Business
THE HISTORY OF THE BOOKS AND THE FUTURE OF ACCOUNTING
Accountancy has been a feature of business for thousands of years but, like almost every single business process, it has evolved significantly over time. As Winston Churchill once said ‘the farther backward you can look, the farther forward you are likely to see’. So what are some of the accounting milestones throughout history, and are we set to see another in 2015?
Mesopotamia
Accounting is nearly as old as the concept of money itself; its early development dates back more than 7,000 years to ancient Mesopotamia. People used clay tokens to trade goods and would then document their expenditures and goods received and traded.
It was clear even at the birth of money that having a comprehensive view and strategy of finances was vital. Regardless of quality of stock, service or sales tactics, systems needed to be set in place to keep an eye on the financial health of the business. Few would doubt this remains true today.
Paciolo
Medieval mathematician Luca Paciolo is often viewed as ‘the father of accounting’, as he laid the foundation for how double-entry bookkeeping is applied today in his notable work, a ‘Review of Arithmetic, Geometry, Ratio and Proportion’ in 1494.
Essentially the historical origin of debit and credit, Pacilo developed this method of accounting that was already being used by merchants in Venice during that period. He worked to formalise and publish the theory which business use even today.
Ability to scale
Accounting progressed into an organised profession in the nineteenth century. The growth of large scale manufacturing and logistics demanded reliable accountancy and the profession became an integral part of the business and financial system.
As a result, accountancy practices developed innovative ways to do their jobs faster. In 1885, William Burroughs invented the first adding machine, which accountants could use to reduce the time it took to make transactions. In turn, this freed them up to focus on growing practices and diversifying services.
IT
Technology has changed business operations forever. From an accounting perspective when VisiCalc, the simple spreadsheet programme, was introduced in 1978, it changed the industry. Although basic software, it took 20 hours of work and turned it around in 15 minutes.
It’s been 40 years since VisiCalc was released and it laid the path for technology to totally transform an industry.
So what’s next?
Fast forward a few years and 2015 might well witness another milestone in the history of the books. There’s a strategic shift taking place within accounting practices globally, one that’s being driven by clients who are demanding additional, value-added services from accountants.
Recent research Intuit conducted showed that 69% of UK SMEs now expect their accountants to be financial advisers, while 62% say that accountants need to introduce new offerings and strategic services in order to move into a valued adviser position. As a result, 71% of accountants expect their role to evolve into that of a financial adviser in the next five years.
So it seems that the next stage in the illustrious history of the books is for accountants to add consultancy and strategic advice to traditional number crunching. Accountants are, of course, evolving their practices and many place these consulting services amongst their most promising revenue streams.
At the heart of this shift is cloud computing. Consider instant access to clients’ financial information anywhere on the globe, real-time collaboration and an ability to complete processes in record time… all help accountants get closer to their clients while freeing up resource to focus on new services.
Cloud and mobile go hand in hand. Mobile continues to increase the ease with which accountants interact with clients, with consultancy available any time, any place and at the touch of a button in the hand.
These changes represent a major evolution in the way we manage the books and 2015 will see a tipping point for cloud adoption and an even greater appreciation of the opportunities it presents. Practices are set to reap the rewards through greater efficiency, a wider skill set, a deeper role in their clients’ businesses. These in turn will drive up the value of the consultancy, resulting in higher profits, higher gross recurring fees and more capital value.
The advances in accounting have been spread out over thousands of years but we’re on the precipice of the latest major shift, enabled by tech and the resulting change in the way accountants view their role within clients’ businesses. With any change comes opportunity. So the challenge for accountants in 2015 is to embrace this growing trend and make it profitable for their practice.
Business
UK delays review of business rates tax until autumn
LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.
Many companies are demanding reductions in their business rates to help them compete with online retailers.
“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.
Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.
($1 = 0.7152 pounds)
(Writing by William Schomberg, editing by David Milliken)
Business
Discounter Pepco has all of Europe in its sights
By James Davey
LONDON (Reuters) – Pepco Group, which owns British discount retailer Poundland, has targeted 400 store openings across Europe in its 2020-21 financial year as it expands its PEPCO brand beyond central and eastern Europe, its boss said on Friday.
The group opened a net 327 new stores in its 2019-20 year, taking the total to 3,021 in 15 countries. The PEPCO brand entered western Europe for the first time with openings in Italy and it plans its first foray into Spain in April or May.
Chief Executive Andy Bond said its five stores in Italy have traded “super well” so far.
“That’s given us a lot of confidence that we can now start building PEPCO into western Europe and that expands our market opportunity from roughly 100 million people (in central and eastern Europe) to roughly 500 million people,” he told Reuters.
To further illustrate the brand’s potential he noted that the group has more than 1,000 PEPCO shops in Poland, which has a significantly smaller population and gross domestic product than Italy or Spain.
The company, which also owns the Dealz brand in Europe but does not trade online, has already opened more than 100 of the targeted 400 new stores this financial year.
Pepco Group is part of South African conglomerate Steinhoff, which is still battling the fallout of a 2017 accounting scandal.
Since 2019 Steinhoff and its creditors have been evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.
That process was delayed by the pandemic, but Steinhoff said last month that it had resumed.
“The business will be up for sale at the right time. It’s a case of when, rather than if,” said Bond, a former boss of British supermarket chain Asda.
Pepco Group on Friday reported a 31% drop in full-year core earnings, citing temporary coronavirus-related store closures.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were 229 million euros ($277 million) for the year to Sept. 30, against 331 million euros the previous year.
Sales rose 3% to 3.5 billion euros, reflecting new store openings.
($1 = 0.8279 euros)
(Reporting by James Davey; Editing by David Goodman)
Business
Fashion-focused livery launch reveals new colours for Gasly, Tsunoda in 2021
Scuderia AlphaTauri debuted their colours for the 2021 Formula 1 season as drivers Pierre Gasly and Yuki Tsunoda unveiled the team’s new look with the livery for their AT02 racecars. The setting was a fashion-forward launch in the all-new showroom of AlphaTauri, Red Bull’s premium fashion brand.
Salzburg (AUSTRIA) – Formula 1 team Scuderia AlphaTauri served up a stylish preview of the new F1 season with a presentation of its 2021 livery alongside key looks from the upcoming Autumn/Winter 2021 collection of Red Bull’s premium fashion brand, AlphaTauri. The launch – held at AlphaTauri’s new showroom in Salzburg, Austria and presented digitally – marked the first time that drivers Pierre Gasly of France and Yuki Tsunoda of Japan have appeared together as teammates.
After a successful first season racing in AlphaTauri colours, the Italian outfit is looking to challenge the top of the ultra-competitive midfield in 2021, and the two young drivers have been assigned clear-cut roles. Gasly is Team Leader. The 25-year-old, who made his Formula One debut with the team in 2017 under its former name, Scuderia Toro Rosso, has earned two F1 podiums. During the 2020 campaign, Gasly’s maiden win at Monza was a defining moment for him and the team under its new name.
Tsunoda, 20, is the first Japanese driver to race in F1 since 2014, his promotion coming off the back of a fast, four-season trajectory from winning the 2018 F4 Japanese Championship and finishing third in the 2020 FIA F2 Championship to entering the top-level ranks this year. Expectations are high for his rapid style of learning to complement the experience of Gasly.
“The decision to go for Pierre and Yuki in 2021 was taken because Scuderia AlphaTauri’s philosophy is still to give talented young drivers from the Red Bull Junior Program the opportunity to step up to F1 and to educate them – this is why Yuki now gets his chance,” explained Team Principal Franz Tost. “With Pierre on Yuki’s side we have an experienced driver, who can help our Japanese rookie to develop faster, but at the same time we can aim for good results. I think this pair is the best possible scenario to achieve both our targets, and I’m also confident this will be a successful one.”
In 2020, Scuderia AlphaTauri won best livery by a landslide, and the team’s all-new, matte blue and white racecar livery took center stage with the drivers at the fashion event, anticipating the 2021 model that will debut at pre-season testing in Bahrain on 12 March. The test is the precursor to an unprecedented 23-race schedule, and in preparation for the demanding calendar both drivers have spent time at Red Bull’s Athlete Performance Center for intense fitness testing.
“I’m ready to take on the role of team leader. Yuki is a very quick driver, and he will help us move the team forward – we will work together to achieve that,” said Gasly, the team’s all-time top points scorer. “I really believe last year was the team’s best in terms of the way it worked, the development, the performance and the way it managed the race weekends. I’m always hungry for more, and I’m sure we can achieve great things in 2021.”
Tsunoda, who was honored with the Anthoine Hubert Award for best Formula 2 rookie in 2020, added, “I’ve been lucky enough to spend some time with Scuderia AlphaTauri ahead of the season, so I’m already developing strong relationships and learning a lot from them – including Pierre, who is an incredible talent. My main goal is to learn quickly and deliver results as soon as possible, and I’m really excited to get started.”
The launch at the AlphaTauri Showroom not only gave Gasly and Tsunoda a preview of the AlphaTauri Autumn/Winter 2021 fashion collection, but the drivers had the chance to select their new off-grid looks ahead of the season start.
Ahmet Mercan, CEO AlphaTauri, summarized: “This is a triple reveal at a unique point of time: a new AlphaTauri Showroom where fashion meets F1, a first look at the AW21 AlphaTauri collection and the unveiling of the new Scuderia AlphaTauri F1 livery and driver pairing.”
Scuderia AlphaTauri fans don’t have long to wait for racing action: The FIA Formula 1 season kicks off at the Bahrain Test on 12-14 March, in preparation for the Bahrain Grand Prix on 28 March.
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