In our opinion, your accountant should always be an asset to the business, not simply someone you turn to when you need a report. One of the selection criteria for your accountant should be your belief that they’ll be able to help you plan, grow, and build for the future.
Interpreting Financial Reports
It’s certainly true that engaging an accountant frees up the time you’d spend in putting together financial records and reports, both those you use internally and those that need to be submitted to HMRC, Companies House, or any other official institution. It’s also true that their experience means they will take less time to achieve this than you might yourself.
In a world of regularly evolving legislation, it’s even true that an accountant will be able to maintain compliance more efficiently and effectively. However, all of this neglects one of the most important services an accountant can provide; interpretation.
Until you’ve built up years if not decades of familiarity with financial reports, it can be hard to read more than the most basic information in them. Understanding what these reports say about liquidity, cash flow, and about profitability, not just of the business as a whole but individual aspects (whether that be different branches, salespeople, or different product lines) can help you make crucial decisions.
Of course, that information needs to be tempered with your own knowledge of the business. Perhaps a particular branch seems to be underperforming because it’s recently had staffing issues and is rebuilding. Perhaps a given product line looks more valuable than the others, but you know an upcoming competitor launch will change that.
Your accounts don’t lie. But understanding what they’re telling you isn’t always straightforward, and a good accountant can help.
Cutting The Right Costs
Profit equals revenue minus costs. Reducing costs therefore means more profit. Put like that, it seems a simple equation. Of course, cutting the wrong corner can be catastrophic; shifting supplier based on price only works if the new product is good enough for the job you need it for.
A good accountant will help you identify where costs are surprisingly high. This tells you where to focus your efforts to have a greater impact.
In a recent conversation with a managing director he mentioned that after he changed accountant, the breakdown of payroll costs he received was much clearer. This made it much more obvious what the actual cost of each team member was, as well as helping him see the true cost of the recruitment process. From there, it’s easy to see how an overhaul of team structure can lead to smarter decisions.
Insight into Tax Obligations
Your accountant should be up to date on all legislation and regulations that might affect the business’ tax liabilities and opportunities, from being clear on what expenses can be claimed through to identifying opportunities to increase tax efficiency.
Dealing with your business’ tax obligations should never be an afterthought. Proactive planning in this area can greatly benefit the company.
Managing Cashflow
An accountant is used to thinking about finances in terms different lengths of time; we deal regularly in biweekly, monthly, quarterly, and yearly reports. This places us perfectly to help you form a clearer picture of your cashflow, identifying seasonal shifts as well as other patterns that can affect your liquidity.
In turn, this tells you when it’s safe to make bigger investments and when you’d benefit from being careful with your resources.
To get the ball rolling on your relationship with an accountant you can depend on, get in touch.
