The Press and Journal (Inverness, Highlands, and Islands)
Technology has taken a tighter grip on business
This year will be remembered for the many unprecedented challenges and disruptions around the world. It may also be remembered for the increased use of technology we have all seen, and significant reliance on it for people and businesses everywhere.
Now, more than ever, technology is at the heart of every business. This has created opportunities for companies providing technology solutions to accelerate growth, and for all businesses to embrace new ways to increase efficiencies and streamline their operations.
Deal activity in the Scottish technology sector has remained buoyant as private equity and strategic buyers continue to seek acquisition and investment opportunities to support growth aspirations.
Some earlier-stage Scotland-based technology companies, most notably in Edinburgh, have also succeeded in attracting growth capital at a time when many investors are being more cautious or concentrating on managing their existing portfolios.
The trend of mergers and acquisitions (M&A) activity in the sector is certainly positive.
There is a real sense that businesses operating in key sub sectors, such as cloud computing, fintech and IT support services, and in particular those businesses with a Software as a Service business model, will be targets of heightened interest and focus from an M&A perspective in the coming months.
At a time when most firms have a renewed focus on efficiency, having access to meaningful data to aid decision-making is key.
With this in mind, cloud accounting software applications such as Xero are now a “must have” and the benefits for firms are clear to see: Remote access; multiple internal users with varying permissions if required; and login access for trusted advisers.
There are also several other apps on the market which will “talk to” accounting applications like Xero – multiple stock management systems and Float, a cash-flow forecasting and scenario planning app, being good examples.
There are three key pillars which support any successful business, and ambitious technology companies looking to grow or attract investment should introduce them, if they have not already done so, as quickly as their budgets will allow.
The first pillar is having accurate management accounts every month.
The second is having a trusted adviser to meet once a month, in order to help interpret the businesses’ profit and loss account and balance sheet.
The third pillar is having timely and accurate annual statutory accounts and tax returns prepared. The more accurate the monthly management accounts are, the easier it should be to prepare these annual documents.
My advice to technology companies is for them to have their annual documents prepared as soon as possible after the financial year-end.
Most firms in the sector will be submitting research and development tax claims which will mean cash coming back into the business. Companies should aim to access this cash as quickly as possible following their year-end.
A Virtual Finance Function (VFF) is Anderson Anderson & Brown’s bespoke solution designed to deliver the three pillars.
Not all companies either need or can afford a full-time, in-house team of finance professionals. VFF is a technology-based solution which frees up time for founders and leadership teams to focus on running and growing the business.
It uses cloud accounting applications like Xero, provides monthly interaction with an experienced, chief financial officer-level accountant and ensures that all operational, finance and compliance needs are met.
The requirements of both scale-ups and well-established companies can also be met.
While outsourcing elements of a finance function may not be new for businesses, a focus on this approach has certainly been heightened over the past few months.
Businesses may be looking at both their headcount and office space, so I advise any company to consider a more flexible, cost-effective way of delivering key financial data to decision-makers.
No one can fully predict the rest of 2020 but from a technology perspective the pattern of changes and developments we have seen – in the sector itself and across many other industries around the world – is likely to continue. Technology may be increasingly in the spotlight and more so than anyone could have anticipated.