All beginnings are difficult. Studies show that, on average, nine out of ten start-ups fail (1), and the shark tank that is the financial industry isn’t exactly renowned for allowing tender start-up shoots to flourish. The risk of failure and the fierce competition should not, however, deter you from launching your own FinTech. Instead, you can learn from others’ mistakes. Anyone seeking to start a successful FinTech company should carefully examine why others fail and avoid making the same mistakes.

So how do FinTech entrepreneurs meet the demands of a competitive and turbulent market, while trying to make it out on top? Tobias Schreyer, Co-Founder of PPRO Group reveals for Finance Monthly.

1. Thoroughly analyse your market

The crux of any start-up is the business idea. The fact that an idea initially looks promising, however, is no guarantee that it will work in practice. The key here is for FinTech start-ups to begin analysing the market as early as possible to determine whether there is an appropriate and suitably large target audience for their business. By far the most common reason for the failure of a start-up is that there is no market for their idea. You must know the size of target market, what the competition is like, and what prices comparable products and services are fetching. Never ignore market analyses and align your business plan precisely with the results.

2. Secure your funding in advance

Even (and sometimes, particularly!) FinTech start-ups want to attract financial backing. As with any other start-up, the issue of funding is right at the top of every FinTech start-up’s list. This issue can be roughly divided into two sections. The first is self-explanatory and covers the considerations which should be part of a traditional business plan and the questions which should ideally be resolved before the company is founded. These include things like how much capital is needed, the outgoings expected, and the potential profits. This is where you should investigate loans for company founders or appropriate grants and subsidies. The second part of the funding issue is more FinTech-specific. As, in most cases, you will be competing with banks or other FinTechs with a lot more money, so attracting partners and potential investors early on in the process is important. You should look for people who are excited about your idea and ready to invest.

3. Always keep an eye on your finances, particularly post-launch

After the business idea, finances are the highest priority for any start-up, including FinTechs. This is a very broad subject. Not only should the company be liquid, it should also have a handle on accounting and taxes. Seemingly simple tasks like setting up a business bank account or applying for a company credit card can be a challenge initially. What if you have a business trip coming up, but your bank won’t give you a company credit card? What if it’s simply not available soon enough? Nowadays there are many clever financial products on the market which can also be used directly and easily by start-ups. Prepaid credit cards with associated online accounts are quick to set up, but are also secure and flexible to use. The centralised company account provides an overview of all expenses at all times, as well as the requisite flexibility when expenses arise. You must never lose sight of your company’s financial status. This may seem obvious, but failure to manage finances has spelt the downfall of many a start-up.

4. Determine the appropriate form of organisation for your company

Choosing the right legal form of organisation is an important decision for a new company, and one that start-ups need to consider very carefully. Although, once selected, the legal form is not set in stone, changing it later can involve some effort. The form of organisation defines the legal and taxation framework conditions for a company, so your choice must suit the needs of a FinTech start-up.

5. Apply for licenses and register in good time

Start-ups should focus much of their attention on their product offering and customers, but even the best product and customer service can be at risk if you don’t have a handle on your day-to-day business operations. Start-ups must perform a great many administrative tasks, including registering with the tax office, listing the company in the commercial register, accounting, sales tax, and more. But to add to that already extensive list, FinTech’s are also subject to additional regulatory pressures. The second Payment Service Directive (PSD2) will, for example, come into force at the beginning of 2018 and can mean major changes for providers of alternative payment methods. Any financial service which can make automated payments at an end-user’s request while collecting and transferring data must obtain a PSD2 licence from the national financial regulatory authority.

(1) forbes.com/sites/neilpatel/2015/01/16/90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10/#915f29c66792

(2) cbinsights.com/blog/startup-failure-reasons-top

(3) crosscard.com/solution/crosscard-expense

Last week marked one month until the deadline for compliance with Second Payment Services Directive (PSD2). Coming into effect on 13^th January 2018, the legislation will enable consumers across Europe to instruct their banks to share their financial data securely with third parties, making it easier to transfer funds, compare products and manage their accounts.

Currently, the levels of individuals looking to switch accounts is relatively low. Figures by the banking authority CMA highlight that 57% of people have held their personal current account for more than 10 years, while 37% have not switched in more than 20 years[1].

However, opening up the front-end of payments initiation and information services has the potential to dramatically shift the competitive landscape. According to research by Accenture, banks are at risk of losing up to 43 percent of retail payment revenues by 2020[2], as the market place opens up to smaller, more sophisticated digital banks that break the industry’s traditional boundaries.

Pini Yakuel, CEO of customer relationship experts Optimove, comments: “The disruption coming with the Open Banking initiative will have a marked impact on customer engagement. Customers will be able to compare the value that each financial services company offers them quickly and easily. Banks will have a real fight on their hands to retain a generation of smartphone-empowered, brand-agnostic consumers.”

“As the financial services industry grapples with the implications of PDS2, one aspect that remains unaddressed is the need for better communications between banks and their customers. Traditional banks will have to respond to this new, more consumer-focused market, and develop successful marketing strategies to make sure they do not lose customers.

“Understanding behaviours, preferences and needs more clearly is key to developing the kind of emotionally intelligent communication with customers that makes them feel comfortable with their bank, helping them to make good financial decisions. Those banks who can offer something back at each stage of their relationship with each customer will set themselves apart under the intense scrutiny of Open Banking.”

“To keep ahead of their competitors, they will need to tailor services to support customers more effectively, offering real value that appeals to each customer personally. Artificial Intelligence which reveals what value looks like to each customer, will provide banks with a clearer understanding of their customer’s preference and affinities. Enabling them to cater to their needs accordingly and provide true value to each of their customers.”

(Source: Optimove)

We've seen some huge deals in 2017, from Qualcomm/Broadcom earlier in the year, to Gemalto/Atos in the last few weeks. We also had the 10-year anniversary of the financial crisis and the seating of Donald Trump into power.

As part of this week’s Your Thoughts, Finance Monthly reached out to experts far and wide to ask about their favourite moments in this financial year, from the most significant changes in regulation and announcements of further regulatory developments, to highlights of the most impacting acquisitions and mergers in the UK and beyond.

Andrew Boyle, CEO at LGB & Co.:

A key 2017 highlight for me surrounded Brexit and came in November at an event organised by the Edinburgh law firm Turcan Connell, which featured an SNP MP and a Conservative MEP. I expected a lively but entrenched debate carried out in a partisan fashion. To my complete surprise, the mood at the event was calm, points were made politely and there was an obvious willingness to compromise. It seems this more constructive spirit foreshadowed that of subsequent UK/EU negotiations given the breakthrough in talks with the EU and the clear indication that all parties, including the EU Commission, wanted to move forward. At the moment, the prospect of a transition period will keep the financial markets and company directors guessing what the final outcome will be. However, it is becoming increasingly clear that a failure to reach a deal will be in the interest of neither of the parties, whose economic viability is so deeply intertwined. I hope the new more constructive mood continues into the New Year.

Another highlight was the Budget. Fears of a radical change to EIS and VCT investing rules were unfounded. The Chancellor did refer to limiting EIS investment that shelters low-risk assets, but he offset this by promising increased EIS limits for investing in knowledge-intensive companies.

Continued support for early-stage businesses is key to what the Chancellor described as Britain’s position at the forefront of a technological revolution. UK SMEs will increase their total economic contribution to £217bn by the end of the decade –up significantly from 2015. In spite of the economic uncertainty around Brexit, British SMEs remain hungry for growth and are generally optimistic about the future. What often holds them back is a lack of funding, particularly through conventional avenues. SMEs often need to raise money quickly to adapt to changing markets or new opportunities, but obtaining bank financing can be a slow and cumbersome process – and that’s where EIS and VCT investors and indeed alternative lenders can help fund the gap. Specific measures announced in the Chancellor’s budget were positive for companies and investors. For now, government policy remains to support innovative companies notwithstanding the pressure to reduce tax breaks and apply funds elsewhere.

Richard Anton, General Partner, Oxx:

The biggest financial story of 2017, in the world of venture capital and technology start-ups and scale-ups, was the European Investment Fund suspending investment in UK VC firms. As an immediate result of the Brexit vote, FinTech lending was the first to suffer, before full suspension of investment into UK VCs. The EIF had been by far the single largest funder of UK venture capital firms and with the options for supply reduced so significantly, not only does this make competition for funding even more intense, the lack of on-the-ground European experience presents yet another challenge to businesses trying to grow to the next stage.

Thankfully, the British Business Bank has moved quickly to help mitigate the EIF’s withdrawal. The £1.5 billion Enterprise Capital Fund programme has got to work to support UK-based start-ups, recognising that the entire market needs to see small firms confident to apply for finance in order to grow. Perhaps the most encouraging indication that British funding is filling the void is the success of Episode 1 Ventures in recently raising £60m for its fund targeted at British early stage start-ups - £36m of this coming from the British Business Bank.

The withdrawal of the EIF shook up the market more than perhaps was covered at the time. Of course for any business to survive and grow, it needs to adapt to a range of situations, yet the sudden absence of European funding was particularly challenging. It is also one that will have long-term ramifications and when the dust settles the European funding market will look very different.

Peter Veash, CEO, Bio:

Amazon’s purchase of Whole Foods in August is my most significant financial moment of 2017. The deal was lauded by many industry pundits as a match made in heaven, with Whole Foods’ glowing reputation for offering high-quality goods marrying with Amazon’s unsurpassed track record for fast, efficient logistics – a new retail power couple was born.

The upshot? Aside from a slashing of prices across the board at Whole Foods (many by up to as much as 40%), the deal also meant that Amazon tech like the Echo, Dot, Fire and Kindle products are now available to purchase instore, while Whole Foods products are now available to buy online via Amazon. ‘Try before you buy’ Amazon Pop-Up stores have opened in locations all over the country, and Amazon Lockers have also been introduced instore, allowing customers to pick up packages and drop off returns. The deal has also given rise to rumours around the potential roll out of Amazon concept stores, including cashier-free checkouts, which would allow Amazon to push commerce tech to a new level.

The $13.7 billion megadeal knocked some competitor share prices sideways and boosted Amazon's – it rose so much on the news that some were saying they’d essentially bought it for nothing. Most importantly, it gave Amazon the physical outlets to develop the future of truly omnichannel retail, particularly within the coveted fresh grocery market (which the ecommerce giant had been preparing to attack for some time).

Marina Cheal, Chief Marketing & Customer Officer, Reevoo:

2017 marked 10 years since the financial crisis, and it’s been a story of reputations - new players trying to forge a new one, and old ones clinging desperately on to theirs.

The world’s big banks took a spectacular fall from grace, the likes of which hadn’t been seen since The Great Depression: after being perceived as trustworthy, powerful corporate behemoths for decades, consumer trust in these institutions was at an all-time low, with many feeling shaken and disillusioned by the lack of ethics displayed by those responsible for the crash.

Meanwhile, a new breed of disruptive, digital-first fintech brand was evolving to challenge the status quo. In 2017 this group of app-based banks have broken the mainstream. Monzo, Starling, Atom and others are now household names, appealing in particular to Millennials who came of age during the crisis years and had the least trust in the financial sector.

Where big institutions once represented trust, newer and nimbler banks have taken their place. Legacy is a dwindling commodity, replaced by convenience and transparency.

What we’re seeing is the next stage on the road to rebuilding consumer trust, but what people want most of all now is a sense that they are in control of their own money, coupled with an ease of use and friendly, authentic communications from their bank – and right now, the challengers are beating the legacy brands to the punch.

Howard Leigh, Co-Founder, Cavendish Corporate Finance:

This year’s November Budget was my highlight for 2017 as it provided some welcome news for the UK’s thriving Financial Services industry and saw the Chancellor confirm his commitment to maintain the UK‘s leading position in technology and innovation post-Brexit. Although it was anticipated by some that EIS and SEIS investments, were going to be in the Chancellor’s firing line, he instead doubled the EIS investment limits for “knowledge-intensive” companies, demonstrating the Government’s commitment to help UK start-ups. The Chancellor also chose to continue supporting Entrepreneurs’ Relief, which, along with other business-friendly policies, is predicted to support the inflow of billions of pounds worth of investment into growth businesses.

With Britain soon to lose access to the European Investment Fund, it was encouraging to see the Chancellor outline his plans to establish a new dedicated subsidiary of the British Business Bank to become a leading UK-based investor in patient capital across the UK. The new subsidiary will be capitalized with £2.5 billion. and will provide a cushion if negotiations with the EIB and EIF do not encourage then to continue investing in the UK. I hope, as some of it is our money and London is clearly Europe’s centre of social impact investing the EIF will now recommence its activities in the UK.

Finally, another key measure in the Budget was the introduction of a policy that will compel online ecommerce companies, such as eBay and Amazon, to police their own websites, thus helping to stem the £1.2 billion yearly tax loss due to fraudulent sales. I first raised this issue in an Oral question in the Lords some 2 years ago and am delighted to see that the campaign run largely with VatFraud.org and Richard Allen has been successful.

The Autumn Budget was a pivotal moment for the UK’s Financial Services sector and the policies laid out by the Government firmly position it as a friend to business. Not only will these policies help to boost UK businesses in the tech and digital sectors, but it will help enhance the City’s position as a leading global centre for finance and innovation.

Tsuyoshi Notani, Managing Director, JCB International (Europe) Ltd:

PSD2 can revolutionise retail banking, generate further investment into fintech, and drive innovation. We’re focused on increasing partnerships with PSPs and fintech firms, enabling them to secure global reach as a gateway to Asia, so February 2nd, when the UK government confirmed its PSD2 timetable, was a really promising step in the sectors’ quest to level the playing field."

We would also love to hear more of Your Thoughts on your favourite moments of 2017’s finance world, so feel free to comment below and tell us what you think!

Marlene de Sousa Teixeira is Founding Partner of Teixeira & Guimarães, specializing in Banking and Finance and advising and representing both national and global companies. Marlene believes that today’s society needs focused, assertive and faster answers, and that the standard model of a full-service legal firm is becoming less attractive. Here she offers her insights into dispute resolution in Portugal and the challenges that her clients face.

Can you provide a brief overview of the dispute resolution process in Portugal?

The dispute resolution process in Portugal, from a technical point of view, has considerably evolved in the past. Being from a different nature when compared to common law countries, the process is based on Civil Law and its general and abstract legal standards apply to generality and abstraction of situations and where judge-made law has a different value than that of common law countries. This results in better legal certainty in regards to the different kind of economic players, since the kind of interpretation of the ruling is also determined legally.

In regards to less positive aspects, in Portugal, we are faced with frequent delay in the delivery of verdicts. However, this does not mean the decisions are more or less fair, or that the quality of the verdicts is not good enough.

How important can it be to resolve disputes as quickly as possible? What are the challenges you face as a lawyer tasked with understanding the technical nature of a business so that a speedy resolution can be found?

The resolution time of a dispute should always be a variable to be taken into account in all matters that relate to coming up with a solution. Understanding the technical nature of a business will not help you make a faster or slower decision. It is clear that if you understand the core of a business, you are going to be assertive and efficient, but the problem is not going to be settled faster because of your know-how. Yet, the know-how will provide you with several other advantages and will introduce you to more hypotheses.

Which types of disputes are you normally called upon to help resolve? How do you develop the best strategy for resolving a dispute?

Usually, I am called to intervene in cases of financial, banking and civil nature – that is my main area of expertise. In fact, T&G was the first law firm in Portugal to be certified by the new standard EN NP ISO 9001:2015 within credit litigation.
Regarding the strategy procedures, the best way to think about it is getting to know the interests in a dispute, because a good strategy doesn’t necessarily mean a winning strategy. In many circumstances, a good strategy means acting in a certain way, regardless of the verdict.

Are there any business sectors that are particularly prone to commercial disputes? What do you attribute this to?

In the past few years, Portugal has witnessed the development of our financial industry. A number of national courts are clogged with mortgage foreclosures and debt recovery lawsuits on unsecured credits. It is clear that a lot of these litigation proceedings were due to the economic situation.

Although this has improved in the past few recent months, it is easy to identify a pattern and easily predict that lawsuits related to foreclosures or debt recovery will definitely continue to be relevant.

Website: http://www.tesg.pt/

By Jan Hoffmeister, Managing Partner at Drooms

Q, the first cinema robot appeared in The Master Mystery in 1919. Ever since then we have seen fictional automatons of various shapes and sizes wreak havoc on the human race.

It’s perhaps not surprising that deep suspicion of the role of robots in business and their impact on the way we work has developed over time. But the truth is that robotics and artificial intelligence (AI) are set to introduce huge benefits to the finance sector in particular.

AI research was founded in a workshop at Dartmouth College in 1956 and those who attended became the leaders of AI research for decades. Their ambitious predictions for a machine that would be as intelligent as a human being attracted generous funding, which led to the development of a robot by the AI centre of Stanford Research Institute called ‘Shakey’ (1966-1972) controlled by a large computer.

By the early 1970s it was clear that AI was in trouble, largely because of hardware limitations. But the doubling of processing power every year under Moore’s Law meant that by 1996 IBM was able to build Deep Blue, a chess-playing computer that famously beat world champion Garry Kasparov.

Fast forward to 2014, and Google invested US$400 million in artificial intelligence start-up DeepMind. While the media discussion about AI has gravitated towards the idea that machines will replace humans and leave them with nothing to do, the fact is that AI is not about to automate most financial professions. Rather, it aims to complement human intelligence.

Recently, Google founded the People + AI Research Initiative (PAIR) to better explore these interactions with the support of researchers from MIT. The financial industry has also understood the potential hidden in the application of AI. Of the 5,000 FinTech start-ups identified by a 2016 report by Ernst & Young, a large number are set to bring intelligence to the banking world.

Fields where AI is particularly relevant include client servicing, trading, post-trade operations such as reconciliations, transaction reporting, tax operation and enterprise risk management.

A study released in 2017 by PwC points to a similar trend: ‘AI will gradually replace humans in some functions like personal assistants, digital labour, and machine learning. But challenges will persist because of bias, privacy, trust, lack of trained staff, and regulatory concerns. Augmented intelligence, in which machines assist humans, could be the near term answer.’ Future decision-making processes in banking, for instance, will be 34% informed by machine algorithms and 66% by human judgment.

A sub-field of AI is a particularly strong example of applications of augmented intelligence – Natural Language Processing. NLP is the development of systems capable of reading and understanding the languages that humans speak.

At the heart of this technology is the ability to interpret a large amount of so-called ‘unstructured data’ (i.e. data that cannot be read by machines yet, such as PDF files, images and audio material). The FinTech sector is leveraging this technology because it significantly improves customer interactions, and not only by implementing chatbots.

The finance industry is a knowledge-intensive sector and key tasks require the reading and understanding of large amounts of information that are only partly structured. NLP is making processes much easier, faster and more precise with less effort than ever from humans.

Start-ups such as MonkeyLearn are already leveraging NLP to automate business intelligence information, whereas leading Japanese asset manager Nomura Asset Management (NAM) are investing to understand whether this technology can improve the decision-making processes of portfolio management’s investors. Even providers of legal services are turning towards NLP, automated document analytics and law case reporting within due diligence processes.

Putting users at the heart of the software was our goal in developing the new virtual data room, Drooms NXG. Aware of the fact that the biggest issue for data room users was to keep up with time-consuming and demanding document analysis, the implementation of the most effective technology was required. As NLP enables the reading and understanding of language, we saw a huge opportunity to apply this new technology to the content of data room documentation.

Today, the data room of Drooms NXG can present information to users thanks to smart pre-set categories, suggested red flags, lists of documents by relevance and recommendations for smarter risk management. When users search their VDR for terms in order to find potential red flags chosen from the categories listed by Drooms NXG Findings Manager, the system returns a ‘Suggested Findings’ list which can be categorised as very low, medium or high level risk or opportunity. Professionals can add their own categories or edit existing keywords to make their searches as focused as possible. Individual calls to action can be assigned to each one; adding an individual note to highlight specific insight, incorporating a link to a document, page or even a paragraph or single word; or using a colour coding system by selecting one of the built-in colour tags. Similarly, we wanted to address language barriers between users. Now, documents can be instantly translated within the data room, thereby facilitating cross-border deals.

These solutions were not developed with the goal of replacing manpower with automated data analysis. On the contrary, our goal is to empower deal experts by developing intuitive tools that don’t feel like a burden, but make their decision-making more accurate and their business lives more successful.

According to McKinsey’s 2017 survey, early AI adopters that combine strong digital capability with proactive strategies have higher profit margins and expect the performance gap with other firms to widen in the next three years. Financial firms should no longer be concerned that the robots are coming, only that they harness the power of robotics and AI to improve the service that they provide to customers.

Website: https://drooms.com

Yesterday saw Chancellor Phillip Hammond deliver his second budget.  While the abolition of Stamp Duty, several tax revisions, freezes on several duties, increased investment in AI and Technology and a £3 billion investment into the NHS all came as welcome additions they could not prevent a sharp drop in the UK Growth Forecast following the budget.

So with many experts labelling it a ‘make or break’ moment for Hammond and a somewhat beleaguered Government, we spoke to the industry experts to see what the Autumn budget really means for the Financial Sector in a special extended Your Thoughts: Autumn Budget 2017

Choose your sector below or scroll through to read all the insight.

FinTech & Digital
UK Growth, Investment & Forex
Tax
Healthcare & Retail
Property & Real Estate

FinTech & Digital

Abe Smith, CEO and Founder at Dealflo

London has been a world-leading financial centre since the 19th century, but low growth forecasts and the lack of clarity around Brexit are unsettling for businesses. The Chancellor has had to work hard to ensure that the UK remains an attractive place to invest and innovate post-Brexit. The new National Investment Fund means that even after Brexit, the UK will remain a hub for FinTech innovation and will attract fast-growing tech companies.

Niels Turfboer, Managing Director of UK & Benelux, Spotcap:

The FinTech industry is going from strength to strength and the UK Government can play an important part in enabling FinTechs to continue to thrive.

We therefore welcome Philip Hammond’s promise to invest over £500m in numerous technology initiatives, including artificial intelligence and regulatory innovation, as well as unlock over £20bn of new investment in UK scale-up businesses.

With this assurance, the government has shown a strong commitment to the FinTech sector, which will hopefully help tech companies all around the UK to flourish and grow.

World Economic Forum member Jane Zavalishina, CEO of Yandex Data Factory

The reality is that it is not the scientific development of AI that will be game-changing in the next few years, but instead the more prosaic, practical application of AI across many different sectors.

While AI is too often associated with self-driving cars and robots, the truth is the most significant AI applications that are of most significance to businesses, are actually the least visually exciting. AI that improves decision-making, optimises existing processes and delivers more accurate demand prediction will boost productivity far more powerfully than in all sectors.

But it’s not just productivity that will be significantly impacted – business revenue will also benefit. The beauty of AI lies in its ability to be applied with no capital investments – making it an affordable innovation for businesses to adopt. Unlike what is commonly thought, applying AI does not require infrastructure changes – in many processes cases we already have automated process control, so adding AI on top would require no investment at all. Instead, companies will see ROI within just a few months.

Martin Port, Founder and CEO BigChange:

We welcome this announcement and support for tech businesses from the Chancellor. Financial backing and stability is a huge hurdle facing all start-ups, so I am pleased to see the government pledge more than £20 billion of new investment. I just hope this funding is easy to access and readily available for those who need it, rather than being hidden among reams of red tape.

Leon Deakin, Partner in the technology team at Coffin Mew:

As a firm with a growing technology sector and client base in this area we are obviously delighted to see specific investment in the technology sector, particularly in AI and driverless vehicles.

Doom mongers have long been predicting that the UK and its tech hubs will be hit hard by Brexit and there have been numerous reports of rival cities within the EU which have sought to position themselves as alternative options. However, we are yet to see this materialise and incentives and commitments such as those announced by the Chancellor in these innovative but essential areas have to be great news for the economy, the sector and those who advise businesses in it.

Of course, creating the next unicorn is no easy task but a serious level of investment of the magnitude announced should at least ensure those businesses with promise have the best chance to scale up even if they don’t reach the $1billion level. Likewise, there is little point developing these new technologies if the infrastructure and support is then not there to utilise them properly

Matthew Adam, Chief Executive Officer of We Are Digital:

With the UK economy now expected to grow by 1.5% in 2017, a downgrade from the 2% forecast made in March, coupled with the challenges of Brexit, the need for the UK to sit at the forefront of digital skills and inclusion is more pressing than ever. We need to be able to grasp, with both hands, the digital opportunities that present themselves to us in order to make us a true global digital force.

The reality is that we simply cannot afford not to. Independent analysis shows that getting the UK online and understanding how to use digital tools could add between £63 billion - £92 billion to UK Plc’s annual GDP. Indeed, it is my belief that economies which focus strongly on getting its citizens online are also more productive.

The Chancellor has said that a new high-tech business is founded in the UK every hour, which he wants to increase to every half hour. It is imperative we support this growth through the announced £500m investment in artificial intelligence, to 5G and full-fibre broadband. However, to bridge the need for the 1.2 million new technical and digitally skilled people which are required by 2022, we must create and support retraining opportunities across society to make the UK truly digital.

Technology improvements are causing widespread changes in every market and the public sector should be no exception, especially as it often faces the biggest social problems to solve. I’m glad the government is waking up to the fact that the latest technological advances don’t need to be assigned only to the private sector, but can do a lot of good to the community at large. We know from our direct work with the Home Office that every government and council department is moving its processes online. Whether it’s chatbots to automate processes, or solving how people engage with Universal Credit, there is so much we can do here with ‘Gov -tech’

I therefore welcome the Chancellor’s digital announcements today and consider this budget as not so much a leap in the right digital direction, but more a necessary conservative step.

UK Growth, Forex & Investment

Owain Walters, CEO of Frontierpay:

The Chancellor’s efforts to win younger voters from Labour by abolishing stamp relief for first-time buyers on homes up to £300,000, and on the first £300,000 of properties up to £500,000, come as no surprise. The potential for such an announcement has been a hot media topic in recent weeks and as such, we don’t expect to see any significant impact on the value of the pound.

“In the wake of this Budget, any real movement from the pound will be caused either by developments in the Brexit negotiations or the potential for a further interest rate rise. I would therefore advise any businesses that want to stay on top of turbulence in the currency markets to keep a close eye on inflation data.

Markus Kuger, Senior Economist, Dun & Bradstreet

It’s not surprising that the Chancellor opened this year’s statement with a focus on Brexit; even as businesses absorb the implications of the Budget, they have a close eye to the ongoing negotiations and any likely trade agreement, which is likely to profoundly impact their future. The government’s move to provide a £3bn fund in the event of a no-deal outcome is designed to increase business confidence. In the meantime the business environment remains challenging, and Dun & Bradstreet forecasts that real GDP growth in 2018 will slow to 1.3% (from 1.8% in 2016). Businesses should continue to follow the Brexit negotiations closely and consider that operating conditions could change dramatically over the next 18 months as the Brexit settlement is clarified.”

 Damian Kimmelman, CEO of Duedil

We welcome the government’s announcement that the Enterprise Investment Schemes’ (EIS) investment limit, for knowledge intensive scale-ups has been doubled.

The EIS has been great for attracting investment for small businesses, however we need to ensure investment through the scheme is not being used for capital preservation purposes, but instead to encourage the growth of companies.

The key to increasing investment in ‘higher risk’ growth companies through the EIS scheme, is to eliminate information friction. With more data, investors can price risk effectively, so they can lend to support the small businesses forming the backbone of the economy, driving growth, and creating jobs.

Lee Wild, Head of Equity Strategy at Interactive Investor:

This budget was always going to be especially tricky for the chancellor. Hitting fiscal targets amid wide divisions over Brexit, while also spending more on populist policies to distract voters from Conservative party infighting and dysfunctional cabinet, was a big ask.  Hammond wasn’t fibbing when he promised a balanced budget. Once tax giveaways, downgrades to growth forecasts, billions more for the NHS and the rest are put through the mincer, both the FTSE 100 and sterling are unchanged.

Given Britain’s housing crisis was an obvious target for the chancellor, he really needed something substantial to make his aim of 300,000 new homes built every year anything more than a pipe dream.  Committing to at least £44 billion of capital funding, loans and guarantees to support the housing market will go a long way to achieving the chancellor’s ambitious target. Abolishing stamp duty for first-time buyer purchases up to £300,000 is a tiny saving, however, and buyers, especially in London, will still require a huge deposit to get a foot on the housing ladder.

The market hung on Hammond’s every word, causing a comical yo-yo effect as the chancellor slowly revealed his strategy.  A threat to use compulsory purchase powers where builders are believed to be holding land for commercial reasons, could cause sleepless nights.

Overall, Hammond’s ideas are sound, but probably not enough of a catalyst to get sector share prices rising significantly near-term, given mixed results in the run-up to this budget.

Mihir Kapadia – CEO and Founder of Sun Global Investments:

The Autumn budget statement from Chancellor Phillip Hammond was as expected, with a few pleasant surprises. While Mr Hammond set out his policy proposals with a "vision for post-Brexit Britain", he also acknowledged that his Budget was "about much more than Brexit".  With the Conservatives struggling in the polls, the Chancellor was under pressure to regain support for his party, which is currently in a fragile coalition.

The expected announcements include the decision to abolish stamp duty for first time buyers on properties up to £300,000, addressing the housing crisis, an immediate injection of £3.75 billion into the NHS, investments into infrastructure (transport and network), freezing duty on fuel, alcohol and air travel, and finally a Brexit contingency budget of £3 billion.

While today’s budget was populist and aimed at the electorate, it has to be noted that the Office for Budget Responsibility (OBR) sharply downgraded both Britain's productivity and growth forecasts, as well as its business investment forecasts, meaning the UK's finances look set to worsen over the coming years. This does not factor the possibility of a Brexit-related downturn or a wider global recession, which has already been seen as overdue by many forecasters.

We expect the abolition of stamp duty for first time buyers on properties up to £300,000 will draw extra attention and headlines from much of today’s announcements. It is vital that we acknowledge the warnings from the Office for Budget Responsibility.

Angus Dent, CEO, ArchOver:

The UK’s productivity growth continues to decrease and we’re looking in the wrong place for answers. It’s not just a case of everyone working a bit harder. Investment in public infrastructure and fiscal policy will be the defining factors that help the UK catch up, while real growth will come from our SME sector.

Britain is known as a nation of entrepreneurs. Yet we’re in real danger of not giving our SMEs the support they need to thrive. We need a bottom-up approach where small businesses with bright ideas have access to the finance and advice they need to grow. Only then will we have the firm economic foundation we need to build our productivity post-Brexit.

The expansion of the National Investment Fund in today’s Budget is a good start, but too many SMEs still have to pay their way with personal savings or put their houses on the line as security if they turn to the big banks for help.

We need to inspire a new culture. We know there is an army of willing investors out there who want to support British business - lending across P2P platforms is on course to rise by 20 per cent by the end of this year according to data from 4thWay.

However, we need to raise awareness among SMEs of the different options available to help them finance their growth. SMEs need to take control of their own destiny. With the right finance in place, they can drive the whole country forward to new heights of productivity. We can’t just leave it to government – small businesses must be given the power and the cash to fulfil their potential.

Tax

Paul Falvey, tax partner at BDO:

It’s clear that the headline grabbing news revolved around the Chancellor’s decision to abolish stamp duty for first time buyers on properties purchased up to 300,000, at a cost of £600m a year to the tax man. Whilst this is important for people getting on the property ladder, there were other key assertions.

Firstly, HMRC will start to charge more tax on royalties relating to UK sales when those royalties are paid to a low tax jurisdiction.  Although this is only set to raise approximately £200m a year, it sets a precedent that tax avoidance will continue to be on the governments agenda. Implementing the OECD policies is a tactic we expected.

Furthermore, companies will pay additional tax on the increase in value of their capital assets from January 2018. The expected abolition of indexation allowance will mean that, despite falling tax rates, companies will be taxed on higher profits. By 2022/2023 this is expected to raise over £525m.

62% of the businesses we polled before the Budget said they will be willing to pay more taxes in return for a simpler system. Yet, once again, the government has done nothing to tackle the issue of tax complexity. It is a huge obstacle to growth and businesses will be disappointed that there was no commitment to setting out a coherent tax strategy.

Craig Harman is a Tax Specialist at Perrys Chartered Accountants:

Although it was widely anticipated beforehand, the only real rabbit out of the hat moment for the Chancellor was confirming the abolishment of stamp duty for first time buyers. This equates to quite a generous tax incentive for those able to benefit resulting in a £5,000 saving on a £300,000 property purchase.

The Chancellor has also stood by his previous promises, by raising the personal allowance to £11,850, and the higher rate threshold to £43,650. This is in line with the commitment to raise them to £12,500 and £50,000 respectively by the end of parliament.

Small business owners will be pleased to note that speculation regarding a decrease in the VAT registration threshold did not come to fruition. It was anticipated the Chancellor would look to bring the UK in line with other EU countries, however this will be consulted on instead and may result in changes over the next couple of years. Any decrease in the threshold could place a significant tax and compliance burden on the smallest businesses.

Ed Molyneux, CEO and co-founder of FreeAgent

I don’t believe that this is a particularly positive Budget for the micro-business sector. Rather than actually offering real support or meaningful legislation to people running their own businesses in Britain, the Chancellor has simply kept the status quo.

While it’s pleasing to see that the VAT threshold has not been lowered - which would have added a significant new administrative burden to millions of UK business owners - this is hardly cause for celebration. Neither is the exemption of ‘white van men’ from diesel charges, which is the very least that the Government could have done to protect the country’s army of self-employed tradespeople.

It’s also disappointing that there are still a number of issues including digital tax that have not been expanded in this Budget. I would have preferred to see the Chancellor provide clarity on those issues, as well as introducing new legislation to curb the culture of late payment that is plaguing the micro-business sector and further simplifying National Insurance, VAT and other business taxes.

Rob Marchant, Partner, Crowe Clark Whitehill

The Chancellor announced that the VAT registration threshold will not be changed for the next two years while a review is carried out of the implications of changing this (either up or down).

Having a high threshold is often regarded as creating a ‘cliff edge’ for businesses that grow to the point of crossing that line. However, keeping a significant number of small businesses away from the obligations of being VAT registered allows them to focus on running their operations without additional worry. Many small businesses will welcome the retention of the threshold.

The consultation should look at ways to help smooth the effect of the “cliff edge”, while continuing to reduce administrative obligations for small businesses.

Jane Mackay, Head of Tax, Crowe Clark Whitehill

The tax avoidance debate has centred around large multinationals and their corporate tax bills. High profile cases have eroded public trust in how we tax companies. By maintaining the UK’s low corporate tax rate, currently 19%, and reducing it to 17% from 2020, the Chancellor accepts that corporate tax is only of limited relevance in our UK economy. It accounted for around just 7% of UK tax revenues last year.

The Budget announces changes to extend the scope of UK withholding taxes to tax royalty payments in connection with UK sales, even if there is no UK taxable presence. There will be computational and reporting challenges, but this measure may pacify those who feel the UK is not getting enough tax from international digital corporates which generate substantial sales revenues from the UK

Healthcare & Retail

Hitesh Dodhi,Superintendent Pharmacist at PharmacyOutlet.co.uk

With a focus on Brexit, housing and investment into digital infrastructure, it was disappointing to see a many healthcare issues overlooked in today’s Budget. The additional £2.8 billion of funding for the NHS in 2018-19 is a undoubtedly a step in the right direction, but it falls short of the extra £4 billion NHS chief executive Simon Stevens says the organisation requires.

What’s more, the Budget lacked substance and specifics; it did little to progress digitalisation in the healthcare sector – an absolute must – while the opportunity to promote pharmacy to play a greater role in delivering front-line services to alleviate the burden on GPs and hospitals was also overlooked. These are both items that should feature prominently on the Government’s health agenda, but the Chancellor did little to address either in today’s announcement.

Jeremy Cooper, Head of Retail Crowe Clark Whitehill:

There is little in this Budget to bring cheer to the struggling retail sector.

The changes to bring future increases in business rates into line with the Consumer Price Index in 2018, two years earlier than previously proposed, is welcome, but is it enough for hard-stretched shop owners?

The National Living Wage will increase for workers of all ages, including apprentices, which is excellent news for lower paid employees. Retailers would not begrudge them this increase, but retail tends to have a higher proportion of lower paid employees and the impact on store profitability and hurdle rates for new stores should not be underestimated.

There is more positive news for DIY, home furnishings and related retailers in the form of the abolition of Stamp Duty Land Tax (SDLT) for first time house buyers. This should help stimulate the first time buyer market and free up the wider housing market which in turn should boost retail sales for DIY and home furnishings retailers from buyers decorating and furnishing their new homes.

Property & Real Estate

Paresh Raja, CEO of bridging specialist MFS

After an underwhelming Spring Budget that completely overlooked the property market, this time around the Chancellor has at least announced some reforms that will benefit homebuyers. While stamp duty has been cut for first-time homebuyers, the amount of money this will save prospective buyers is in reality still limited – the average first-time buyer spends £200,000 on a property; abolishing stamp duty for them will save them just £1,500.

Importantly, homeowners looking to upgrade to another property still face the heavy financial burden of stamp duty, which will ultimately deter them from moving house. I fear this will have significant implications in the longer term, decreasing the number of people moving from their first property purchase, and thereby reducing the number of properties available for first-time homebuyers, and reducing movement in the market as a whole.

Fareed Nabir, CEO and founder of LetBritain

“Having acknowledged the growing number of Brits stuck in rental accommodation, it’s pleasing to see the Government deliver a Budget heavily geared towards the lettings market. With 7.2 million households likely to be in the rental market by 2025, the Chancellor has seized the opportunity to continue with the recent wave of reforms by offering tax incentives for landlords guaranteeing tenancies of at least 12 months. This should hopefully have a trickle-down effect on rental prices, offering more financial manoeuvrability for tenants saving to buy their own house – something the Chancellor has made easier – while also providing additional security for renters.”

Richard Godmon, tax partner at Menzies LLP

We should to see house price increases almost immediately on the back of this announcement. His commitment to building an extra 300,000 homes a year is not going to happen until 2020s, so this measure could lead to market overheating in the meantime.

The removal of indexation allowance will come as a further blow to buy-to-let landlords, many of whom have been transferring their portfolios into companies since interest the restriction rules were introduced. This will mean paying more tax on the future sale of properties.

Now that all sales of UK investment property by non-residents after April 2019 will be subject to UK tax, it effectively means one of the incentives to invest in UK property by non-residents has been removed.

Jason Harris-Cohen, founder of Open Property Group 

There was a lot of speculation before the Budget that the Chancellor would reduce or temporarily suspend stamp duty for first-time buyers, in a bid to help young people get on the property ladder. What we got was the complete abolishment of the tax on first-time house purchases of up to £300,000, effective from today, and in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by first-time buyers will be exempt from stamp duty. This is arguably the biggest talking point of today’s announcement and as the Chancellor says will go a long was to "reviving the dream of home ownership".

It was equally refreshing to hear that the Government is committed to increasing the housing supply by boosting construction skills and they envisage building 300,000 net additional homes a year on average by the mid-2020s. However, I was surprised that local authorities will be able to charge 100% premium on council tax on empty properties, though I appreciate that this is a further stimulus to free up properties sitting empty and bring them back to the open market to increase supply. Conversely this could result in falling house prices if there is further supply and lower demand following a period of political and economic uncertainty.

What was disappointing, however, was the absence of any mention to reverse the stamp duty change that were introduced in 2016 for buy-to-let and second homes, which is currently deterring people from investing in the private rented sector. The longer it is around the more of a knock on effect it will have on the growing homelessness crisis, a problem the Government plans to eliminate by 2027 - a bold statement from Mr Hammond!

We’d love to hear more of Your Thoughts on Phillip Hammond’s Autumn Budget.  Will it benefit Britain and will the reduced growth forecasts have an impact?  Let us know by commenting below.

Since 1968, there have been 1,516,863 gun-related deaths on US territory compared to 1,396,733 war deaths since the founding of the United States[i]. This means that up to 2015, according to data collected by Politifact, the death toll for citizens and visitors of the United States from domestic gun violence exceeds that of all the deaths from all the wars the US has participated in since its inception.

The statistics on US gun violence remain mind-boggling to many. A study by Health Affairs states that more than 100,000 people are shot each year in the US. 350 people are estimated to have been killed in American mass shootings[ii] this year, according to data gathered by GunsAreCool - a sarcastically named community that tracks gun violence in the country. In comparison, 432 people were killed in mass shootings in 2016 and 369 in 2015, which means that on average, more than one person is killed in a mass shooting for every day of the year. According to the Small Arms Survey via the Guardian, America has 4.4% of the world’s population, but almost half of the civilian-owned guns around the world.

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For both individuals and society as a whole, gun violence imposes heavy psychological burdens. The media regularly highlight the emotional cost, and rightly so. But what is the economic cost of US gun violence? What is the financial cost to society from all that carnage?

The price tag

Back in 2012, Mother Jones, the liberal magazine, launched a three-year investigation, following the Colorado cinema shooting rampage in July, when James Holmes killed 12 people and injured 70. The magazine went through the combined annual impact of a total of about 11,000 murders, approximately 22,000 suicides and 75,000 injuries that are the result of gunfire. The findings of the investigation showed that the annual cost of fatal and non-fatal gun violence to the US was $229 billion, representing 1.4% of total gross domestic product. In comparison, obesity in the US costs the country $224bn, which makes the economic impact of gun violence higher than that of obesity. These $229bn are also the equivalent of the size of Portugal’s economy or the equivalent of $700 for every American citizen.

The study notes that about $8.6bn is direct cost, including emergency care and hospital charges, the expense of police investigations, the price of court proceedings, as well as jail costs. According to the investigation, $169bn goes to the estimated impact of victims’ quality of life, based on jury awards for pain and suffering in cases of wrongful injury and death, and the rest $49bn account for lost wages and spending.

It is of course worth mentioning the positive economic impact that the gun and ammunition manufacturing industry has on the country, which according to IBIS World was $13.5 billion in 2015, with a $1.5 billion profit. However, it is also worth pointing out the distinction between the profit from manufacturing the very products used in shootings, in comparison to the financial loss seen due to gun violence.

The impact on US firearm manufacturers 

In recent years, firearms sales tend to increase and gun stocks tend to rally in the immediate aftermath of mass shootings in particular. Shares on gun manufacturers such as Sturm, Ruger & Co. (RGR, +1.91%) and Smith & Wesson maker American Outdoor Brands (AOBC, +0.74%) rose sharply right after the mass shooting in Las Vegas from earlier this month, when 59 people were killed and hundreds were injured. Only a few hours after the deadliest mass shooting in modern US history, shares of Sturm, Ruger & Co. rose 3%, American Outdoor Brands jumped 5%, while Vista Outdoor (VSTO, -0.67%) popped 2%. The explanation behind this is quite simple - investors predict a rise in sales as people buy firearms to defend themselves and their families in the event of another potential attack. Sales are also likely to spike due to the fear that an attack may result in law changes and guns becoming harder to buy.

Despite the fact that mass shootings lead to increased firearm sales, research by Anandasivam Gopal and Brad N. Greenwood published on 28^th May 2017, points out that when mass shootings occur, investors appear to be reducing their valuations of publicly traded firearms manufacturers – an effect driven by the threat of impending regulation. However, these tendencies were most prevalent in 2009 and 2010, but seem to disappear in later events, indicating the possible markets’ acceptance of mass shootings as the ‘new normal’.

How do local economies respond to increased gun violence?

A report by the Urban Institute, published on 1^st June 2017, found that surges in gun violence in the US can ‘significantly reduce the growth of new retail and service businesses and slow home value appreciation’. According to the study, higher levels of neighbourhood gun violence drives depopulation, discourages business and decreases property values, resulting in fewer retail and service establishments, fewer new jobs, lower home values, credit scores and homeownership rates. The report features interviews with local stakeholders (homeowners, renters, business owners, non-profits, etc.), who confirm the findings, which state that  ‘Business owners in neighbourhoods that experience heightened gun violence reported additional challenges and costs, and residents and business owners alike asserted that gun violence hurts housing prices and drives people to relocate from or avoid moving to affected neighbourhoods’. In Minneapolis for example, the report finds that each additional gun homicide in a census tract in a given year was associated with 80 fewer jobs the next year, while average home values in Minneapolis census tracts dropped by $22,000.

Is gun violence really the ‘new normal’?

It seems as if the US lawmakers, and indeed large swathes of the US population, are now willing to accept gun violence as a part of their daily lives in a manner that may shock others. But what is more surprising is that a country founded on capitalism permits this as the status quo in the knowledge that gun violence is having a severe and negative impact on the US economy. From hospital fees through to deterring business investment, mass shootings and gun crime are the cause of considerable financial losses to the United States. These acts of violence cost the country a great deal of money, but most importantly – they cost lives. And although markets have seemed to accept mass shootings as ‘the new normal’, should this be the case for the rest of us too?

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[i] That figure includes American lives lost in the revolutionary war, the Mexican war, the civil war (Union and Confederate, estimate), the Spanish-American war, the first world war, the second world war, the Korean war, the Vietnam war, the Gulf war, the Afghanistan war, the Iraq war, as well as other conflicts, including in Lebanon, Grenada, Panama, Somalia and Haiti.

[ii] Mass shooting being defined by the FBI as any incident where at least four persons are killed with a firearm in a random act with little or no premeditation.

As expected, Mark Carney and the Bank of England have risen the UK interest rate for the first time in 10 years, stating that: “The time has come to ease our foot off the accelerator”.

The rate has risen from 0.25% to 0.5%, returning it to the same levels it was prior to a drop following the Brexit referendum result in June 2016, a move designed to stabilise the economy during a tumultuous market in the wake of the landmark vote.  The MPC (Monetary Policy Committee) voted by a score of 7-2 in favour of an increase, but has sought to curb any major fears of a quick rise and retain a level of cautiousness by stating in its report that, “All members agree that any future increases in Bank Rate will be at a gradual pace and to a limited extent”.

The rate rise has been expected to happen for some time and is seen by many as a direct response to protect British households from creeping inflation.  Mark Carney, Governor of the Bank of England, is tasked with keeping inflation at a target mark of 2%, however September saw it rise to 3%, its highest figure since 2012.

The rate increase was also announced in tandem with an upgrade on the growth forecast for this year, which has been raised from 1.3% to 1.5%.  The projections for 2018 have also been upgraded, and while this may sound promising for those who championed leaving the EU, the Bank of England has been very clear in asserting its position that Brexit is, and will remain, harmful to the UK economy.  The report states that Brexit is causing ‘noticeable impact on the economic outlook’, citing the ‘uncertainties associated with Brexit’ and ‘Brexit-related constraints’, as having a detrimental effect on the financial system.

For the average UK citizen, there are some concerns that the cost of borrowing will now increase and therefore negatively impact those applying for mortgages and loans.  The move is also expected to affect homeowners on interest only mortgages who have been enjoying low repayments with the potential to increase monthly payments.  With nearly 4 million homeowners currently on variable or base-rate trackers, an increase of up to £12 per month could be seen for those with the average repayment loan of around £90,000 on their mortgages.  There is also concern that many people who have never seen a rate-rise in their lives will be caught unexpected, and this could further squeeze a population where falling wages and consumer debt are prevalent.

The British pound fell sharply immediately after the announcement, but many analysts are still seeing this as a ‘one and done’ rise and do not expect to see any further changes emanating from the Bank of England until the terms of Britain’s Brexit is defined.

Budgeting is a highly necessary and mandated task for any business, with an extremely structured process in most cases. But as budgeting expands to include a broader scope within companies, how can we work towards a collaborative budget? Chris Howard, Vice President of Customer Experience, Centage, explains for Finance Monthly.

I’ve yet to speak to anyone involved in the budget modeling process who didn’t wish for an Excel feature that somehow made budget collaboration easier. And I speak to a lot of people.

The folks responsible for creating the ‘master’ budget models, often CFOs, don’t have an easy time of it. They need to gather input from numerous people within their organizations (most of whom have no background in corporate finance) and then validate the data they receive. All too often, they rely on managers to put together entire budgets based on higher level numbers, guidelines and goals they provide.

Once that’s done, they need to piece together a myriad of spreadsheets and apply complex formulas and macros to arrive at projections. This last bit typically occurs late into the night.

But here’s the thing: Excel was never meant to be a collaborative tool. It simply wasn’t designed to farm out files and to collect and manage the input of multiple users. That means even the most advanced power user can’t deliver the level of collaboration finance teams need.

Beyond input consolidation, the CFO’s I speak to say they have an urgent need for automated rigor in their budget models to ensure accuracy. It’s not uncommon for a CFO (or another budget contributor) to find that an error – such as a broken link or formula – which causes a costly displacement in the budget. The result is a lot of discomfort.

Given needs and constraints of budget modeling, what does a truly collaborative budget look like? How does it work? Based on what I’ve heard from CFOs in the mid-market, here’s what I think are the requirements of a collaborative budget model:

Bottom-Up vs. Top-Down Management

Although it’s the finance team’s responsibility to manage a budget, the budget itself belongs to every department within the organization. It’s the CMO who determines how to spend the marketing budget, and the CTO how to best manage IT investments. This means that budgets must be managed from the bottom up, rather than top down, and that buy-in is essential. But when a CFO is forced to control the budget model via a master spreadsheet, those models are, by definition, managed from the top down. This results in a disconnect between the model and the day-to-day activities of an organization. Monitoring performance vs. plan becomes impossible.

Role-Based Security

Budgets are filled with highly sensitive information, personnel data, salaries and the like. A collaborative budget should prevent the wrong users from accessing data that’s not directly related to their roles in the organization. For this reason, a collaborative budget model should have role-based security with an interface that’s customized to the user’s function. What the VP of Marketing sees should be very different from what the CFO sees. Needless to say, this is far outside the realm of Excel’s capabilities.

Financial Integrity Safeguards

In a true bottom-up collaborative budget, most of the contributors will have no background in corporate finance, and little understanding of the differences between a balance sheet, cash flow or P&L statement. How do you ensure that input from these contributors is correctly tied to the right outputs, and is fully compliant with US GAAP accounting rules?

Collaborative budgets need some kind of built-in rigor that protects the financial integrity of the outputs, allowing non-finance team members to enter data without breaking things. In other words, data entered by facilities management is automatically tied to the correct outputs without that user even realizing it.

Self-Serve Reporting

Finally, a collaborative budget must promote self-sufficiency, especially when it comes to reporting. Every CFO I speak to tells me his or her goal is to create reports once – with financial rigor firmly in place to ensure integrity – and then hand over the reins to the CEO or Board. This is the only way a CEO is free to monitor performance vs. plan, cash flow or P&L on a monthly or even a weekly basis on their own, and without the CFO’s constant involvement.

In order to turn over the reins, the entire budget needs access to the data in real-time, otherwise the CFO will be forced to update the reports manually (hardly the level of self-sufficiency they’re looking for).

Why a Truly Collaborative Budget is Worth Working Towards

A truly collaborative budget model will, by definition, require finance departments to jettison their budgeting spreadsheets – a painful exercise given that most of them have been working with Excel since their pre-college days. But the payoff will be huge.

A budget model that combines historical information with real-time data is the only way to spot trends, threats and business opportunities. And it will be “board ready,” meaning it will allow teams to respond with accuracy to the Board of Directors when they ask about ramifications of any number of business changes on the P&L, balance sheet and cash flow statement.

Put another way, it’s time to say goodbye to that monster spreadsheet your team just finished creating. Instead, implement a budget that lets you combine data from multiple sources to present a single version of the truth. You’ll get a living, evolving document that significantly improves the quality of information you deliver throughout the year.

Research from leading information security company Clearswift has shown that the education sector is rivaling technology for the top spot when it comes to GDPR preparedness.

The research surveyed 600 senior business decision makers and 1,200 employees across the UK, US, Germany and Australia. When asked whether firms currently have all of the necessary processes in place to be compliant the top five performing sectors included technology and telecommunications (32%), education (31%), IT (29%), business services (29%) and finance (29%).

The survey has also revealed, of all the sectors, healthcare is the least likely to be ready for the upcoming GDPR, with only 17% of private and public sector bodies claiming to have the processes in place to comply with the legislation. Following closely behind is the retail sector with a mere 18% of the industry ready for GDPR, and marketing at 19% and legal at 21%.

Overall, the research has shown that only a quarter (26%) of businesses are currently ready for General Data Protection Regulation (GDPR). However, with the deadline fast approaching, a further 44% are putting processes in place and expect to be ready in time for May next year, when the legislation comes into force.

Dr Guy Bunker, SVP of Products at Clearswift, said: “With 64% of UK businesses currently making moves towards GDPR compliance, the outlook is not as bleak as previously thought.

“It is clear that the regulation has grabbed the attention of businesses, but what is important is that their focus is in the right place. Those viewing GDPR as an opportunity will be in the best position to not only comply, but evolve their organisations, enhance their security posture and achieve business growth.

“Educating employees about how to safeguard critical information, introducing data protection guidelines and instilling a culture of data consciousness in the workplace will not only bring organisations closer to compliance but help reduce the chances of a data breach.”

Although the majority of businesses may not currently be ready for GDPR, employers have begun to identifying the departments within their organisations where data protection is needed most. The most common departments to have budget allocated for spend on GDPR are finance and IT (31%). This is particularly relevant as most businesses believe their critical data predominantly lies in the finance department (55%), suggesting that finance will be under the spotlight in the coming months as organisations look at how they can prepare for GDPR.

When looking at the size of an organisation, 46% of the businesses that reported they are ready for GDPR had between 500 – 999 employees. Compared with larger corporations of 5000 or more employees, only 19% reported they are ready, suggesting that bigger is not necessarily better.  Smaller enterprises are leading the way over their larger counterparts in putting processes and technology in place ahead of May 2018.

While many organisations are expecting to be ready for GDPR, our research has shown that a typical company-wide IT project takes around six months to roll-out, meaning those that aren’t ready now are running out of time to introduce new technology which could help them comply with the legislation.

Dr Bunker added: "The key focuses for GDPR compliance are educating employees and understanding where your data lies. However, organisations that are still looking at how they can prepare should focus on security solutions that can be integrated within existing infrastructures, such as Data Loss Prevention (DLP) tools and content inspection software, which are the biggest priorities in preventing data loss and can be used to demonstrate compliance with GDPR legislation. This can save time and costs by adding these to existing security investments instead of the removing old technology and replacing it with completely new solutions.”

(Source: Clearswift)

By Andrew Durlak, Co-Founder & VP of Operations at Scout RFP

The use of digital technologies in non-customer-facing operating activities lags behind technology utilization for other critical business activities, according to a recent HBR report in partnership with Scout RFP. (And yes, that lag includes various aspects of finance — scary, right?) This is a problem, particularly when digital technologies are a top driver in critical strategic prioritization, as another recent report by Ernst & Young points out. If businesses aren’t fully up to speed in the digital transformation, how can finance leaders truly engage in strategic leadership – such as streamlining revenue and increasing ROI from tech investments – within the organization?

Finance leaders can blaze the trail in this area, accelerating digital transformation and positioning themselves as proactive leaders within their respective companies in the process. The first step is to broaden finance’s view of digital transformation outside of traditional FinTech. One area that poses the promise of high ROI is procurement — an area of the business that often falls under finance’s oversight, yet is rarely tapped to its true potential for bottom line savings.

Undiscovered potential

 While sourcing is a business function that is often overlooked in digital transformation efforts, it can also have a massive bottom-line impact on the organization: As the HBR report points out, strategic sourcing has the potential to drive up to 400 percent ROI and “any cost savings realized through sourcing improvement drop directly to the bottom line, which in turn can have a substantial impact on profitability.”

The report also goes on to highlight more untapped benefits to strategic sourcing: “Although some dimensions are more straightforward to quantify than others, the concrete financial returns of focused sourcing and procurement efforts are quick to accrue and very easy to identify, executives say. The work is tangible and measurable, with a rapid and unambiguous impact on shareholder value. Once the company undertakes improvement, executives point out, the financial benefits begin to accumulate rapidly.”

Taking the first step 

With savings that go directly – and quickly – to a business’s bottom line, there’s no reason that finance leaders shouldn’t prioritize procurement in their quest for digital transformation within the company. As they think outside of increased sales to improve cash flow, the impactful, direct savings that strategic sourcing delivers is an obvious answer. Strategic sourcing brings a notable advantage to traditional cash flow tactics through efficient and effective processes.
In order to take the first step in sparking digital movement to establish these strategic processes, there are three key ways finance leaders must approach the transformation within their business:

1. Encourage stakeholder buy-in.
   Stakeholders must engage to truly make the adoption of new technology successful. Before implementing a new solution, finance leaders can encourage this buy-in by clearly defining the stakeholders’ needs met by the solution — whether that be a more collaborative team environment or accelerated savings. When compared to the current results stakeholders are seeing from existing technology or processes, a new solution worth implementing should have the power to speak for itself.
2. Select the right technology.
   Technology that prioritizes automation and collaboration yields efficiency. Adopting technology that allows cross-functional teams to collaborate, streamlines communication and project management in a single platform, and encourages more strategic vendor decisions means quicker savings that can then fuel even further technology adoption within the business. Digital transformation is a cycle — as finance leaders pursue forward-looking digital adoption, they open a new channel for accelerated digital transformation within the business as a whole.
3. Make implementation easy.
   While finance leads the business in a digital movement, quick and easy onboarding and streamlined implementation are key to continuing that momentum for further digital adoption. To keep stakeholders engaged even after the initial touchpoint, finance leaders must create an adoption process that is as easy and streamlined as possible. This will encourage users to dig into the solution early on, promoting familiarity and ongoing use of the technology. When users are fully engrained in a solution from the start, it makes it nearly impossible for use of the technology to fizzle out, establishing long-term impact.Traditionally, accounting and ERP software have been considered the fulcrums of change for digital transformation within the enterprise. While these certainly have their merits, don’t forget the path less (digitally) traveled. Finance’s responsibilities have shifted, and its leaders must adjust priorities accordingly. “Where once its remit was predominantly that of a reporting function that focused on balancing the books, it will become a data-driven decision-center,” Ernst & Young’s The DNA of the CFO report points out. Tapping undiscovered resources –like procurement– to jumpstart digital transformation, and taking deliberate steps to make sure that digital adoption reaches the business as a whole, puts the necessary parts in place for finance to adjust its focus to more strategic, data-driven decisions for the business as a whole.

Website: https://www.scoutrfp.com/

The collapse of Monarch is “a not-to-be-ignored red flag” for people on the cusp of retirement, warns the boss of one of the world’s largest independent financial services organisations.

The warning from Nigel Green, founder and CEO of deVere Group, comes as Chris Grayling, the Transport Secretary, today faces questions over Monarch Airlines, once one of the UK’s biggest holiday airlines, which ceased trading at the beginning of this month.

Mr Green comments: “The high-profile collapse of Monarch, together with the accusations of asset-stripping, leaves yet another pension fund in question.   Indeed, its collapse should serve as a not-to-be-ignored red flag for people on the cusp of retirement.

“It has been reported that the pension fund, which is in the government’s lifeboat rescue fund, the Pension Protection Fund (PPF), could have been left short when it went under back in 2014.

“The PPF is an invaluable resource. But with UK final-salary pension schemes now having an alarming £1.6tn of liabilities and a £224bn deficit, and the problem only getting worse, it can be reasonably assumed that it is perhaps seriously feeling the squeeze.  How many more high profile collapses could it sustain?”

He continues: “The truth is despite rising equity markets and a global outlook looking relatively rosy, many firms are still battling to fund their pension schemes.

“It is crucial for pension members to understand exactly what represents a risk to their pensions and how these can be mitigated.

“In the same way people have their cars regularly serviced, it is now more important than ever that individuals seek independent advice on an annual basis to ensure that they are completely aware of their pensions and how much they should expect to receive in retirement.

“Regularly reviewing and taking action on your financial planning strategy, where appropriate and possible to do so, will mean that you’re less likely to receive an unwelcome shock upon retirement.”

Mr Green concludes: “Now is the time that savers should ensure that they are properly diversified to mitigate the increasing threats to their retirement funds.”

(Source: deVere Group)