However, while 59% of business leaders reported having a “zero-tolerance” policy towards racism, only 18% of employees claim their leaders have openly acknowledged existing inequities – according to new research by Henley Business School.

With more than 3 out of 4 job seekers and employees (76%) reporting that a diverse workforce is an important factor when evaluating companies and job offers, it is clear that companies need to champion diversity and inclusion because it is morally right and also because it is important for business success.

Deborah Gray outlines some key tips to help a business design a recruitment strategy that attracts a broader range of talented individuals while expressing the firm’s commitment to its values.

Make your adverts inclusive

The latest research from LinkedIn suggests that while both genders browse jobs online in a similar way, they apply for them differently. More importantly, the study found that male-orientated job descriptions, can actively dissuade women from applying to jobs, and this is particularly prevalent within the tech sector.

As a result, employers should avoid the temptation of recycling an old advert from previous years and deploy gender-neutral language in their communication. Therefore, it’s essential that the language used in job adverts is inclusive, avoiding nuanced biases and avoiding blanket terms such as ‘team player’ or ‘charismatic’ in favour of accurate descriptions of competency.

Equally, firms need to avoid using jargon that might be deemed unnecessary – phrases such as KPIs, SLAs and P&L. While potential recruits with experience may well understand these acronyms, talented young people, particularly those coming straight from university, may be less aware of these terms and corporate jargon.

Firms should only include skills that are immediately vital, while clearly expressing their commitment to improving diversity. It is also important to constantly review applicant demographics to continually monitor when adverts might be discouraging applicants.

Don’t let biases go unchecked in the interview process

Unconscious bias goes some way to explain why many cross sections of society are underrepresented in senior management teams and boardrooms. For example, a study from researchers at Nuffield College’s Centre for Social Investigation in 2019, which altered nothing but applicant names that were based on their ethnic background, found that while 24% of white British applicants received a call back from UK employers, just 15% of ethnic minority applicants did.[1]

Moreover, compared to White British applicants, people of minority heritage had to make a considerably higher number of job applications before getting a positive response, including those from Pakistan (70%); Nigeria and South Asia (80%); Middle East and North Africa (90%).[2]

It is important to also be wary of unconscious gender bias when screening candidates. Unfortunately, gender bias in hiring persists today, with a recent UN report finding that almost 90% of men and women hold some sort of bias against women and a look at the FTSE 100 showing that there are more CEOs/chairmen called John than there are women.[3] Just 10% of executive-level roles in the tech industry were held by women in 2020 – highlighting that there is still a clear need for change.[4]

Interestingly, a 2016 Harvard Study found that employers who interviewed candidates in a group setting were far more likely to eliminate any gender biases inherent in an individualised hiring process.[5] More diverse representation will help workers feel better accepted and therefore more confident in entering different sectors. Hiring more women into senior leadership roles will positively influence younger female workers, helping them to aspire to similar roles in the future.

Asking candidates about their interests and working styles during interviews may offer useful insight, but this can also foster biases. Therefore, rather than job suitability, interviews often end up testing similarity between candidates and current employees – this can be problematic in workplaces that lack diversity.

In addition, companies should have multiple decision-makers involved in the hiring process. This way, varying notes and scores can be compared and reviewed, which will often reveal a candidate’s suitability more effectively.

Target a variety of sources for diverse candidates

Instead of relying on the same tried and tested talent pools, employers should seek out new sources focussing on a variety of different institutions, universities, cities or regions. As an example, there are many groups online, such as the women in business network or the black business network, which could provide opportunities for businesses to hire a more diverse group of new recruits.

Find an external recruiter that shares your values and commitment

It is often the case that businesses look to specialist recruitment firms to find suitable candidates.  Specialist firms often have a deep understanding of how to encourage and foster diversity and inclusion through the hiring process. These firms can often point out problem areas within the hiring approach for businesses where diverse candidates might be disadvantaged or where there is potential for bias.

Totum Partners adheres to recruitment practices that find, foster and forward candidates from a diverse pool of talented individuals from a variety of backgrounds and demographics. Not only are companies with a diverse range of recruits seeing 2.3 times higher cashflows than those with less diverse teams, but they are also 70% more likely to capture new markets than their counterparts. However, much more importantly, increasing diversity and inclusion is just the right thing for businesses to do. Providing all candidates with a fair chance, free from bias or discrimination is at the top of Totum’s agenda – those who do not adapt to encourage D&I will find themselves short of the top talent that drives business success.

[1] http://csi.nuff.ox.ac.uk/?p=1299

[2] https://www.bbc.co.uk/news/uk-46927417

[3] https://www.beapplied.com/post/gender-bias-in-hiring-report

[4] https://isemag.com/2020/10/telecom-the-latest-stats-on-women-in-tech/#:~:text=According%20to%20a%20report%20by%20Entelo%2C%20there%20are%20about%2019,10%25%20of%20executive%20level%20positions.

[5] https://dash.harvard.edu/bitstream/handle/1/8506867/RWP12-009-Bohnet.pdf?sequence=1

Considering the current environment, is now a good time to sell a business? 

In the industries that we typically work in (waste, recycling, trucking, logistics, food service, contracting), the M&A activity is off the charts right now. Given rising inflation, labour shortages and the escalating situation in Ukraine, if you are even on the fence about whether or not you want to sell your business, I would advise you to take a serious look at your exit options. On top of all that, the Federal Reserve is planning multiple rate increases this year. Given that, as well as the economic and geopolitical issues facing the United States and the world, there is no telling what the capital markets could look like a year from now. A deal that requires any sort of financing may be difficult to achieve 12 months from now. In short, I do believe it is a good time to sell your business, especially if you are a closely held business. There are quite a few industries right now that are being aggressively consolidated and valuations are very high. This is absolutely a great time to sell, but if you are serious about doing so, I would start the process right now. The last two years have shown us how rapidly things can change, and I would not be surprised if 2023 looks a lot different than 2022.

What are your top tips on planning an exit?

The number one tip I could give anyone who is trying to sell their business would be to stay organised and have all your information accurate and up to date. I am helping a closely-held family business sell right now. On top of being great people, they have also run their business exceptionally well. In a matter of a week, they were able to provide me with audited financials, tax returns, asset lists, customers by revenue, large contracts, etc. I could tell right away that their information was accurate and that I could trust it. When I am negotiating with buyers, it is a huge advantage to know that what I am selling is accurate and that I will not get a surprise right before closing that results in the owner taking a haircut.

The next tip I would give to anyone considering selling their business is to explore getting a quality of earnings (QoE) done. Every deal I have been involved with, whether it is getting a commercial loan for a client or helping someone sell their business, has involved one of the parties getting a QoE done. A QoE is a “mini audit” that is not as long or costly as a full audit, but it gives instant credibility to the financials that a company provides.

Unless the situation in Eastern Europe escalates even more than it already has, I expect the M&A activity to continue to be busy, at least in the short term.

My next tip would be to check your expectations going into any deal. Your business is not worth what you think it is, it is worth what the highest bidder is willing to pay. We have met numerous owners who have unrealistic expectations about what their business is worth and it can ultimately cost you value. At my old job, I was leading the acquisition of one of our local competitors. We offered him $3.5MM for his business, he wanted $5MM. We ultimately walked away from the deal. Over the course of two years, he lost a few big contracts, had a couple of trucks breakdown, and a key employee left. Just two years after our initial offer, we bought him for $1.2m. You should absolutely get what your business is worth and fight for it, but also remember that it is not you the business owner who ultimately decides how much your business will sell for -it is whoever is willing to pay the most.

Finally, continue to run the business as if the deal will not go through and you are going to run your company for the rest of your life. Until all the documents have been signed and the money is in your bank account, a million different things could happen that could derail the deal.  I have seen many business owners think they are going to close on selling their company then begin to neglect the day-to-day operations of the business. In the instances where the deal falls through, I have seen those business owners in some unpleasant situations. No matter your exit strategy, it is pertinent to continue to maintain the standards of your company.

What M&A trends do you expect to see in the coming months? 

Unless the situation in Eastern Europe escalates even more than it already has, I expect the M&A activity to continue to be busy, at least in the short term. It is possible that it will be a down year for the stock market with rate hikes coming and fixed income securities currently have historically low returns. For financial buyers, especially PE firms, buying companies is the most logical step to earn points on your money. I would expect financial buyers, especially PE firms, to continue to be aggressive in the coming months.

About Michael Cifor

Tangram Partners offers four “core” services. It provides business valuation (BV) services, M&A advisory, debt and equity raising and corporate restructuring. In his role at Tangram Partners, Michael is the primary lead on all of their BV projects as well as support management with other services. During his time at Tangram, he has performed  numerous valuations for cases that included divorce proceedings, succession planning, wills and estates and shareholder disputes. On top of his BV work, he has put together three separate syndicated commercial credit facilities totalling over $100m, executed two mergers and one acquisition and is currently in the process of helping a close-held, family business sell. 

Tangram is currently engaged with several commercial banks to work out projects where they help businesses that have defaulted on their loans to get back in compliance. While located in upstate New York, the company works nationally with current clients in California, Georgia, Florida, Massachusetts and Michigan.  

The Public Accounts Committee (PAC) report warns that there could be “potential disruption” at the UK border if cross-border passenger volumes, which have been at a fraction of normal levels due to the pandemic, recover as expected in 2022. 

This could be “exacerbated by further checks at ports as part of the EU’s new Entry and Exit system and especially at ports like Dover where EU officials carry out border checks on the UK side,” the PAC’s report says. 

“The PAC has repeatedly raised concerns about the impact of changes to trading arrangements on businesses of all sizes and we remain concerned.”

Since the end of the agreed transition period on 31 December 2020, there have been a series of changes in how the UK trades with the EU, and in relation to the movement of goods between the UK and Northern Ireland. 

This has led to the EU introducing full import controls. While the UK had initially intended to follow suit, the implementation of such controls has been delayed by the government three times over the past year. 

“Government plans to create the most effective border in the world by 2025 is a noteworthy ambition but it is optimistic, given where things stand today,” The PAC says, moving on to comment that it is “not convinced that it’s underpinned by the plan to deliver it.”

At the same time, nothing stops you from retraining and pursuing a career in an industry that is beginning to take off. Emerging industries have always been a thing, and the new industries are often popular with existing and budding entrepreneurs alike.

Knowing what these industries are is the critical first step, and that is where we come into the picture. Below, you will find a list of some emerging industries that have dominated the business scene for the past few years and which look set to remain. 

Regardless of what industry you are looking to move from or into, read on to discover more about these industries, as well as a bit about what you can do to be successful in your upcoming career switch. 

What Is An Emerging Industry?

Before getting into the swing of things, let’s take it back to basics. For those who are unsure, Investopedia defines an emerging industry as when a product or idea is in the early stages of development, and numerous companies focus themselves on this idea. Generally speaking, this happens when a new form of technology is discovered or created, replacing an older counterpart. 

As you might have grasped following from this definition, there have been numerous emerging industries throughout the last few decades, running alongside the numerous technological advancements that we have seen. These include the following industries: 

1. Artificial Intelligence (AI)

AI is something that is becoming all the more commonplace but is a phenomenon that is still confusing a lot of people. The technology that is used for this emerging industry is continuing to develop and grow and is being used more in our day-to-day lives than ever before. While some might find this form of technology problematic, it has proven to be incredibly helpful to numerous industries. 

Various industries and businesses use this emerging technology; it is even used by some government departments here in the United States. There are numerous jobs available in this emerging industry, and they can be attained by learning the associated skills that often link closely with computer science as a field. 

2. Fintech

The running theme throughout this piece will be that most emerging industries relate to the likes of technology in some way or another. Fintech, also known as Financial Technology, is the process of competing with or replacing more traditional methods of delivering financial services with a form of technology. Much like other forms of technology, this is something that is continuing to grow and develop while also revolutionising the ways that we complete tasks. As a result, there is always something new to learn about this emerging industry. 

Fintech courses online allow interested parties to learn more about this form of technology while retaining their existing skills in the hope of moving into this as a career. Completing this fintech course from Harvard University Online in your own time ensures that you can make the switch into the industry at your own pace and when the timing is suitable for you. Financial services will always be required; there is no doubt this is an industry and form of technology that is here to stay. 

3. Renewable Energy

This is a term that we feel many people reading this and beyond are familiar with, for it is something we have grown accustomed to throughout recent decades. There has been a significant focus on renewable energy throughout the years, with this idea gaining more traction since the United States rejoined the Paris Climate Agreement. 

Clean energy is important to many people, not just those who are eco-conscious. The renewable energy industry is set to grow exponentially in the coming year, with analysis experts estimating that the growth could pose a threat to the traditional use of coal. 

Expanding into an industry like this is a lot easier than most people realise. Beginning your career change by volunteering in the sector to develop your passion is the best place to start. From here, you can learn more about the processes and establish whether there are more specific skills that you need to learn and develop before applying for a role. 

It goes without saying, but emerging industries provide a multitude of career and growth opportunities. Understanding what the first steps are and moving forward from there is sure to ensure you land a career you are happy with. No matter which emerging industry has caught your eye, go forth knowing you are making the right moves and will be working with the latest technologies in no time.

When you're transferring money overseas, the process might seem like it takes a lifetime. But why is this so? Money is nothing more than information. The question is, why does it take longer to send money internationally than it does to email? There are three leading causes behind this. 

First and foremost, one currency must be exchanged for another. Second, compliance checks are required in order to avoid the payment of unlawful funds. And, finally, various payment systems communicate in a variety of languages. Costs, friction, and delays can all be associated with these procedures. Payment innovators and organisations like SWIFT are working hard to create better solutions and standards for data and messaging transmission and storage.

With the growth of cross-border e-commerce, businesses must be able to take payments from clients all over the world, regardless of location. As of 2022, it is anticipated that cross-border shopping would account for 5.4 trillion US dollars in sales and account for 20% of total e-commerce sales. Amazon and eBay are two of the most prominent online marketplaces for cross-border buying, primarily in North America and Europe, and they are both owned by eBay.

If you are a merchant conducting business worldwide, you need to be able to take payments from customers in all of the countries you are considering.

So, what are cross-border payments, and how do they work?

Cross-border payments are transactions in which the payer and the transaction receiver are based in different countries from where the transaction is being processed. Transactions can take place between people, businesses, or financial organisations that are attempting to move funds across borders. In order to accept cross-border payments, merchants will need to partner with a payment service provider capable of processing a diverse variety of payment methods.

• For example, you can make online payments easy by offering local and global payment methods. It is possible to make cross-border payments using various techniques, including credit and debit cards, bank transfers, and local payment options.
• The use of credit and debit cards is a popular choice among customers who want to make a cross-border payment since they are simple to use: users simply enter their card information and wait for the transaction to be processed.
• Payments made via international bank transfers are another option for sending money across borders. To conduct this sort of transaction, consumers will require the merchant's IBAN and BIC.
• E-wallets and other local payment methods can expedite overseas transactions, as can credit cards and other forms of cash.

How does a cross-border payment transfer operate?

In order to move funds across borders, banks and a diverse set of domestic companies collaborate to complete the transaction. When a transaction is made, a "correspondent bank," which represents the entity seeking the money, communicates with a "respondent bank," which represents the entity purchasing the item being purchased.

There are counterparts for every bank in each of the world's major cities in a different city. Consequently, money will first leave the buyer's bank and go to that bank's counterpart in the merchant nation, where they will be prepared for remittance to the buyer. The merchant's bank will then receive the money and it will be deposited into the merchant's account as soon as possible. These banks frequently collaborate with others to move money, which frequently entails more than four banking locations interacting with one another, traversing many currencies, and dealing with a variety of taxes.

What are the benefits of investing in cross-border payment solutions?

Customers want to make payments in an easy and familiar method, such as by credit card. As a result, it is advisable to research the preferred payment methods in the territories you intend to target. Depending on the country, international payments usually take between two and five business days to clear. The greater the number of financial institutions that the money must pass through, the longer it will take to complete the transaction.

You must identify all elements of a cross-border transaction if you want to run a successful worldwide business. These processes must be recognised and, if necessary, modified to ensure that the consumer has a positive experience while making an international purchase online.

As the number of individuals who own smartphones continues to rise worldwide, they have practically unlimited access to financial services and online payment solutions, with mobile wallets experiencing considerable and consistent development. Because of this expansion, the volume of cross-border business is expanding.

Cross-border payments: What the future holds

The market for cross-border payments has traditionally been dominated by financial institutions. Because there was minimal competition among the dominant global correspondent banks, cross-border transactions were fraught with difficulties for ordinary customers and companies alike.

As real-time cross-border payments become more widely accepted, techniques such as Visa Direct and SWIFT GPI will rise in popularity, and this will become more common. Strong Customer Authentication, mandated by PSD2 regulation, is another characteristic that makes cross-border payments more efficient. Payments made inside the European Economic Area will be required to go through a two-factor authentication procedure in order to authenticate the identity of the cardholder as a result of this new legal requirement. 

Looking at the public opinion, it is recommended that merchants deal with a payment service provider that provides quick payment processing, transparent charge structures, a secure worldwide payment gateway, a variety of local payment options, and a variety of settlement currencies.

Businesses use invoice finance as a means of raising capital without giving up equity or other collateral, and it's also the only form of business loan available in many markets across the world. This guide will help you understand what business invoice finance is, how it works, and whether or not this business funding option could work for your business. 

What is invoice finance and how does it work?

Invoice finance (also called accounts receivable financing) is a type of finance that allows businesses to borrow money against the money they are owed from customers. Banks and other lenders are often unwilling to lend to small businesses because the business's credit history is not as strong as a bigger business. Invoice finance allows businesses to get the cash they need by borrowing against the invoices they have already sent out. This means that even if the business has not yet been paid for the services or goods it has provided, it can still get a loan based on those invoices.

The lender will advance a percentage of the total invoice value to the business, and then collect repayment plus interest once the customer pays their invoice.

The benefits of invoice financing

Invoice financing can help your business by providing quick and easy access to cash. This type of financing allows businesses to borrow money against the value of their outstanding invoices. This can provide a much-needed cash infusion when you need it most, helping you to grow your business and maintain liquidity.

Business invoice finance can also help you improve your company's cash flow by accelerating the collection process on outstanding invoices. Funds are typically available within 24 hours of submitting an invoice for financing, so you can get the working capital you need quickly. And because there are no lengthy application processes or credit checks involved, this type of financing is a great option for businesses of all sizes.

How to get started with invoice finance

Getting started with invoice finance is quite easy. First, you need to find a reputable company that deals with business invoice finance lending. Next, the application process needs to be completed which includes providing personal and financial information relevant to your creditworthiness. Thirdly you will receive an email confirming acceptance into their program and once approved they will send you detailed instructions on how to use the service in exchange for an agreed down payment at closing plus interest over a time period dictated by terms of agreement upon purchase or lease agreements made prior to invoice finance transaction taking place.

Why should you choose to invoice over other funding options?

Invoice financing is a type of short-term loan that can be used to cover current expenses. It's also an excellent way to finance new or expanding businesses, as the funds are provided on an invoice basis with no collateral required. The lender doesn't care about your credit rating, so you don't need to go through the hassle of applying for a conventional loan. You'll get your money quickly and easily without any fuss — just how it should be.

Businesses who use invoicing financing often find themselves with more cash on hand than they had before because they're able to get quick access to funds when needed without having too much debt hanging over them at any one time. 

What are the risks involved with invoice financing?

The risks involved with invoice financing are typically the same as any other form of business credit. The lender will want to know what you plan to do with the money, and there may be some restrictions on how it can be used depending on the terms of your agreement with the lender. There is always a chance that an invoice won't get paid, which could result in liens being placed against personal property or even bankruptcy if it's a corporation.

The two clear leaders in this emerging digital economy are the US and China. Their current dominance in platform-based enterprises means that they are the most prepared for the forthcoming wave of disruption, which is due to their ‘platform vision’, i.e., their understanding of the underlying logic and digital architectures of the new digital economy. China especially is demonstrating long-term strategic thinking with considerable investment and technology partnerships in other countries.

The impact of the digital economy is the result of two major disruptive innovations—platform-based business models and deep technologies such as data analytics, blockchain, quantum computing and advances in the life sciences such as nanotechnology. In order to understand how digital technologies are already revolutionising business, leaders need to develop an organisation-wide platform vision to overcome the conceptual confusion that often exists between digital businesses, systems and platforms.

These differing concepts can be best understood by looking at how the digitalisation of business evolved. At the start of the first internet wave in the early 1990s, companies started to build portals that provided new channels to market, powered by the first e-commerce technologies. Online portals such as AOL and CompuServe, and then mobile portals such as British Telecom's Genie Internet, created unified customer experiences by integrating information such as news, travel, weather, sports, and entertainment with the first generation of online shopping services.

As web technologies and digital user experience design practices developed, portals brought new channels, media, interfaces, processes and technologies into the economy. Following this phase, we learned to create new digital systems. A digital system is an integrated set of digital components, service interfaces and computational infrastructure that is highly scalable, available, and economically efficient. Some examples are customer relationship management (CRM) systems, learning management systems (LMS), and content management systems (CMS).

Our personal and professional lives will be changed dramatically with the introduction of virtual worlds called ‘metaverses’ - digital worlds which blur the distinction between our real-world and virtual lives with social media becoming more of a gaming experience.

In the following phase of digitalisation, these systems were integrated to create digital solutions capable of producing or augmenting critical business capabilities. An example is a multi-channel marketing solution that can send a range of messages such as emails, SMS messages and which defines rules, business logic, and market segmentation on communications workflows. So a digital solution contains multiple digital systems and critically impacts on one or more business capabilities.

Digital solutions usually have an internal perspective rather than user-centric platforms and are based on niche business capabilities. They are always created in a closed manner, meaning they cannot scale and extend to new markets and value propositions. Today, many modern startups are closed digital solutions rather than being built on an open platform logic. However, this does not stop these solutions from being positioned as platforms, resulting in conceptual confusion for leaders who are not fully digitally literate.

This architectural misunderstanding can present significant challenges for businesses that wish to transform digitally through acquisitions. Purchased businesses can often be challenging to integrate into holding companies because their digital systems are not interoperable. Digital solutions can be evolved into platforms through architectural re-engineering, a process that requires the various digital components to be made open for extension, evolution and reconfiguration.

Platform-based business models can be understood by categorising the way in which people interact with them in three core ways:

1) Core interactions

Relatively simple fundamental interactions which reinforce the core value proposition.

2) Volume functions

These allow a platform to increase the number of people who use it.

3) Exchanges of value

The access offered by a platform in return for users sharing personal information and content.

When these different forms of interactions are explicitly understood, organisations are then able to build platforms flexibly, meaning that they can be opened up with extensions to create new solutions created by external partners. It is this aspect that is transforming the very structure of our global economy, where the focus is no longer on single businesses but whole ecosystems. Today, for example, Instagram is not just a platform. There is an entire ecosystem of solutions that utilise the platform’s functionalities.

While at present digital technologies are behind the drive towards digital transformation, it is the flexibility and extensibility of platforms that is facilitating the next wave of innovation, allowing businesses to grow by rapidly customising the way in which they deliver value to customers and extending their offers into new markets and sectors.

Our personal and professional lives will be changed dramatically with the introduction of virtual worlds called ‘metaverses’ - digital worlds which blur the distinction between our real-world and virtual lives with social media becoming more of a gaming experience. While Facebook recently announced its new name Meta to reflect its new focus on developing its own metaverse, other innovative virtual worlds have already started to capture people’s imagination. Developments such as NFTs are now allowing digital-only fashion houses such as The Fabricant to work with brands such as Adidas, Puma and Tommy Hilfiger to produce highly desirable fashion that only has a digital existence.

The vision of metaverses being the experiential basis of the digital economy will be made possible through the breakthrough advances in quantum computing now being achieved. A team of scientists in China led by quantum physicist Pan Jianwei recently announced that their new Jiuzhang 2.0 quantum computer was 10 billion times faster than its previous version, meaning that it can solve a problem in one millisecond that the world’s fastest supercomputer currently takes about 30 trillion years to solve.

While practical and commercial solutions are still a few years away from being realised, leaders need to start understanding the implications for quantum computing now, in order to ensure that they are fully prepared for those specific areas in which this type of technology is suitable for. Extremely large data sets will be searchable almost instantaneously, and real-world complex problems that were previously intractable will soon become solvable, such as computation in physics, chemistry and cybersecurity and providing optimisation solutions such as Volkswagen Group are developing in transportation and JP Morgan are developing in financial services.

Society is now at a bifurcation point, and we do not yet fully know which new order will emerge from the current chaos and complexity. Many people are now sensing dangers from having a Meta/Facebook level of monopoly in the digital economy due to the controversies that have recently come to light. But at the same time, we should not allow these understandable concerns to stop our most creative designers and entrepreneurs to discover new ways of connecting, relating, transacting and being in the digital economy, elevating humanity and amplifying our impact in the digital economy of the future, whatever form it may take.

 Simon Robinson is the Global CEO of Holonomics and co-author of Deep Tech and the Amplified Organisation: How to elevate, scale and amplify your business through the New 4Ps of platforms, purpose, people and planet,

While investing in such technology has been vital to helping many businesses survive and thrive in the pandemic, one department that is often overlooked is finance. Rob Israch, General Manager Europe and CMO at Tipalti, explains why this needs to change.

Despite advances in technology and the adoption of cloud accounting software over the last decade, it is still common for businesses to complete many finance processes manually. In fact, we know from our recent research that nearly a third (29%) of CFOs in the UK are dealing with more manual financial operations than ever before. Not only is this wasteful in time and money, but it is also holding finance leaders back from working on important strategic initiatives. We know that driving international expansion, incorporating environment, social and governance (ESG) and sustainability, and dealing with changes brought about by the global pandemic and Brexit – are all causes of complexity for already-busy CFOs.

In order for finance teams to evolve and become the strategic heart of a business, instead of being siloed and viewed as only fulfilling statutory requirements, adoption of automation technology is vital. Any resistance around adopting such technology, which is often that the perception that manual operations is good enough, can be squashed when we look at the benefit it brings businesses. Applying new tools to automate everyday tasks such as payroll, accounts payable, purchase order management, invoice management, group consolidation, and expense management will increase the efficiency of finance teams, allowing them to produce fast and high-quality information. In turn, stakeholders can benefit from increased agility to act on timely management information. Below are the specific benefits businesses that modernise their finance department will see.

Payroll

Payroll is a critical finance task. Employees are one of the most important assets within any business, so it's important to keep them happy by paying them accurately and on time. However, it is easy to get wrong by failing to submit up-to-date information about leavers and joiners, and not providing accurate employee tax codes. Its completion also has added pressure due to being time-sensitive and needing to be performed within a precise and tight deadline each month.

Payroll systems usually are not connected, meaning finance teams have to manually key in or export data to core accounting software and banking providers. However, many payroll processes can now be automated using solutions connecting accounting software and banking providers to provide an all-in-one workflow - saving time and reducing the chance of human error by overcoming the need to move data into different systems, either manually or by exporting and importing CSV files. A particular benefit is not having to recreate payroll journals, which is a notoriously fiddly task.

Accounts payable

Similar to payroll, accounts payable is an essential and regular task for finance teams. Ordinarily completed once a week or fortnight, it takes significant time to collate all invoices, enter payment details onto banking platforms and attain the necessary approvals for payment.

Incorporating vendors that leverage automation to facilitate multiple approvals and pull payment data from accounting software to a banking and payments interface, removes the friction associated with payment runs so they can be completed seamlessly, while also reducing the risk of manual payment errors and fraud.

Many accounts payable solutions reconcile payments automatically, saving further time, which can be used to complete higher-value tasks. A further benefit is better supplier relationships, providing visibility of payment status and enabling proactive communication to suppliers, while also helping reduce the likelihood of invoices being paid late, removing the risk of late payment penalty fees.

As CFOs’ roles and responsibilities grow, an increasing amount of pressure is put on the finance team to focus on tasks that help grow businesses – it’s essential more importance is placed on adopting finance automation as part of businesses’ wider digital transformation plans.

Purchase Orders (POs)

POs play a key role in financial control, with many companies insisting on their use for spend above a particular threshold. The creation and approval of POs are commonly a pain point for companies. There can be a disconnect between budget owners and suppliers, resulting in invoices being raised with incorrect or fully utilised PO numbers.

Using an automated PO tool that integrates to the core accounting platform streamlines processes so they can be created on the fly or from within forecasts. Additionally, they can auto-match invoices to PO numbers when received, eliminating the risk of being assigned incorrectly and delaying payment to critical suppliers.

Group consolidation

A number of core accounting software providers don't include functionality to consolidate at a group level. Finance professionals can get around this by exporting figures for individual companies into spreadsheets and manually making adjustments to consolidate group companies. Alongside the risk of entering data incorrectly and a potential delay to month-end close, this approach requires judgment due to often needing to consider which exchange rates to use and making adjustments based on the accounting standards under which the parent company is prepared. For example, this may include whether to recognise unreleased foreign currency gains/losses in the balance sheet or profit and loss, or revenue recognition treatment.

Using core accounting software that has consolidation features, or a third-party consolidation package, will ensure consistent treatment across all group companies and save finance employees from the hassle of exporting and manipulating accounts data.

Expense management

Managing employee expenses has historically been a chore for finance teams due to having to chase colleagues for their reports at month-end, alongside also needing sign-off from managers for approval. Additionally, the quality of submitted reports is often patchy, with receipts missing and spend being taken to the wrong accounting category. Embracing an automated expense management solution results in more accurate expense reports, allowing for easy upload of supporting receipts, OCR data extraction, and easy imports into accounting software.

As CFOs’ roles and responsibilities grow, an increasing amount of pressure is put on the finance team to focus on tasks that help grow businesses – it’s essential more importance is placed on adopting finance automation as part of businesses’ wider digital transformation plans. Embracing automation for all of the above tasks will benefit finance teams and the wider business. Finance team members will be able to use their time to produce up-to-date reports, providing financial and operational insights into company performance to grow sales, optimise KPIs and finetune acquisition channels.

Turbulence always creates opportunities for winners and losers to emerge but, following a brief pause on activity at the outset of the pandemic in 2020, dealmaking rebounded strongly throughout 2021 and Bloomberg Business Week notes that global transactions are set to top $5 trillion by the end of the year.

These figures come despite economic volatility and the prospect of tougher competition regulation. Capital, appetite and opportunity have not been in short supply, and investors – particularly within private equity – have been keen to make up for lost time and put excess cash stockpiles to work. The low-interest rates environment is also a factor that has driven activity, alongside the abundance of capital flowing into the economy and chasing deals. This liquidity can also be explained in part by the availability of cheap debt. The coming together of these factors has created a strong pipeline of dealmaking activity and intense competition to get transactions done.

Tim Nye, head of corporate at Trowers commented: "Competition has been so fierce that pent-up demand has led to the amount of capital that can be put to work outweighing the number of deals available. The knock-on impact of this is that confidence has sky-rocketed and valuations have soared."

He adds: "These trends show no signs of abating, based on our conversations within the dealmaking community, and we, therefore, expect a continuation of strong M&A activity throughout 2022".

Dealing with change

The health, social and economic challenges created by COVID-19 meant that organisations of all shapes and sizes had to adjust their business plans and corporate growth strategies. For many, organic growth became more difficult and dealmaking, therefore, grew in importance as a primary option for achieving scale or entering new markets.

The ability to be nimble and agile during intense uncertainty and upheaval has been a key for success, and the best way to pivot into new areas over the past year has often been through merger or acquisition.

In certain sectors where disruption has led to huge changes in demand for services, consolidation and the birth of new market entrants have also provided dealmaking opportunities. Healthcare – and particularly HealthTech – has been an active sector as a result of spiking demand for services related both to the pandemic and to the maintenance of business-as-usual healthcare provision as backlogs grew in the wake of lockdown and other restrictions.

Elsewhere, Real Estate has been heavily impacted during 2020-2021 thanks to social restrictions inhibiting peoples’ ability to carry out a range of activities – from working in the office to visiting retail destinations and using leisure and hospitality venues. With smaller organisations struggling with this uncertainty, and the recent or impending withdrawal of government support schemes, some consolidation activity has occurred with larger entities buying up smaller rivals.

Other sub-sectors have been impacted differently, with industrial and logistics sites seeing spikes in demand thanks to the growing use of online retail and home deliveries as people were forced to spend more time in their own properties.

The ESG imperative

Towards the end of the year, COP26 took centre-stage in November, as world leaders gathered in Glasgow to discuss the changes and commitments that need to be made to achieve net-zero goals and turn the tide in the fight against climate change. The pandemic also helped to thrust ESG considerations into the spotlight, as the impact of an unprecedented global crisis was felt acutely in all corners of the world.

The role of corporates in driving the ESG agenda is vital. With governments, regulators, customers, employees, lenders, insurers and investors increasingly judging companies based on their ESG commitments, these themes are working their way onto the transactional agenda, too.

Just under two-thirds of respondents to a recent Trowers & Hamlins research survey identified ESG as either a significant dealmaking factor or an important factor ‘to a certain extent’, as pressure mounts for due diligence into potential acquisition targets to go deeper than ever before when analysing ESG issues. Large financial institutions from banks to insurers are factoring ESG risks into their pricing decisions, so an ability to demonstrate ESG credentials in those areas is becoming more and more important. With the direction of travel clear for all to see, savvy leaders will already be looking to get ahead of the curve on this to save themselves potential exposure later down the line.

Alison Chivers, corporate partner at Trowers explains: "ESG is an opportunity to set yourself apart from your competitors. If you’re not doing it, you risk finding it harder to get investment, financing or insurance. If you are taking the lead, you can expect to see the benefits.”

As we enter 2022, the embedding of recent and new regulation and guidance will only heighten the need for organisations across all sectors to get their ESG houses in order – this will cover a range of risk areas from working conditions, gender pay and executive remuneration reporting through to climate and sustainability policies. As data and disclosure in these areas become more sophisticated, potential transactions may be scuppered if the ESG numbers do not add up. This in particular is one strong trend from 2021 which we are expecting to become even more deeply ingrained in the minds of dealmaking decision-makers through 2022.

There are several downsides to this arrangement for businesses. Firstly, this will increase their recruitment costs as visas are not cheap; secondly, obtaining work visas can also be time-consuming and delay the hiring of talent. The reality is that the business immigration system needs an overhaul. Business immigration is a benefit to the UK and should not be confused with social immigration which is entirely different. Our immigration should not be governed by policies issued by the current government but, rather, based on the needs of businesses.

To ensure the UK remains one of the leaders in technology and development, we need to encourage the best global talent to come to the UK with a cutting-edge approach to gain talent and investors. In order to do that we have to have an adaptable immigration system that welcomes talent, decent businesses and the workforce we need.

It’s also imperative, in my opinion, that we let students come to the UK to study and work after they have completed their degrees. We have just allowed this again but only for 12 months! Not long enough in my view but it is a start…

A note on social vs business immigration

I have practised business immigration for over 20 years. Social immigration is an entirely different kettle of fish and colours the debate, making it impossible to set sensible goalposts for businesses. Many say most are opposed to immigration and yet most of us are a product of some form of migration. In reality, most are opposed to social migration rather than business immigration.

In all of my 20 years practising business immigration, all of the employees I have helped bring in have paid fees and taxes and the majority have left the UK after their assignment, few (if any) have taken jobs from local people. Some have remained, fallen in love with a person or the country and contributed greatly to the economy. Sadly, having practised criminal defence work for almost a decade before this I think it is still cheaper to obtain a UK passport or false papers on the black market than it is to go through legitimate channels.

Addressing business immigration needs

We are moving in the right direction but we need to take immigration policy out of the politicians' hands and place it in the hands of businesses. Businesses need to be trusted that they will hire those they need. Most businesses want to avoid sponsoring individuals for visas unless there is no other option.

But the job has to be a certain pay grade and a certain level. Industries like hospitality are unable to sponsor the individuals they need as the skills they need are considered too low. A lot of that workforce left in the pandemic and are now stuck, unable to return to the UK. That is why our restaurants and bars are short-staffed.

So business is suffering. And the war for talent, and wages, is fierce.

Businesses must do as follows:

1. Ensure all your existing staff have a right to work by conducting appropriate right to work checks. Taking a staff member's word for it is not sufficient. You must have seen their original paperwork and keep a copy of it or use the Home office to verify their status. Failing to do this can result in a £20,000 fine per illegal found. Getting out of these fines is incredibly difficult and frankly only feasible if you have been given fraudulent paperwork.
2. If you are a professional business needing talent then you need to apply for a sponsor licence ASAP. Or if you previously relied on European workers to staff your business equally you need to apply for a sponsor licence ASAP. This enables you to then potentially sponsor those from Europe and anywhere in the world who wish to work in the UK. Provided the job is at a suitable level. Beware the processing times are increasing as more and more businesses apply for a sponsor licence.
3. Budget for increasing recruitment costs, work visas are not cheap and you will need to pay for them.
4. Allow time to obtain work visas. Sadly our system is overwhelmed and this is likely to only get worse as the scale of the problem reveals itself.
5. Certain sectors that have heretofore relied on lower skill levels need to campaign and raise awareness and push for change, ideally with backing from UK society at large, to help to enable them to hire and recruit the talent they need wherever it may be.

The most important thing is to keep being vocal about the ways the new immigration system is failing businesses. We need to campaign for the best, open-minded, straightforward business immigration system in the world. Let us lead the charge and suck up all the talent we can to ensure the UK remains Great Britain!

While many deductions are commonly known, like mortgage interest and charitable contributions, you may be wondering if life insurance is tax deductible too. But before you go writing off life insurance premiums this tax season, here’s what you need to know.

What is a tax deduction?

Tax deductions are amounts that you can subtract from your taxable income to help you pay less in taxes. Some standard tax deductions are contributions to health savings accounts (HSAs) and what you pay in property taxes. That means when tax season rolls around, you’ll add up your taxable income, then subtract any deductions that you qualify for before determining how much you’re going to pay or receive in a refund. Since there are different eligibility rules for each deduction, it may be wise to consult with a tax professional if you’re unsure which specific ones apply to you.

Is life insurance tax deductible?

For the average person taking out a personal life insurance policy, the premiums you pay are typically not tax deductible. That’s because they’re considered a personal expense. And since life insurance isn’t required by the government, there’s no mandate that you must be insured, which means no government tax breaks. But that doesn’t mean there aren’t unique situations where you can deduct life insurance premiums from your taxes, like:

When you own a business

If you own a business and pay life insurance premiums for your employees, those premium payments may be deducted as a business expense. For most businesses offering a group term life policy to employees, the premiums are typically deductible up to the first $50,000 in coverage per employee.

When the beneficiary is a charity

If you take out a life insurance policy and name a charitable organisation as the beneficiary, you may be able to write off some of the premiums as a tax deduction. But in addition to naming the charity as the beneficiary, you’ll also need to transfer policy ownership. And that means there’s no changing your mind after the fact. So, if you’re debating making a charity the beneficiary of your life insurance policy, you may want to discuss tax deductions with a financial professional first.

How to determine if your life insurance is tax deductible

Working with a qualified tax planner or professional is a good idea if you’re unsure if your life insurance premiums are tax deductible. And it’s important to work with an expert if you’re a business owner that’s not 100% sure how to go about deducting the premiums. Plus, it’s worth noting that while your premiums may not be tax deductible, the death benefit paid out to your beneficiaries is often tax-free. You’ll also receive the benefit of tax-deferred growth if your life insurance policy has a cash value component. So, you can think of it as paying your dues on the front end so your loved ones can receive a higher benefit and lower tax burden down the line.

The bottom line

For many people, life insurance is not a tax-deductible expense. But the benefits of maintaining a policy far outweigh the downside of not receiving a tax break. If you think you may be eligible to deduct life insurance premiums, seek the advice of an expert financial or tax professional to confirm.

Some of the most successful businesses have come about because the founder was trying to solve a problem that they had experienced, often just for their own benefit. There is nothing wrong with setting up a money-making project as a hobby, and no need for a hobby to necessarily turn into a full-fledged business. But it is worth understanding your own motivations and being clear with yourself about what you want to achieve.

What is the difference between a hobby and a business?

There are no hard and fast rules that distinguish between a hobby and a business. For me, it is a state of mind – what are you trying to achieve? Is this a project to fill time, or are you single-minded in your desire to set up a successful business? It’s an important point as businesses take time and devotion. Many businesses fail because their founders aren’t prepared to make the sacrifices necessary to make the business a success. 

What business structure should I use?

There are a large number of potential legal structures available for people setting up a profit-making enterprise. However, in most cases, only two are relevant: sole trader and limited company. 

A sole trader is when an individual begins to trade in their own name. For example, I decided to set up a coffee shop, and call it “Beans Coffee”: the business would be “Michael Buckworth trading as Beans Coffee”. Setting up as a sole trader is a quick and easy way to get up and running: all you have to do is notify HMRC that you are now self-employed. You can find out how to do that here. 

Limited companies are separate legal persons meaning that they exist separately from their owners. They can enter contracts, borrow money, and are liable to pay tax on their profits. You can register a company easily by filling in an online form and paying £12. One of the most important differences between a sole trader and a limited company is that a limited company has limited liability whereas a sole trader doesn’t. With a sole trader, if something goes wrong, you are personally liable for all the debts of the business, whereas (in most cases) if a limited company can’t pay its debts, it goes bust, but the assets of its owners and directors are protected. 

Which one to choose? As a rule of thumb, it is fine to operate a (low risk) hobby via a sole trader. However, if you are planning to grow and scale a business, I would suggest incorporating a company from the get-go. There is one footnote to this advice: once you incorporate a limited company you have to make an annual filing with Companies House and file accounts each year, so there is a cost associated with it. It isn’t a problem if your business is going to grow and scale, but it could be an unwelcome cost if you don’t intend to generate more than modest amounts of revenue. 

Are any profits I make on a hobby tax-free?

There are two certainties in life: death and taxes. However, there is a small allowance for people making modest amounts of money from hobbies and side hustles. If you have earned less than £1,000 from your hobby (and any other side hustles you may have in play) during a tax year, you don’t need to declare that to HMRC as income. However, any more than that must be declared, and you have an obligation to keep track of your earnings to make sure that you don’t exceed the limit. 

Do I need to worry about contracts and insurance for my hobby?

In my view, any business should have in place contracts with its customers as soon as it starts to trade. Contracts are hugely important as they limit your liability if something goes wrong and protect your revenue stream (as well as providing protection in a number of other important areas as described in detail in my book, Built on Rock, an entrepreneur’s legal guide to start-up success.) Most businesses will also want to have in place insurance to provide protection if something goes wrong. 

Whether you need insurance for your hobby depends on what you are doing, and the likelihood of you becoming liable if something goes wrong. Imagine you sell face creams online: you would want insurance in case a customer suffered an allergic reaction to your cream and sued you for personal injury. By contrast, if you are selling birthday cards online: you probably don’t need to bother with insurance as the risks are minimal and can be covered off in a simple customer contract. The key questions for you to consider are “what can go wrong?” and “what is my likely exposure if something does go wrong?”

What happens if I change my mind and want to flip my hobby into a business idea?

If your hobby really takes off and you realise that this is something that could make a viable business, congratulations! It probably makes sense to flip the business into a limited company sooner rather than later. Why? Firstly you can’t raise investment from third party investors as a sole trader – you need a limited company to do that so that you can issue them with shares. Secondly, you probably want the protection of limited liability if you are going to try to scale up your idea: the more customers you sell to, the greater the risk. Thirdly you want to make sure that the intellectual property rights in your business idea (the intangible stuff that you create as you develop your business such as your logo, the design of your product and the source code in any software you create) are created in and belong to your company, as this optimises the chances that you will later be able to qualify for a bunch of tax reliefs for start-ups. 

I have no business experience: can I really set up a business?

Over the years, as founder of Buckworths, I have spoken to many would-be entrepreneurs who worry that they don’t have any business experience, or the skills to be able to run a business. The good news is that it generally doesn’t matter. You can figure out the answers to most problems through research and  by speaking to people who have already figured it out. It doesn’t matter if you are a student, a stay-at-home mum, a retiree or a person working a 9 to 5 job. You have a uniquely personal experience that has led you to come up with your idea; you have a set of skills that can be harnessed to get your idea off the ground, and you have as good a chance as anyone else of making a success of it. Grab the bull by the horns, launch yourself onto its back and enjoy the ride.