Crowd Source Funding is a “new revenue stream” for the Australian accounting industry.
One of the benefits is that you do not require a “special license” to act as an advisor to a company which is interested in seeking capital by utilising Crowd Sourced Funding.
Crowd Sourced Funding presents accountancy businesses with a great opportunity to differentiate your accountancy business in the market place.
Crowd Sourced Funding will not be subject to the competitive pressures and Australian Taxation Office driven changes that are affecting the income tax return preparation market. Crowd Sourced Funding advice and implementation will definitely not be a commodity product!
There are a significant number of components to the Crowd Sourced Funding “revenue stream” including:
Crowd Funding Offers Significant Benefits to SMEs and Accountants
A new opportunity for small/medium enterprises, inventors and entrepreneurs has emerged with the passing by the Australian Senate of the Australian government’s Crowd Sourced Funding Amendments to the Corporations Act.
SMEs and others now have three distinct opportunities where they can raise capital from the public without producing a prospectus. These opportunities for capital raising are:
CCH iFirm presented a very interesting webinar earlier this week which raised a number of questions relating to how you might go about building a “Future Fit Accountancy Business”.
What do you need to create an outstanding accountancy business?
How do you view challenges:
Many of these challenges will present opportunities if you have a good look at them.
These are opportunities that can add value to your clients as well as to your own business.
Have you contacted your clients to ascertain their debtors’ days outstanding? How many of your clients have debtors’ days outstanding similar to the average figure determined in a worldwide review that identified Australia as having the “longest debtors’ days outstanding in the World”?
The review, covering 80 countries, determined that Australia had an average debtors’ days outstanding of 56.4 days which was substantially higher than any other country!
This is a national disgrace!
If accountancy businesses are performing as the “trusted advisor” to a small/medium enterprise surely this means proactively assisting your clients to get their debtors’ days outstanding close to 30 days as part of the job description.
Where do you start?
At long last the Australian parliament has passed the legislation that will enable companies to raise capital from the public. This is a great decision for small medium enterprises, entrepreneurs and members of the public who wish to invest into a new type of company!
The legislation indicates that the only entities which can raise money using the crowd sourced funding equity method will be an unlisted public company. The legislation enables a proprietary limited company to be able to be converted to an unlisted public company to enable the company to then be able to raise money from the “crowd”.
Unlisted public companies will be able to:
Retail investors will be able to invest up to $10,000 every 12 months into a company. The “cooling off period” for retail investors is five days.
Sophisticated investors are not subject to any investment limit and there is no “cooling off period” for them.
“90% of small business failures are due to poor cashflow” Ms Kate Carnell the Australian Government’s Small Business Ombudsman said recently.
“Australia has the longest debtors days outstanding in the world”. A survey of over 80 countries found that Debtors Days Outstanding in Australia was 26.4 days higher than the normal payment term of 30 days meaning that debtors’ days outstanding on average are 56.4 days.
Where to Start?
Identify your clients that have debtors’ days outstanding in excess of 40 days or:
Why not have a conversation with your client about the benefits of you undertaking a review of their debtors’ system to ensure that it is working appropriately?
Accounting Market Pulse (produced for the Commonwealth Bank) December 2015 edition identified that the main areas of expected growth for accountancy businesses over the period from 1st January 2016 to 30th June 2017 would be:
A key component of Business Advisory Services and Management Consulting Services is supplying a Virtual Chief Financial Officer Service to small/medium enterprise clients.
In various surveys produced over the last 15 years involving thousands of small/medium enterprise operators one of the continually identified services required by the SME market was related to Chief Financial Officer Services.
Whilst there is some debate as to the degree that individual accountancy businesses will be affected by changes in the marketplace relating to taxation returns, financial advice and superannuation fund audits, you would be a very brave accountancy business if you elected to reject these changes out of hand!
At the very least why not have an each way bet!
There are numerous examples all around us about changes that are occurring in the business community – think about:
now competing with businesses such as Amazon and other internet selling organisations.
As a “numbers orientated person” my suggestion is that in the first instance you identify what the “Potential Fee Slippage” might be for your accountancy business.
There is no doubt that there are changes in the accounting market. These changes are occurring at an ever faster pace! How you respond to these changes will significantly affect what your accountancy business looks like in a few years’ time.
Potential “fee slippage” is a relatively new problem for accountants. “Fee slippage” is caused by a number of things including:
Accountants can assist small/medium enterprises to reduce their Debtors’ Days Outstanding by producing a Debtors Systems’ Manual.
A written debtors’ manual, together with targeted training of the small/medium enterprise’s staff responsible for credit sales/debtors will assist an individual business to play its part in reducing Australian small/medium enterprise’s debtors’ days outstanding “from being the worst in the world“. Described by Australian Government’s Small/Medium Enterprise Ombudsman, Kate Carnell as being the “SILENT KILLER OF MODERN BUSINESS“. (Australian Financial Review article)