Business

Why Outdated Accounting Practices Are Costing You More Than Time

posted by Chris Valentine

All too often we see small and medium sized businesses that are slow to embrace new technologies and change track to accommodate changes in the market. When businesses grow from a small to a medium sized company the owners are used to be thinkers and doers, however there comes a time when business owners need to know when to step back from the day to day to assess where their business is going and how it needs to adapt to meet their future goals and objectives.

When running a business it is important to regularly check in and review what is working well and what practices need to be updated. Falling back to ‘this is the way we’ve always done things around here’ just won’t cut it in this technological era of real-time action. Therefore these reviews are ever more important now with the continual advancements of technology, as technology has the ability to streamline and benefit business processes. Benefiting not just time effective business but also cost affect business.

Accounting practices are one part of the business ecosystem that has seen considerable updates recently and have effectively changed the landscape of this service offering. Changes such as automation and remote access for instance have freed up a great deal of time, however there are numerous companies that are yet to embrace these new ways of working.

However the ATO’s introduction of single touch payroll may just force their hand. Single touch payroll will be mandatory for all businesses from July 2019. Whereas, if you have twenty or more employees now it starts from 1 July 2018. This latest compliance from the ATO requires businesses to send all employee financial information to them every pay run, rather than it being at the end of the financial year. This new reporting requirement may forces older software packages to be updated with new software which accommodates and automates this process for businesses.

Although on first reading it may sound like it adds more time to process, with new software advancements it will actually save the business time, and therefore money. By streamlining these processes it frees up much needed time at the end of the financial year – which is generally a frantic time for any business. Plus as the ATO now holds this payroll information it also means that you no longer need to create and distribute new of year payment summaries for employees as it’ll all be available online through mygov.

This time saving gives financial departments and accountancy firms a bigger scope to help forecast and plan strategically for the year ahead rather than being bogged down with manual tasks. Forecasting is important financially as it allows businesses to look at previous trends in the business and help pinpoint resource needs in high or low periods. Furthermore from a planning perspective it enables accountancy firms to analyse the businesses most profitable clients and put in place strategies to either growth or convert other clients which resemble the characteristics of this particular type of client.

Forward thinking and planning is great for businesses, but don’t forget to look back and learn from where the businesses has come from and reflect on the good and bad of year financial year. There is always room for improvement. This could be in the shape of new technologies or software for the business, new hires or training and building capacity in house. However to have a true understanding of what you want from the next financial year, you have to understand your current footing. As after all, the best predictor of future behaviour is past behaviour.

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