Forward-thinking businesses can leverage a variety of artificial intelligence tools in the new tax year to save costs, as well as make more provisions for unexpected expenses.
ADVERTISEMENTThe 2023-2024 financial and tax year has just ended, with several businesses and investors still recovering from the flurry of wrapping up pending year-end tasks, using up individual savings accounts (ISA) allowances and more. However, now that the dust is settling, it may be a good time for businesses to decide on new and more efficient ways to spend in the new tax year.
This involves making increased provisions for unexpected expenses, reducing the duplication of job roles and functions, as well as leveraging the use of business tools, such as invoicing, payroll, financial management and more.
Avoid paying twice through duplication
According to Pleo's 2024 CFO Playbook, 19% of financial decision-makers in small and medium businesses feel that using two or more different platforms for business expenditures can work very well together and complement each other.
However, although using separate business platforms can be very helpful in a variety of situations, businesses also need to watch out for unnecessary subscriptions and redundant tools accumulating, leading to increased wasteful expenses.
Another key trend to watch out for and potentially integrate early in UK businesses is e-invoicing, which is already seeing considerable adoption across Europe. Although not many UK businesses have made the transition to e-invoicing yet, those which do could have a potential head start in the coming years.
Digital transformation
More businesses are also focusing on the digital transformation, seeing it as a way to lay the groundwork for more cost-savings and smarter spending in the coming years. Referring to which European companies have already started the digital transformation process, the CFO Playbook said: "In Spain, 90% of financial decision-makers (FDMs) and 80% of senior decision-makers (SDMs) said their organisations had got the ball rolling, with Denmark not far behind at 73%."
Ben Swails, UK general manager at business expenses solution company Pleo said, in an email note: "Stepping into a new tax year comes with its challenges for UK businesses. From navigating changes in regulations to ensuring accurate reporting ahead of deadlines, the complexities can be overwhelming.
"On the bright side, a new tax year also presents an opportune moment for businesses to implement smarter spending and set themselves up for success in the months ahead.
"One of the primary challenges businesses face during the new tax year is the need for better visibility of spending. It's difficult to make informed decisions without a clear understanding of where money is being allocated.
"... A quarter of UK SMEs are looking to reduce business spending in 2024 - and only a third of UK businesses feel they have an excellent grip on managing their spending. Keeping a tighter reign on spending means deeper insights and fewer spending duplications."
How can AI help lower costs for businesses?
Several businesses of different sizes and across sectors have jumped on the artificial intelligence (AI) bandwagon in the past few years. This has mainly been due to AI being able to significantly reduce business costs in a variety of ways.
One of the most important ways AI does this is through automation. By automating a number of your routine tasks, businesses can save money, redirect employees towards more useful tasks and free up time for core business functions, such as converting clients.
AI can also help you get rid of several different redundant tools, by combining many separate functions into one package or product, thus saving money on tool subscriptions, renewals and maintenance. AI's accuracy in these routine tasks can also help reduce the time and costs involved in rectifying mistakes, should they happen.
In time, AI can help significantly scale businesses, by analysing vast amounts of data and catering to several more customers, without needing to obtain more resources. Through this, businesses can also avail of economies of scale.
AI can also reduce manpower needs, especially through its virtual assistant tools, as well as considerably smoothen out supply chain issues. Often, due to AI-powered tools analysing such massive amounts of data, businesses can also use the distilled insights to spot new revenue generating opportunities.
Regarding how artificial intelligence can help reduce business spending, Swails said: "Technology has a huge part to play in this by providing enhanced visibility of spending through real-time data insights. By leveraging AI-powered tools, businesses can automate repetitive tasks, streamline processes, and uncover valuable insights from their financial data to determine where cost savings can be made.
"This not only improves accuracy, but also frees up valuable time and resources that can be redirected towards more strategic initiatives. It can also unlock technology consolidation which is vital for driving efficiencies across teams.
"Many businesses anticipate the new tax year with a sense of apprehension, but with careful planning and the right tools, these challenges can be turned into opportunities for growth."
ADVERTISEMENTWhat are new changes in business and corporate taxes?
The UK's most recent Spring Budget did not change the UK corporation tax, which is currently 25%, not the small profits tax rate, which is 19% at the moment.
However, it did introduce a few other changes, such as the Independent Film Tax Credit (IFTC). This is an extra support measure to help qualify independent films, which will then be entitled to an expenditure credit of up to 53% on their qualifying expenditure.
One of the most important changes in the Budget was a temporary tax on outsized oil and gas company profits, known as the Energy Profits Levy. Although announced back in the 2023 Autumn Statement, this measure will be added to the Spring Finance Bill 2024.
New measures for the decarbonisation of upstream oil and gas companies were also introduced, aimed at encouraging oil and gas companies to start the transition of their facilities to renewable energy.
