Finances

Digital transformation: How AI will supplement (not supplant) the role of the CFO

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Artificial Intelligence (AI) continues to revolutionize the financial realm. And as a result, the role of the CFO is evolving, too.

AI is changing the organizational structure of how financial departments function. It’s allowing businesses to work smarter and faster, enabling their transformation into full digital organizations. But as technology fulfills core accounting jobs, what does that mean for the future of the CFO?

There are some shoes AI will never fill
The rise of AI is not likely to replace the CFO, but rather create a strategic partnership. Even as robots get smarter and more economical, they’re not equipped to take on every function.

According to a recent McKinsey report, the determining factor in whether a job is likely to be replaced is the type of work involved. The more predictable and repetitive the job, the more likely it is to be taken over by automation. So, it’s safe to say the core functions of a CFO will not be automated any time soon, and here’s why:

Decision-making skills are difficult to program. Not every question or business challenge can be broken down into quantifiable factors for AI to solve. AI isn’t capable of making judgment calls and tackling decisions that can impact an entire organization. There will always be unexpected problems to solve and machines will never replace human judgement.

Machines can’t easily adapt to the unexpected. Consider the self-checkout lines at big retailers. While they may help move lines faster and lessen crowds, they’re also susceptible to theft. It’s too easy for someone to input the wrong code and make off with a sizeable discount. What does that mean for more complicated machines? System flaws within AI are often unavoidable.

Humans prefer to deal with other humans. When it comes down it, people put more trust into the ideas and intuition of other people rather than machines. While robots are entrusted with smaller duties, it’s unlikely that any company would trust AI with taking over critical tasks.

The true value of AI is enabling CFOs to analyze data in more valuable ways. But this insight is worthless if you’re bogged down with daily accounting operations, like managing financial transactions and producing reports. With technology taking over the grunt work, you’ll be poised to lead change within your organization.

Working in tandem
Today’s CFO is responsible for contributing to company growth and increasing profits. AI provides the actionable information to support decision-making to reach organizational goals — but not take it over. Machine-learning algorithms lend the power to analyze, interpret and make predictions to improve operations and productivity. With AI, the CFO gains:

  • Increased efficiency. As low-priority responsibilities are automated, time is freed up to concentrate on more strategic and revenue-generating tasks.
  • Improve planning. Accurate and reliable data offers higher visibility to detect anomalies, pinpoint inefficiencies and make better planning and forecasting decisions.
  • Smarter fraud detection. The ability to verify information in real-time and ensure compliance can help mitigate risk and prevent fraudulent activity.
  • New ideas. AI can make sense of volumes of data, initiating new ideas and possibilities.
  • Internal reliability. Use data as proof points to build trust with stakeholders and justify key business decisions.

The bottom line
Al gives CFOs a huge advantage. By harnessing the power of data and automation to rise above tedious tasks, they can move into the future with more certainty and maximize their contributions to the success or their organization.

Making sense of the new regulations for retirement plan hardship distributions

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Last month, the IRS issued its final regulations relating to hardship distributions from employee-sponsored retirement plans, including 401(k) and 403(b) plans. These regulations come in response to statutory changes affecting hardship distributions contained in the Bipartisan Budget Act of 2018. The objective: to provide one general standard for determining whether a distribution is necessary — thus simplifying the rules.

If your firm offers retirement benefits, here’s what you need to know:

According to the IRS, a hardship distribution is a withdrawal from an elective deferral account due to an immediate and substantial financial need, limited to the amount necessary to satisfy that need. The money is not paid back to the borrower’s account, but is taxed to the participant.

What constitutes financial need?
Under the new regulations, distribution is treated as necessary when the following requirements are satisfied:

  • The employee has obtained all other distributions available under the plan, as well as all deferred employer compensation plans
  • The employee has provided a written representation to prove insufficient funds to satisfy the need, and the plan administrator does not harbor any knowledge that conflicts with the representation
  • The distribution amount doesn’t exceed the amount required to satisfy the financial need, including any monies needed to cover taxes or penalties resulting from the distribution

What’s changed?
A distribution is not treated as necessary to meet an employee’s urgent financial need if the need may be relieved from another reasonably available resource, including a spouse’s assets. Hardship withdrawals can also be extended to the employee’s primary beneficiary for qualifying educational, medical and funeral expenses. Going forward, hardship withdrawals may also be made from an employee’s elective contributions, as well as the matching contributions from employers — including the earnings on the savings.

Hardship-related amendments in the legislation include:

  • Elimination of the six-month suspension requirement for employee elective deferrals following receipt of a hardship distribution
  • Elimination of the requirement that available retirement plan loans be taken before a hardship distribution is granted
  • Inclusion of employer-provided qualified non-elective contributions (QNECs) and qualified matching contributions (QMACs) and their earnings — as well as any income on employee elective deferrals — in hardship distributions

What does this mean for your business?
Plan sponsors are now tasked with ensuring that retirement plan documents are in compliance with the newly-issued hardship distributions. Plans that currently allow hardship distributions will need to be amended to reflect the final regulations by December 31, 2021. Operational changes, however, must comply with the amendments by January 1, 2020.

 Questions? Reach out — we’re happy to discuss these changes and their impact in more detail.

Donor management best practices: Turning good data into a goldmine

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For nonprofits, donors are the lifeblood of your mission. After all, they’re the people funding it. So, it’s no surprise, according to NonProfitPRO’s 2019 Leadership Impact Study, that 82% of nonprofits are using technology to improve their donor relationships and 52% are using it for donor management.

When kept current and accurate, data can be leveraged to inform critical decision-making for the entire organization. That’s why most nonprofits rely on donor database software — also known as nonprofit constituent relationship management or CRM software. This type of software stores your donor data in one centralized location, helping you to better manage and make sense of all the information.

Because donations are just the tip of the iceberg
Even the most basic donor management platforms can track donations, donor details and more. Depending on your software, it may also have built-in features that are designed to help build on the data you already have. It may even come equipped with fundraising features, helping to automate cumbersome tasks. At the end of the day, your software should make information accessible and readable, so you can easily address donor challenges, streamline the solicitation process and develop a sound strategy for effective communication.

Try the following best practices to optimize your data management and build stronger supporter relationships:

Create comprehensive profiles
To best engage with your supporters, ensure that your donor profiles contain all the essentials — and more. You should already have their full name, email address, mailing address, phone number and birthday. But having a broader picture of who your donors are and how they can impact your mission can help you create better strategies to support them. That means collecting supplementary data such as:

  • Hobbies
  • General interests
  • Employment details
  • Social media profiles

Track supporter engagement styles
Pay attention to how your donors are interacting with your nonprofit. When you can pinpoint the areas of engagement, you can better nurture those relationships and develop future plans to engage. You should have separate strategies in place for how they’re involved:

  • Donors
  • Volunteers
  • Event sponsors
  • Event guests
  • Membership program participants
  • Peer-to-peer fundraisers
  • Social ambassadors

Roll out smarter fundraising appeals
A donor’s giving history can be invaluable when it comes to planning your next ask. When you’re armed with a donation amount, payment type and donation channel, you can use this information to:

  • Be realistic about the donation amount you’re soliciting
  • Share the impact of past gifts
  • Promote the gift-giving channels you know donors are likely to use
  • Inspire them to give more by showing how a small increase could make a huge impact

Tailor your outreach
You want to stay in touch often — even when your donors are not signing a check. But too much communication can be annoying. And messages may be overlooked altogether if they’re sent through the wrong channel. That’s why it’s critical to update your donor profiles with data such as:

  • Preferred communication channel
  • Communication frequency
  • Programs or opportunities of interest

Integrate online forms
The benefit of an integrated form-builder? The data will automatically flow through your database and update your donor profiles — so you can spend less time inputting data and more time putting it to use. These forms include:

  • Donation
  • Event registration
  • Volunteer sign-up
  • Membership applications

To connect with donors personally, fundraise successfully and expand your mission, you need a donor management strategy that maximizes your data, along with the technology to support that strategy. But remember, don’t opt for a shiny new toy without ensuring that it’s right for your organization in a way that supports your overall mission and your goals.

Learn more about how Magone & Company helps nonprofits find financial clarity and maximize support for their mission.

Jump on board: 5 Next-level nonprofit trends for 2020

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In any given year, nonprofit professionals face a mix of significant accomplishments and relentless challenges. From donor expectations to new technology, the landscape is constantly innovating. Nonprofits must keep up to achieve their desired goals, or risk being left behind — along with the communities they serve.

To maximize your organization’s potential, here are some recommendations from NonProfit PRO for bringing in more donations, engaging more donors and improving communications to make your mission’s mark in 2020.

#1. Form non-traditional partnerships. With the changing political climate, nonprofits are shying away from government sources to help fund their operations. Instead, they’re building partnerships across new sectors to help protect their organizations from political uncertainty.

In the healthcare industry, for example, providers want to reduce the incidence of low-income patients being continuously readmitted because they have nowhere else to go. The solution? Stable housing. By providing disadvantaged patients with a place to live, it creates an opportunity for housing providers to partner with health systems to mutually benefit each people in need.

#2. Execute mobile-first technology. Are donors checking emails on their desktops or smartphones? The donor landscape continues to shift across generations, and nonprofits need to reach them in an increasingly mobile environment. This creates the urgency to understand and implement mobile-first technologies.

Don’t just accommodate mobile users with a full version of software that they must load onto their tablets. Give them information that’s designed specifically for mobile and touchscreen interfaces.

#3. Harness the power of AI. Artificial intelligence (AI) technology carries the ability to improve proficiencies and outcomes in various areas of the nonprofit sector.

For example, chatbot technology can be used to increase donor engagement across your social media pages. Or, you can use predictive analytics to optimize your campaigns to better speak to your donor base. The growing availability of AI and its ease of incorporation into your current processes holds great many possibilities.

#4. Focus on recurring gifts. Monthly giving allows donors to spread their contributions throughout the course of the year — so do your part to make it easier and more convenient. Leverage technology to set up monthly giving options.

Not only does this this provide a better idea of the giving forecast, it also offers stability to coincide with your year-round fundraising efforts. Remember, your nonprofit’s ability to expand giving options across multiple touchpoints — text, mobile, desktop, mail, etc. — plays a huge factor in the overall success of your efforts.

#5. Provide authentic communication. When it comes to your board, one of the biggest challenges is finding ways for members to connect with the cause. Like donors, board members are likely willing to volunteer and devote their time and energy to your organization because they have a natural affinity for its mission.

So, give them opportunities to experience the mission at work. Let them interact with the community and see first-hand how your organization is making a difference. This will help keep them engaged and enthusiastic in their roles, as well as generate new perspectives and ideas.

There’s no time like the present for establishing a fresh outlook. To strengthen your outreach and make a stronger impact, consider how you can best utilize these strategies to meet your organization’s specific goals and needs.

3 reasons you shouldn’t talk to the IRS yourself if you owe back taxes

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If you owe money to the IRS, it might sound like common sense to try to tackle your tax problem on your own. However, one of the worst things you could do is talk to the IRS directly without proper representation.

As an expert tax resolution firm, we encourage all readers facing a tax problem to contact us for a free consultation.

The IRS is not on your side and their primary goal is to collect the taxes they believe you owe. In this article, we give you 3 reasons why talking to the IRS directly could get you into deeper trouble.

1. You have rights.
Contrary to popular belief, you DO have rights as a taxpayer that you probably don’t even know exist. One is the right to representation. If an IRS revenue officer or revenue agent calls or “visits” you, did you know you are under no obligation to answer any of their (very intrusive and condescending) questions? Politely respond by asking for their contact information, explaining that you’re in the process of hiring a professional to represent you and that this person will contact them directly. A CPA or Enrolled Agent that deals with IRS problems for a living knows the “ins” and “outs” and how to deal with the IRS so that your rights are protected. A tax resolution specialist also knows how to get you the lowest possible settlement allowed by law. Generally, our clients never meet or speak with the IRS once we’re on the scene.

2. Answering questions can dig you into a deeper hole.
If you are being audited or about to be, the IRS will ask you about 50 very intrusive questions in your initial interview. How you answer these questions will dictate the fate of your case.  Having a tax resolution specialist conduct these meetings WITHOUT you is the best course of action we can recommend. Half of the referrals to the IRS’s criminal investigation division come from that “nice” auditor sitting across the table at the audit.

3. They won’t tell you about all your settlement programs and options. The just want their money.
If you owe between $10,000-$25,000+, the IRS has many NEW flexible programs under their Fresh Start Initiative available to taxpayers. These include Offer in Compromise, Partial Pay Installment Agreements, Payment Plans, Penalty Reduction, and Currently Not Collectible Status to name a few. Each carries with it its own unique process, procedures and qualifications.  Having an experienced tax pro in your corner ensures you are taking advantage of the best options available to you.

One last thing….

Ask yourself this question: Would you go to court without a lawyer?

If you answered “yes” hopefully you know the law inside and out concerning your case, but if representing yourself doesn’t seem like a great idea it’s best to hire somebody who is well versed in the subject matter. Well, it’s the same thing with the IRS. Having someone who knows how to negotiate the IRS’s maze of rules, regulations and the 74,000 pages of the Tax Code and deal with the IRS may be the best money you’ve ever spent.

If you want the help of an expert tax resolution professional who navigates the IRS maze for a living, reach out to our firm at (973) 301-2300. We’re happy to schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.

Can Client Accounting Services lead to increased efficiencies?

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 From increased visibility to enhanced financial controls, Magone & Company’s Client Accounting Services (CAS) were created to streamline your company’s accounting and finance functions and help you operate more efficiently.

But don’t take our word for it! Respondents to Bill.com’s 2018 Client Accounting Services Report say that CAS delivers measurable benefits.
 


What’s more, these benefits lead to hard-dollar CAS outcomes, such as increased profit (28%) and improved revenue (23%). 

Your financial needs are a moving target. So why lock into a hire who may not be able to keep pace? Our CAS team has the expertise to handle finance-related tasks at every level — for less than the cost of hiring a full-charge bookkeeper or staff accountant. 

With four levels of service — from bookkeeping and accounting to more strategic controller and CFO-level tasks — Magone & Company’s CAS services provide the financial skills, services and systems you need, without having to invest in expensive staff and technology infrastructure.

Is CAS right for you? Learn more or  call (973) 301-2300 for details.