms that have only come into being over the last decade.Dollar Shave Club, a California based Razor Company which was started in 2011, was sold to Unilever in July for $1 billion. Dollar Shave Club were pioneers in subscription commerce, signing up consumers to a recurring monthly order. Their new owners, a fast moving consumer goods company dating back to the 1880s, were not able to innovate internally fast enough to develop their own subscription commerce brand.Due to being able to understand the fundamental drivers of these disruptive businesses models (i.e. cost base, break even analysis, churn rate) accountants are able to put together financial models to demonstrate whether a business case can be made for their adoption.In order to be able to offer the best advice on business, accountants should make efforts to be briefed on macro economic factors, alongside development of their data analysis skillset. Additionally, those in industry should frequently engage with different business functions in order to have a big picture understanding of how their business operates. Nick Levine is a chartered accountant and freelance journalist, with a background in fin-tech who has written for Accounting Technician magazine.