First an apology for a long hiatus – writer’s drought, father of two, World Cup, craft beer, personal training…choose an excuse that you find palatable.
And if those aren’t to your liking, here’s a summary of what we’ve been working on behind the scenes:
I am pleased to announce that we have opened an office in Singapore April 2018, headed by our very capable director Kin Seng, supported by a combination of our favourite “robots/software” and existing, amazing but lean HK team.
Our footprint now includes Malaysia, where we have been able to source awesome accounting talent that can communicate in English, Chinese (Cantonese/Mandarin) and other Asian dialects to better support our existing team and most importantly, our international client base.
Off the back of our extended coverage, we are now known as Cornerstone Management Group Asia – pretty original I know (still an accountant deep down).
In celebration, we are launching a low-touch accounting solution geared towards digital consultants, marketers, agencies – businesses which do not sell physical products and/or hold stock inventory.
The solution is powered by our bots, programmed and reviewed by Cornerstone logic – it allows clients to easily get their bills/expense receipts to us at Cornerstone through 3 channels:
Phone App – take a picture with the app. Yes, it’s that easy.
Desktop – drag and drop into the RB app through web browser.
Email – email the attachment to a dedicated address
Our team takes care of the rest and the bill/expense is booked to Xero.
We’ve also built an automated reconciliation software for high-volume e-commerce operators that run on Shopify, Stripe and Paypal.
Put simply, we can reconcile up to 1000s of Shopify orders per day to Stripe/Paypal payments in seconds – and then auto post to Xero for daily reporting.
SKU codes from Shopify are sync’d through so you’re covered for automated COGS/Inventory journals and gross profit calculations!
Designed with an open API so it can also talk to other softwares and/or marketplaces (e.g. inventory management, Lazada), although this will require further development.
Amazon Marketplace Xero accounting add-on
We haven’t forgotten about Amazon sellers – a really cool app has been in our testing labs for a while and until we felt that it had reached Cornerstone’s standard of accounting integration maturity, we held back – so we’re happy to recommend using A2XAccounting (https://www.a2xaccounting.com/) to integrate Amazon Marketplace sales, fees, COGS and FBA Inventory to Xero.
Still under wraps in our labs is a Xero integrated, customisable, model-driven, 3-way forecast dashboard that we are building to improve our engagement with you, our clients. We see that our value going forward, is to help you navigate the uncertain future, rather than just talking about the past.
Last month, I shared some basic thoughts immediately before Chief Executive Carrie Lam’s maiden address. Let’s do a quick recap on her policies aside from housing (although an important topic, but not the focus of this particular newsletter).
The underlying message conveys a vision for Hong Kong to head towards a “let’s bunker down and create a better Hong Kong for the next generation”. Which begs the question, has Hong Kong simply been treading water the past 15 years OR is this atypical “spin-doctoring” to win votes but with no real execution plan or milestones for accountability?
It seems that the government is looking to double down in Innovation & Technology (I&T) and Creative industries where Hong Kong has a “competitive edge and much potential.*” Take a look at the numbers:
Innovation & Technology – Total $14.2 billion
$10,000 million for University research funds
$3,000 million for student scholarships along with postgraduate programmes
$500 million in a “Technology Talent Scheme”
$700 million to develop Hong Kong into a Smart City
Creative Industries (apparently specifically the design industry) – Total $1billion
$1 billion into the CreateSmart Initiative
Roughly $15 billion in investing in the future. Not bad in isolation, but comparatively, the Shatin to Central Link cost roughly $100 billion ($79.8 billion + $20 billion) **? Suddenly, $15 billion doesn’t seem like much.
More specifically, $0.7 bilion to develop Smart City projects is extremely low. Especially compared to Singapore’s S$2.4 billion (HK$13.7 billion) budget to spend on Smart City initiatives***. Perhaps, a more objective question, what Smart City deliverables should we expect from a $0.7 billion investment?
Let’s take a look at two items that will directly benefit SMEs.
Tax Rate Reduction
We have all by now heard of the 8.25% profit tax (for the first HK$ 2 million profit). How the rate will evolve afterwards is still unclear, but there aren’t many nations in the world that provide such a simplistic and incentivized tax scheme for corporations.
How is your business ready to benefit from this? Perhaps after this legislation passes in 2018, it’s simply a good time to register a profit? Or more complex matters such as potential entity restructure within the new tax boundaries?
Sadly, Hong Kong has had incentivizing tax rates for a long time now, but will the benefit of this additional tax reduction smooth over the difficulties in Talent Acquisition, Office/Storefront Rental or Archaic Beauracracies? Let’s not forget the increasing difficulty to open a company bank account which is one of the most basic necessities for any business (there are organizations out there that can help you with business banking facilities. Check out Neat).
Research and Development Deductions
I suppose the biggest carrot would be in R&D. A 300% tax deduction for the first $2 million spent on eligible R&D was stated in the address. Coupled with a halved corporate tax rate, that’s a huge incentive, but also opens up issues such as “what is eligible research and development?” and “does the Inland Revenue need to re-interpret their stance on R&D conducted by HK companies in light of the increasingly common, digitally nomadic (offshore) work culture crucial to this business phase?”****
Details on her statement need to be clarified, but just as importantly how will your firm start accounting for the R&D that’s performed to benefit from this policy?
Get ready to capitalize on these policy changes. Obviously, as an accountancy firm, our shameless sale line – make sure your accounts are in good shape to start!
It’s been a while since I last wrote but a recent clash of titans caught my eye – no not the McGregor vs. Mayweather, but the Musk vs. Zuckerberg twitter exchange on AI.
Far from the cutting edge of artificial intelligence (AI) or machine learning (ML), needless to say, I am a proponent of technology development that improves our lives, personal or business.
We’ve all seen the proliferation of companies building software/hardware and services to streamline tasks, social network, disrupt and improve archaic processes within industry sectors. For ease of communication, in this article, I will refer to the aforementioned phrase in italics simply as “products”. Some of these products have made a fundamental difference in the way we operate, others are just being created to capitalise on the “now”, “quick-fix” and our self-indulgent nature.
This latter group multiplies exponentially – today there are so many apps and wearables* with a new feature that is instantly captivating yet disposable. What these lack, in my opinion, is a customer stickiness that has, at its core, elements that address a digital Mazlow’s hierarchy.
Oversimplified, both diagrams suggest that if basic lower levels are not met, there is no desire or purpose to pursue higher levels.
Looking at the human chart, the fact you are reading this article on a phone, tablet or computer, I can assume that you are safely beyond the initial basic needs and are wandering in the upper wedges along with the rest of humanity. With the rapid advance and adoption of the Digital Age, millions of us are using apps/wearables as part of our search to satisfy our upper needs – we are driving demand and supplying data in parallel.
Looking at IoT diagram, one can infer that the current phase of products is a pre-cursor to Artificial Intelligence (AI) or Machine Learning (ML). Think about it – multiple data collection points (social apps, business apps, lifestyle apps, wearables etc) all designed to satisfy the immense AI/ML data need with consumer products that satisfy the bottom three. We’re all heading down this path whether we like it or not, unless you decide to go “off-grid” Jason Bourne-esque. And even he came back online.
Philosophically, the three upper wedges of each hierarchy are almost symbiotic which affirms the depth at which our lives are intertwined with digital technology.
Today, self-actualisation/smart needs are being achieved using integration – basically apps that talk to one another. We’re creating multi-app ecosystems that improve our daily lives, businesses which in time will provide the data framework for AI/ML algorithms.
Practically, what choices are you making in business apps to streamline your operations and “buy” you time?
The current challenge is twofold for users:
To curate and integrate relevant, practical yet fragmented products from the plethora of choices in the market and
satisfy the upper wedges in both hierarchies.
Using the accountancy sector as an example, practical applications of AI/ML are still in infancy stage***, however this interim period allows us to move towards this automation nirvana using integrated software with human oversight, insight and intervention.
It’s about as close to Tesla self-drive that we have now – @cornerstonehk, we coin it as “low-touch accounting”.
As our first topic, let’s start from the beginning, an overview.
At Cornerstone, our mission is to streamline your business’ back-office accounting (vs. the traditional), powered by Xero.
As a client, you know we work all on the cloud.
Step 1. Data collection has never been easier. With a snap of your camera phone, drag-n-drop the photo onto Dropbox or Google Drive app (if you’re on Expensify, it’s even easier). Gone are the days of creating journals and posting ledgers! (how does one even do that?!)
Step 2. We take care of balancing your books (reconciliation process)
Step 3. Preparing your financial statements
Your job is to focus on growing your business and sit back till audit time.
After arriving from New York 8 months ago, everything felt familiar. Transitioning from one large metropolis to another, and also having some passing familiarity to the city as I lived here when I was a teenager. Initially I hoped my transition will be easy. As I began to settle in, I began to notice subtle differences that I took for granted back at home.
As I function primarily digitally, back home everything was at the touch of a smart phone, or computer. As I navigated Hong Kong’s digital presence, paying bills was challenging, online shopping is less convenient, making reservations went through traditional phone calls, just to name a few inconveniences. Websites are antiquated, or even worse, a Facebook community page. There is no Amazon for easy shopping, only Taobao which requires Chinese reading ability. Even one of the most popular sites, Open Rice, suffers from the same language issue. The site might be in English but the content (ie the reviews) are in Chinese.
Why hasn’t HK evolved its digital footprint? I assumed Hong Kong would be close to its Western counterparts or its neighbor China. It wasn’t.
Hong Kong has a unique issue, they have too many different audiences. Generally speaking, there are 3 major groups, local HK-ers, Mainland Chinese, and Ex patriots. One of the biggest obstacles is how to capture all audiences that have different digital maturity and behaviours.
Zooming in on this issue, language is an obvious barrier. A platform will have to decide which user base do you want to capture. Does it go after the local base, and support traditional Chinese? Or should it support Simplified to capture the ongoing traffic from mainland China? English has almost become the defacto localisation language due to the large ex pat community (and its associate spending power). The MTR is successful at this. It supports all 3 of these main groups. Audio and visual queues support multiple languages, and the support staff are multilingual. MTR figured this out because they understand who their users are. If companies followed suit and invested in researching UI/UX needs, a much better product will come out.
Despite these growing pains, I can see Hong Kong maturing their digital presence quickly. In the last 8 months, I have seen companies try to start innovating. HSBC has started trying to do a payment app similar to Venmo called Payme. Uber is available and becoming more and more popular to the point where you can catch rides from Tesla owners. There are at least 3 food delivery apps (Food Panda, Deliveroo & Uber Eats) out there along with their motorcycle fleets. Jousun and Honestbee have attempted to take a crack at the grocery shopping space. Online booking reservation systems are beginning to surface (Chope), and GoGo Van has captured the small moving business.
The next 12 to 18 months will be interesting. All I need is better online shopping or learn how to read and write Chinese…
Kevin Tan is from New York City with a background in Finance before switching over to UI/UX 3 years ago. He is currently a Hong Kong based User Experience consultant, trying to help companies transform their products to be more user focused.
A recent analysis of supply chain professionals in a variety of industries and business sizes, business software consulting firm Software Advice discovered a staggering 34% of them still rely on manual methods and legacy systems for their supply chain management (SCM) needs.
Software Buyers’ Current Solutions for Supply Chain Management
If your wholesale business only has a handful of suppliers, distribution channels, and team members, you may be able to get away with time-consuming pen and paper or clunky spreadsheet methods.
But as your business continues to grow, the limitations of these manual methods will quickly become a pain, standing in the way of the efficiency you’ll need to expand.
That’s where modern SCM software comes in.
3 Reasons Your Current SCM Solution Needs Replacement
Whether you’re stuck using manual systems or outdated SCM software, a few key reasons you’ll want to consider upgrading include:
It’s Too Much – you don’t need all the bells and whistles.
It’s Not Enough – spreadsheets and outdated software are costing you time.
Its Support is Lacking – the best software in the world is useless if it constantly breaks and you’re left without help.
How the Right SCM Software Can Improve Your Business
Software Advice also found that the key factor driving the switch to a new SCM solution was “modernization”, meaning two things:
Increased automation of business processes
Closer integration of business systems
Software Buyers’ Pain Points With Existing Solutions
Automation may be the buzzword of the day in the supply chain management world, but that’s for good reason – being able to quickly and efficiently manage your production from component purchasing to sale fulfillment can make or break a growing wholesale business.
And with the increasing move to software-based business systems, integrating everything from sales portals to fulfillment systems, production lines to accounting software is key to maintaining your business’ ability to expand.
Ultimately, the goal of upgrading to modern, fully automated, completely integrated supply chain management software is to support the growth of your wholesale business – both now and in the future.
3 Questions to Ask When Choosing New SCM Software
So how do you know which SCM software system is right for your wholesale business?
Ask yourself these three questions as you begin your search:
What do we need it for?
How compatible is it with our business?
How reliable is the vendor?
Grow Your Business with the Right SCM Software
Hopefully now you’re better prepared to choose the right new SCM software for your wholesale business – including a better understanding of why it’s a worthwhile investment and essential questions to consider when choosing an SCM software solution.