Author: Darren Gorton, Finance Executive at the South African Institute of Professional Accountants (SAIPA)
 
Cryptocurrencies are dominating the media. This one has collapsed, that one is on the rise, and a new one is around the corner. Their flavour isn’t quite as piquant today as it was yesterday thanks to fraud, an upsurge in Initial Coin Offerings (ICO) and the challenges that face its legislation and regulation across country and government.
 
In April the South African Revenue Service (SARS) announced that it will be treating cryptocurrencies using normal income tax rules. Affected taxpayers will, therefore, be expected to declare cryptocurrency gains or losses as part of their taxable income in the tax year in which it is accrued.
 
Cryptocurrencies are also often confused with blockchain which is a complex, layered technology that provides the backbone of cryptocurrency, but has the potential to deliver so much more to enterprise, industry and the consumer.
 
Cryptocurrencies may be getting all the airtime, but blockchain is the underlying technology, and this application of the technology is only a small part of what this technology can enable. Blockchain itself is largely unexplored, even though it has been around for nine years now.
 
To fully understand the potential of blockchain, it’s worth understanding precisely what it is and what it is not. According to Deloitte, blockchain is defined as a ‘digital and distributed ledger of transactions, recorded and replicated in real time across a network of computers or nodes’. It is already being used as a way of replacing databases thanks to its secure, centralised network – taking the vulnerable database of today and turning it into something that can be trusted.
 
If a bank runs its own database, they can change information without anyone knowing. With blockchain, it is impossible to do so without leaving a digital trail. This means it provides a system that all parties can trust inherently, and the applications of this high level of transparency and security aren’t limited to just the finance industry.
 
Removing the middleman
By implementing blockchain, the business can cut out the middlemen who originally provided the verifications needed for transactions. There is even talk of it being implemented in security exchanges where the exchange is currently the middleman between the investor and the company they want to invest in. While the technology may not have an immediate and profound impact on the man on the street, for the accountant it potentially offers an additional layer of trust to the numbers.
 
Blockchain provides the certification between two parties in a transaction, acting as the verification in itself. There is increased emphasis on the validity and accuracy of the information. The Professional Accountant (SA) can lean on the security afforded by blockchain to focus on adding value to the enterprise across financial reporting, analysis and insights.
 
Of course, this does mean that the accounting industry needs an understanding of the technology, how it supplies the verification and the reasoning behind its security and validity.
 
Businesses are set to adopt this technology, of that there is no doubt. It won’t happen overnight, and the middlemen are going to push for a lot of legislation to delay the advance of blockchain technology as far as possible or even make some of the applications unlawful. It is a battle that technology will most likely win in the long run, and the Professional Accountant (SA) needs to know how this will impact on clients and the industry they are working in.
 
For the Professional Accountant (SA), the pressure is on. By understanding how blockchain works and the impact it has, they can provide clients with exceptional insight into everything from the latest regulations to innovative applications.
 
The circle of success
In South Africa, we still have a way to go, but that doesn’t mean that the Professional Accountant (SA) can put their head in the sand and ignore it. As cryptocurrency fluctuates and organisations such as the Reserve Bank, SARS and other government departments implement regulation to manage the movement of money around the globe, blockchain is going to evolve at a rapid pace.
 
Another aspect to consider is information. The POPI Act and other similar forms of legislation that control information are set to impact on the development and adoption of blockchain. It connects to the digital lives that people are leading, the regulation around what companies can or cannot maintain, and how blockchain can support compliance.
 
It is difficult to say how blockchain and cryptocurrencies are going to play out. The Professional Accountant must be aware of how cryptocurrencies are declared in business records and monitor regulation. They have to know what to look out for, the risks that are involved and the impact on the business. And they need to recognise that these technologies aren’t going to leave any time soon.
 
ENDS

MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za  
 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants

By: Marnus Broodryk, Founder of The Beancounter accounting firm
 
About the author: In addition to being a Professional Accountant (SA) and a member of the South African Institute of Professional Accountants, Marnus was asked in 2016 to participate in M-Net’s reality series Shark Tank South Africa and he hosts a weekly insert on kykNET’s Winslyn, where he shares advice and tips with aspiring and established entrepreneurs on how to start, manage and grow a business. http://marnusbroodryk.com/about/
 
I can’t tell you exactly what 2018 has in store for you as a professional accountant. But I can say with great certainty that how you approach business this year will determine how successful you are. Here’s my advice for staying ahead of the curve.

Don't get ahead of yourself
Too many accountants worry about maturing technologies like Blockchain, AI and robotics stealing away their income. Some of you have weathered radical changes in the business environment for decades. What’s different now? Sure, we know these developments will be disruptive, but we don’t even know when or to what extent.
 
Instead of fretting over what might happen in the unforeseeable future, I suggest that you rather focus on imminent changes we can expect over the next three years, by which time they’ll be considered the new normal. Research those certainties and decide how you can start preparing for them today.

Stop time
If you haven’t heard, hourly billing is dead. Fixed fees are the future. You can kick against it all you want but clients who have tasted fixed fee services won’t be coming back ... ever. They like knowing what they’ll pay upfront because nobody enjoys a bill loaded with unexpected charges. Some forward-thinking firms saw an opportunity early on and introduced fixed fees as their competitive advantage.
 
Now it’s becoming the standard and your only option is to follow suit, so start switching over now. Rather than worrying about how much income you’ll lose, think of how many grateful customers you’ll gain.

Evict the vampires
Keeping customers happy is worth every effort most of the time. But not all clients are right for you and those who aren’t will quickly suck the energy and fortunes from your business. They demand the best service at a discount, but their account is always in 60 days.
 
Or they’re just never happy, even with quality everyone else raves about. Do yourself a favour: run a Pareto analysis on your debtors, identify the 20% that causes 80% of your problems, and cut them loose. Then spend more time on the 20% that brings in 80% of your sales.
 
These days we shop, bank, socialise and even hail taxis online. Yet, when it comes to accounting, many practitioners still use legacy desktop software and transport data from and back to their clients on a flash drive, sometimes interrupting business for days. With cloud-based accounting systems gaining traction, employees can work from any location at any time.
 
Organisations who have switched over will expect their accountants to follow suit. My advice is to get up to speed or risk losing clients. Learning popular systems will take time but the payoff in customer retention and satisfaction is worth it.

Feed your chefs
Accounting is a very personal service. You can automate the basic bookkeeping and reporting functions all you like but your clients still want to deal with people they trust to advise them on their financial management concerns. The ones who do a great job will gain their personal confidence and loyalty.
 
We’re talking about your employees here. If you treat them poorly and they resign, the clients who believe in them may follow. So, don’t just give them a fair deal. Incentivise them to stay and perform to their best ability. If you look after them, they’ll look after your clients.
 
The best way to handle change in the business world is to develop a mindset that embraces it. Those who do will survive and thrive. Think of it as a rollercoaster. If you try to stand in its way, you’re going to get hurt. So why not jump on and enjoy the ride?
 
Former industry leaders like BlackBerry and Nokia lost massive market share because they refused to accept the new direction consumers were heading in or adapt their approach accordingly. But the true entrepreneur remains flexible, expects change and keeps an eye out for the opportunities that accompany it.
 
As you progress through 2018, keep these simple but powerful ideas in mind, especially the last one. There’s no challenge that can’t be improved by our willingness to accept it and our flexibility in dealing with it.

ENDS
 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za 
 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants