Retailers heard from industry experts on how to exploit advancements in cloud computing, digitisation of B2B payments and data analytics to further enhance their competitiveness in an environment of heightened uncertainty at the RSM financial management workshop on 22 June 2016.
Yang Li Lian, Industry Leader for Retail, RSM, stressed the need to make the best use of technologies in business models with increased profit as the end in mind. For example, cloud computing may be used to support a co-sourcing model where the service provider partners with the client to achieve a common goal.
Li Lian, who also heads AccountStaff, the Managed Services and Staffing Division, said businesses should evaluate the option of off-site business process outsourcing (BPO) through the use of cloud accounting software and other solutions to alleviate the stress of spending too much time on back-end processes. This time would be better invested in the front-end and actual business that generates the revenue.
“With the modernisation of brick-and-mortar stores and pervasiveness of e-commerce, retailers need access to business applications anytime, anywhere to serve customers and stay competitive,” she said. “Online accounting and record reviewing systems allow clients to avoid upfront capex and maintenance costs, as well as free up time for accountants to play a more strategic role in the business.”
Digitisation of B2B payments
Retailers should consider how B2B payments may be digitised for greater efficiency, especially in light of Singapore’s Smart Nation initiative, according to Livia Ang, Director of Commercial Solutions, Visa.
She said that such digitisation can help businesses to address pain points such as lack of cash flow visibility or confidence in payment sources, friction in the procure-to-pay process and challenges in payment collection.
For example, digital card payments can reduce friction in the procure-to-pay process by “providing the payment details that are carried throughout the entire payment life cycle, or all the data that is needed for reconciliation,” Livia added.
Increasing sales with data analytics
Elaine Tan, Senior Manager of Risk Advisory, RSM, shared that data analytics has the potential to help different departments working in silos to collaborate in finding ways to increase sales, manage costs effectively, and discover new business opportunities.
“Businesses can gain insights by leveraging on existing data such as client demographics, transactional information, and customer online activities, for example, online shopping, enquiries or complaints,” she said. “Data analytics helps them to answer questions such as what happened and why, what will happen when something changes, what should be changed and what could be done differently.”
Elaine added that trend analysis may be applied to quantity sold to gain insights on obsolete stock for example, allowing timely decisions to be made. It may also help to identify popular products, improving inventory planning and management as well as coordination with suppliers. Another area is in facilitating customer-centric marketing. By studying the behaviours of different types of customers, targeted ads that provide product recommendations might be more effective than a reliance on search results. Market basket analysis can also be used to determine how pricing of a product may affect the sales of another for example.
Reducing GST compliance risk with data analytics
Richard Ong, Partner and Head of GST Services, RSM, spoke about the role of data analytics in reducing GST compliance risk. He noted that businesses may not have time to assess how “perfect” their GST returns are and the accounting and finance functions can be a “cost-saving centre” in this aspect.
Richard further explained that there are two types of risks from a GST perspective — transactional risks and differences between accounting and GST concepts.
Transactional risks arise when spreadsheets are used to manage GST compliance. These include a limit to the number of transactions that can be analysed, the time-consuming nature of conventional data analysis, inconsistent analysis quality of different individuals, difficulty in spotting irregularities, and failure to account for GST updates. The ERP system also may not be reliable in tracking transactions accurately for GST reporting, and there is a risk of human errors such as unrecorded transactions or duplicate entries.
The difference between accounting and GST concepts is another risk because the tax authority may impose a penalty for filing an incorrect GST return that is not based on GST concepts. This may arise from a difference in recognition of when a sale has incurred GST for example.
Consequently, incorrect GST reporting can translate into a huge financial impact in the form of penalties from the tax authority.
“Data analytics can reduce such risks by identifying GST compliance gaps quickly without any limit in the number of transactions that can be analysed and with a consistent level of analysis quality,” Richard said. “Businesses should also consider the GST impact of online platforms such as online ads as these may present indirect tax risks.”
Retail Productivity Plan
Chanel Lee, Senior Officer of the Lifestyle division, SPRING Singapore, noted that some 1,400 retailers employing 43% of Singapore’s total retail workforce participated in the first Retail Productivity Plan from 2010 to 2015.
The second Retail Productivity Plan for the next five years will focus on areas such as encouraging development of a viable e-commerce environment, innovative retail concepts by retailers, and retail pilot projects that involve automation, she said.
Chanel added that SPRING Singapore will continue to encourage service excellence among retailers through programmes such as the Customer-Centric Initiative assistance package, which covers up to 70% of eligible costs for SMEs in target sectors, including retail. It will also continue to encourage retailers to create innovative products and enhance operational efficiency with support from the Capability Development Grant, which defrays up to 70% of qualifying project costs until 31 March 2018.