In search of a work-life balance
After a well-earned break for most, Christmas and the biggest rush of the entire year seem to be a very distant blur! Yet some of us are still finding it tough to get back into routine, with that seemingly endless to-do list.
Christmas is a wonderful time as it pushes us to have some much-needed time off and recharge, which for some does not come often.
While I admire those with a good work ethic, I believe that balance is the key to happiness and good health.
So how do we get the right balance?
We must be able to adapt. If you think about your work/life balance as a pair of scales you want the weight to be equal - but for most it never is, Something has to give in order to coordinate balance.
Most balance relationships, kids, hobbies, while chasing a career, Some have no time for any of the above other than the career.
The biggest mistake most people make is over committing, and not using time wisely!
Getting itchy feet, making a change to please others, saying yes too often whether it’s starting a new project, studying, hobbies, meeting up with loved ones, we are always in demand but now is the time to review, most of us feel we can’t say no which is half the problem....
There is always an alternative solution… time to re-think our answers!
- I can’t stay late tonight instead ask can I please extend that deadline until Friday?
- I cannot start that new project yet (Can we meet about this next week instead?)
- I am not going to send one more email (Set an alarm, a reminder to switch off emails at 5:30)
- I’m not going to be able to attend that meeting can one of my team go instead?
- I can’t commit to plans that weekend
What is the bittersweet?
The 'bittersweet' is the hard work that provides results but only to a degree - money and achievement, for instance. B
But let’s take a look at Elon Musk, CEO of Tesla. He's a very wealthy, clever man. But working 17 hours a day with millions in the bank is ludicrous!
There is no balance here at all... it is just work, work, work and the result of this is his health has suffered.
Overwork has been proved to decrease productivity and can even shorten your life span!.
Next time you find yourself with that inner doubt and you are questioning whether you can say yes or no, don’t just commit and please others by saying yes. Think of a solution, an alternative - and give yourself the time you deserve.
After reading the above, are you questioning your work life balance? Or maybe you have already conquered this? Have you got any advice for others?
Please comment below!
Oh and here's an article about why working a 17 hours a day is bad for you. Right HERE
Accountants speak volumes
Lots of books come across my desk, but in all honesty they are for the most part rubbish, written by people with an overblown sense of their own importance and no track record in the business whatsoever. Despite this, they insist that their way is the right way and that if you follow their strictures then untold wealth and fortune will follow.
That said, a few books come my way from writers that I know to have been successful, and who don’t pontificate but simply try to impart knowledge that accountants in practice may find helpful. I’d like to mention a couple that I think are really worth taking the time to read.
First up is a book by Phil Sayers, called ‘It’s All About The Value’. Some of you might know Phil from his time at Clear Books, and most likely will have met him at Accountex or you may know him from his work on the Council of Basda. His book is subtitled ‘Improving Sales Effectiveness for Small Businesses’, so initially you may well think it’s of no use to accountants. But you’d be wrong. Accountants in practice need clients to survive – that’s a given. They don’t appear by magic after all, and this little book will help accountants no end. Most of us are not salesmen; we studied accountancy and most likely we have a natural dislike of hyperbole and salesmen simply because of our background. The only sales techniques we learned were what we picked up at our boss’s knee, as it were, and we had drummed into us from an early age that “sales is vanity, profit is sanity”. Referrals are how we get our work – we don’t have to have a sales pitch because our client has done that for us – and most of us frankly aren’t very good at it, as a quick glance at most websites will confirm.
If only salesmen read this book that will be a shame, because this book will help everyone who deals in services as well as products, as Phil points out. It covers so much, from working out who we are trying to sell our services to, to holding that initial meeting or making that first phone call through to negotiations and handling objections. It even covers CRM systems and hiring sales people. I especially liked the chapter on writing quotes and proposals, which gives a great and logical layout to follow. I learnt a lot from it, and I think all accountants will find something in it to help. ‘It’s All About The Value’ is available from Amazon, but I have a few copies available to distribute free so if you want one just get in touch.
The next book I came across was ‘The Numbers Business’ by Della Hudson, who is a lady I have a lot of time for. She grew her practice from scratch in Bristol in 2009, selling up in 2018, using cloud-based applications at the heart of the practice. She continues to work in accountancy as a speaker, writer and consultant, and many of you will have come across her on social media. This is another great book that I thoroughly enjoyed, most likely because at its core it’s an honest and true reflection of a real small practice with real small business clients that all small practices can relate to.
The term ‘manual’ is used often in the publicity for this book, which I think does not do it justice. For me a manual is something that should be followed to the letter, and while any accountant in practice could do that if they wanted I think more will benefit by firstly having a thorough read of the book from start to finish and then thinking about how each chapter relates to their own practice, and what if any ideas they can implement. I doubt very much there will be one reader who does not find something that they can use in their own practice – it’s that good and it’s that simple.
I especially liked the chapter on becoming a trusted adviser, because it is something that the world is shouting at us to become. As Della says, “not all accountants enjoy this type of work, nor do we have the necessary skills”. However, she does point out that recognising this does not mean that we pass up the opportunity, and she explains how this can happen.
The sub-title of the book is ‘How to grow a successful cloud-based practice’, and it covers everything that you will need to think about if you are to make a success of your practice. Yes, the focus is on cloud, but in her chapter ‘Choosing your software’ there is a good list of what is available – it’s not all cloud and it’s not all Xero, either.
This is a very good book that is also available to buy from Amazon, but again I have a few copies so it’s first come, first served if you want a free copy. Please get in touch via email – [email protected]
If you are in practice, or if you are thinking of starting out in practice, then both these books will help you get the very best of what you do.
Accountants embrace the future
Accounting automation is something that’s fascinated me ever since I qualified in 2011. I’ve seen many doomsday scenarios predicting an end to accounting as we know it. And to an outsider, accounting must be ripe for automation because it’s just a case of adding some stuff up, right?
When I left PwC, where I trained as an auditor, I moved into the tech start-up world. ProConfirm, my first business, was a platform to automate bank confirmations. We sold ProConfirm in 2014 and I had some time to reflect on the future of our profession and whether robots would be taking over soon.
I now run my second accounting technology company called Coconut. There is no doubt that technology will drive some massive changes in accounting over the coming years. And, overall, I think this will be a good thing for customers and accountants.
But through all of this what I’ve realised is that there’s no way accounting will be automated in the way that outsiders expect it to be.
The human touch
I’ve spoken to thousands of self-employed people and small business owners and accountants provide something that computers are a long way off from replicating: peace of mind.
Having a human to talk to, someone who understands how you’re feeling, has experience built over many years and professional judgement, gives customers ultimate reassurance. Experience lets you navigate complexities that machines just can’t conceive of, no matter how smart.
That’s why accountants are the go-to business adviser.
It’s just not adding up
When we were starting Coconut we asked ourselves: if it’s the advisory work that clients crave, how can we do more of it? What we found is that there’s lots of manual preparation and cleaning up work to do. And this is under attack from the outside because clients don’t see the value. It boils down to:
- Gathering customer data, cleansing and preparing it.
- Communicating with the client to understand context of the transactions.
- Making lots of different tools and systems talk to each other.
Automation starts with metadata
We looked for ways of solving this problem and decided to start with the data. We identified that transaction metadata holds the key to automation. Metadata is information that describes the transaction in more detail. As traditional banks don’t pass metadata on to the customer it’s hard to understand the tax context of a transaction automatically.
So the starting point for Coconut was to create a business current account, giving us transaction data from the source, including the rich metadata.
Changing customers’ experiences
We also realised that a lot of work is created by putting off the bookkeeping until it absolutely has to be done. We wanted to find a way of interacting with the customer when a transaction happens.
This is really hard to do with traditional banking data, but by building on a smart current account we see the data in real time, making it much easier.
The instant interaction changes bookkeeping from something retrospective into something instant because we can:
- Remind the customer to take a photo of the receipt when it’s in their hand.
- Use the metadata to make a judgement about what tax category the transaction relates to.
- Prompt the customer to check, giving them relevant guidance increasing the chances that it’s right.
- Make sure everything is ready to go, along with notes, for when any review or filing needs to be done.
To make this to happen we have built a proprietary process to understand the tax context of a transaction. We’re finessing this all the time to improve accuracy. And it means within a few seconds the bookkeeping for a transaction is done and stored in a neat system ready to go.
But if the bookkeeping is done, what next?
Our aim is to free accountants up to provide insights and advice to clients. With very little effort both parties can concentrate on the hard stuff, eliminating the mundane and repetitive. The objective is that accountants can do more advisory work or expand their client portfolio.
Working with the UK’s accountants
We’ve engaged closely with customers from the beginning and it’s meant we’ve created a product that they love. In the same way, partnering with the accounting community on our accountant tools is really important.
Elaine Clark, the founder of Cheapaccounting.co.uk, is one of our key advisors. She is supporting with development of tools for independent accountants and networks like hers. We’re also very excited to be working with Tony Margaritelli and the ICPA and will be making sure ICPA members get priority access to our products – see you all at Practice Evolution 2019 conferences where I’ll be sharing more!
What Coconut does
The Coconut product is a current account for sole traders that they can open in a few minutes from their phone, available on iOS and Android.
Coconut gives business owners guidance about the tax rules, categorises their income and expenses, and gives a forecast of their tax bill. It also has an invoicing tool, which will match off invoices automatically to the payments into the account.
Accountant Portal
Alongside our customer accounts, we’re building an Accountant Portal. The aim is to give accountants a window into the transactions your customers are making on their Coconut accounts. You’ll be able to see transactions, receipts and notes in a really accessible format. You’ll be able to download them easily. We also want accountants to be able to communicate with the client through the portal to make the bookkeeping process much more efficient.
Want to get involved?
Our aim is to develop the next generation of tools that really help accountants service their clients. If you’d like to get involved, have a chat or just want more information, please get in touch by going to getcoconut.com/icpa
Sam will be speaking at the ICPA’s 2019 Practice Evolution conferences in London (27 June) and Manchester (4 July). For details and to book a place go to https://practiceevolution.co.uk/
FRS 102: How to account for government grants
Government grants are dealt with in FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland in Section 24 Government Grants.
Section 24 of FRS 102 deals with the accounting requirements for all government grants.
The term ‘government grants’ is defined in the Glossary to FRS 102 as: “Assistance by government in the form of a transfer of resources to an entity in return for past or future compliance with specified conditions relating to the operating activities of the entity.
Government refers to government, government agencies and similar bodies whether local, national or international.”
Recognition and measurement
A reporting entity cannot recognise a government grant until the recognition criteria has been met. In order to meet the recognition criteria there must be reasonable assurance that:
- the entity will comply with the conditions attaching to the grant; and
- the grants will be received.
Accrual and performance models
An entity receiving (or expecting to receive) a government grant that meets the recognition criteria laid down in paragraph 24.3A of FRS 102 is required to recognise the grant based on the accrual model or the performance model. This is an accounting policy choice and must be applied on a class-by-class basis. Note – micro-entities reporting under FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime can only account for grants using the accrual model.
Accrual model
The accrual model of grant recognition will be the most familiar to accountants. This model requires the grant to be classified as either a revenue-based grant or a capital-based grant.
Grants which relate to revenue shall be recognised in income on a systematic basis over the periods in which the entity recognises the related costs for which the grant is intended to compensate.
Example: Capital-based grant
Autumn Ltd (Autumn) has purchased a new item of machinery for £100,000 outright in cash, which has an estimated residual value of £nil at the end of its useful economic life. The machine is being depreciated in accordance with the company’s accounting policy for such equipment, being ten years’ on a straight-line basis with a full year’s depreciation charge in the year of acquisition, but none in the year of disposal.
Summer applied for a government grant towards the cost of this asset and the government have confirmed that they will meet 20% of the cost of the equipment in the form of a grant (i.e. a grant of £20,000). This has been received by the company two weeks’ after the purchase of the machine.
The entries in the books of the company in respect of the new machine and the grant are as follows:
Purchase of the machine
Dr Property, plant and equipment additions £100,000
Cr Cash at bank £100,000
Being purchase of new machine
Dr Depreciation expense (profit and loss) £10,000
Cr Accumulated depreciation (balance sheet) £10,000
Being depreciation of new machine in year 1
Government grant
Dr Cash at bank £20,000
Cr Deferred income £20,000
Being initial receipt of the government grant
Dr Deferred income £2,000
Cr Profit and loss account (other income) £2,000
Being 1/10th of the grant released to profit or loss
It should be noted that paragraph 24.5G of FRS 102 specifically prohibits the value of the capital-based grant from being deducted from the cost of the asset (i.e. Dr Bank, Cr PPE additions) and hence recognising the grant in profit and loss by way of reduced depreciation charges.
This is because such an accounting treatment is incompatible with company law as the statutory definitions of ‘purchase price’ and ‘production cost’ make no provisions for deductions from such amounts.
Performance model
The performance model works by allowing a company to recognise a grant immediately in profit or loss; however, there are certain criteria that have to be considered as follows:
- A grant which does not impose specified future performance-related conditions on the recipient can be recognised in income when the grant proceeds are received or receivable.
- A grant which imposes specified future performance-related conditions on the recipient is recognised in income only when the performance-related conditions are met.
- Grants which are received before the revenue recognition criteria are satisfied are recognised as a liability.
Example – Performance-related conditions met
Winter Ltd has set up a new branch in a deprived area of the country and has an accounting reference date of 31 March each year and chooses to apply the performance model of grant recognition. In order to entice businesses to set up operations, the government have introduced a scheme whereby they will provide a grant to the company once certain conditions have been met. The conditions are as follows:
- The company must be trading to full capacity by 31 December 2018.
- The company must have successfully employed at least 150 people on a full-time basis by 31 January 2018.
- The company must take on at least 25 people under the age of 25 on an apprenticeship scheme.
The company successfully achieved all the conditions imposed on them by the government and the grant was duly received on 26 March 2018.
The financial controller is unsure whether to recognise the whole grant in profit or loss or defer it in the balance sheet.
The company has complied with all its performance-related conditions imposed on it by the government where the grant is concerned. Provided none of the grant is, or may become, repayable in the future, the entire grant can be recognised in income for the year-ended 31 March 2018.
HMRC's MTD pilot sparks software momentum boost
IRIS is seeing an uptick in momentum for the HMRC Making Tax Digital (MTD) pilot as requests for the software group's VAT Filer increase to over 100 per week.
Since its launch last month, the UK’s leading accountancy software provider has received over 400 requests for its ‘bridging software’. It can only be used if accountancy practices have registered for the HMRC MTD pilot. IRIS has also seen an increase demand for its KashFlow and IRIS Snap products, which also streamline MTD compliance.
Nick Gregory, chief product and marketing officer for IRIS explains, “The number of requests for these products reflects the appetite from firms wanting to join the HMRC MTD pilot. It also shows accountancy professionals are talking to clients before the deadline to ensure they are prepared ahead of the new legislation.”
Bridging software allows the required VAT values to be easily imported from various sources and submitted to HMRC for compliance with MTD.
IRIS VAT Filer automatically connects to HMRC and retrieves client data, such as previous submissions made under MTD, current VAT obligations, liabilities due and payments already made. As a result, keeping track of clients’ submissions, payments and any amounts outstanding is much more straightforward. VAT Filer is included in IRIS as part of the subscription.
IRIS has published a free guide, Making Tax Digital: Setup Guide for Agents. This highlights the information needed to set up an account and screen shots to show each step of the process.
MTD VAT pilot takes a huge stride
It's happening! Half a million UK businesses can now sign up to the HMRC's making tax digital for VAT pilot.
Another 100,000 will be able to join by the end of the month.
That's ahead of next April when about a million businesses registered for VAT with a taxable turnover above £85,000 will need to keep their VAT records digitally and file their returns using MTD-compatible software.
This significant step for the whole MTD programme was announced online yesterday.
Join the pilot as soon as you can
HMRC advises: "Eligible businesses and agents shouldn’t leave preparations to the last minute and are encouraged to join the pilot as soon as they can."
More and more businesses use digital tools every day to help them operate – tax shouldn’t be different. This is a major step towards bringing VAT into the 21st century.
Theresa Middleton (pictured), director for Making Tax Digital for Business, adds: "Millions of people are already banking, paying bills and interacting with their suppliers and customers online. Using digital tools to help businesses manage their business income and expenses and get their tax right builds on this momentum and will also help them get more control over their finances."
Background information
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world and Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right
HMRC has updated its guidance and produced a series of videos to help people make the leap into digital, including how to create an agent services account. Loads of info HERE.
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Video: how can accountants scale the value ladder?
Accountancy business mentor and networking expert Itzik Amiel will be delivering two keynote sessions at Accountex 2018.
Check out the video preview of Itzik's keynotes here.
Weekly Insight: AI is the way forward for accounting
Written by Ian Moss. Welcome to Accountex North's Weekly Insight Number 3 and congratulations on reaching February, the end of another self-assessment-crazy January. But don't worry. There's plenty more fun on the horizon: Brexit rumbles on; the GDPR deadline looms; the spectre of automation/Artificial Intelligence hovers menacingly in the background.
On AI, I spotted this headline in Forbes. "Why Artificial Intelligence Is The Future of Accounting". This statement seemed to run counter to a lot of robot scare stories I've come across since taking up my role as Accountex editor three weeks ago.
The author of a new study, Jean Baptiste Su, VP and analyst at Atherton Research, reckons: "More than most other industries, accounting hasn’t seen much innovation since the creation of double-entry bookkeeping - a process of recording both profits and losses - and considered one of the greatest advances in the history of business and commerce. That was over 500 years ago!"
Opportunities and serious challenges
He adds: "We expect that by 2020, accounting tasks - but also tax, payroll, audits, banking - will be fully automated using AI-based technologies, which will disrupt the accounting industry in a way it never was for the last 500 years, bringing both huge opportunities and serious challenges." Sound familiar?
And it's at this point that I realised just how many of these AI articles come equipped with a familiar rider, too. It goes along the lines of... machine learning efficiency needs to improve to avoid errors ... in order that automation can fulfill its promise. When it does, it'll be OK because accountants can take on a more advisory role.
All this is bound to become clear. One day. What does seem pretty clear to me now, though, is that there is a massive difference between automation and intelligence... artificial or otherwise.
And this seems to be overlooked by many observers in the field.
A way to go on GDPR
About two-thirds of businesses worldwide are not ready for the arrival of General Data Protection Regulation, which, in case you didn't know, is on 25 May.
But worry not... that's the headline figure from an EY survey. In Europe that figure rises to nearly two-thirds of companies have compliance plans in place. That's good news, as far as it goes. But that still leaves a third with no strategy...
Called to account on diversity
Diversity and gender equality are big news in so many areas of society at the moment. (Unless, of course, you are the BBC, where there is "no evidence of gender bias".)
Meanwhile, big accountancy firms PwC (they carried out the BBC gender survey), KPMG and EY are among the top 100 inclusive employers, as ranked by LGBT charity Stonewall.
Fiona Wilkinson, ICAEW vice-president, says, “Diversity is a powerful force for good. We know that businesses benefit from strong diversity and inclusion policies and practices that help both attract the best talent as well as a diverse range of clients.
"I urge member firms to do more to promote equality and diversity in the workplace and, whatever their size, to consider applying to Stonewall’s Index.”
And finally...
Drum roll... Fanfare ... Party poppers! It's time to look at the top of Accountancy Age's Financial Power list for 2018. And at number one in the top 50 folk who'll have the biggest influence on accountancy this year is ... Brexit Secretary David Davis. Oh dear.
If you have any comments or content ideas for us here at Accountex, please let us know in the box below or drop me a line at [email protected]