In 2016 a major revision of the accounting requirements for leases is set to have a significant impact on huge swathes of industries doing business internationally who rely on leasing assets as a way of doing business. International Accounting Standards Board (IASB) now requires that all leases be reported on balance sheet as assets and liabilities. Generally Accepted Accounting Principles (GAAP) does not have the same requirement.
It’s interesting how over the years, companies make adjustments to the rules that always seem to work in their favor. Generally, the reporting transactions are accurate and legal, but may paint a different picture of the financial health of the company. As a lender or trusted advisor, it’s important to understand the shortcomings of the reporting system. This understanding is key to maintaining awareness of important issues that impact how cash flows through a company. Let’s look at a few problems within the three main sections of the cash flow statement. Cash generated from:
3) Financing activities
In a study published in late 2013 by Carl Frey and Michael Osborne of the Oxford Martin School, 47% of all US jobs are susceptible to the risk of automation by computer. Surprising, it’s not the jobs may you think.
A heavy portion of the jobs listed in the study as ripe for automation included jobs in the accounting and banking fields. The Future of Employment provided the accounting world with the catalyst it needed to evolve its services in an automated world. The accounting profession itself was analyzed to have a 94% chance of automation. While another common profession, loan officer, has an astonishing 98% chance of being automated. As shocking as it seems, the technology market has already set this prediction into motion with fantastic new tools being introduced every month. Products like Expensify, for expense reporting; T-Sheets, for automated timekeeping; and Finagraph, for automated financial analysis.
Just for fun I searched the Internet for trends in “accounting financial services.” I wanted to see how my target audience was viewing the shift in the industry from transactional to advisory services. My search revealed some interesting patterns. The one that stood out the most was the absence of small and mid-sized firms in the search results. I sifted through 5 pages of listings before finding a firm name that I didn’t recognize.
Don’t do it they said. You’ll damage the brand and reduce its value. People don’t trust free products. The list of reasons why you shouldn’t launch a free product is long. The scariest of course is “how will your company survive?”
But let’s image you answered the survival question and genuinely felt that your product could positively impact the world. The only thing between a noticeable change in the lives of small business owners and your product was letting them know you existed. It’s no small task, but it’s the biggest question in many entrepreneurs’ minds. How do I get my product in more hands? In many cases similar to ours, the answer is to give it to the people who can benefit the most.