How Your Accountant Can Help Your Business
In days gone by the tasks of the accountant was to provide tax advice and assist with compliance issues, however the role of the business accountant has now changed to encompass much more general business tasks, and accountants are now all round business advisers with many firms of accountants actively marketing themselves as such.
This diversification in to the more general business tasks doesn’t mean that accountants no longer provide tax advice and assistance with compliance issues since this is considered the “bread and butter” work, and to stop doing this would probably see many firms of accountants fail. This diversification means that your business accountant can now add value to your business and assist you in the day to day running of the business, assist in driving the business forward and helping with all aspects of the financial management aspects whilst helping you out with the year end compliance task and tax advice.
So what value added services do many accountants now offer that can assist your business? The amount of services is likely to vary although popular ones include;
i) Assisting in the preparation of management accounts
The financials are an important aspect of running a business and up to date and regular information on how the business is performing, i.e. a profit and loss account, and a regular statement of the financial position of the business, i.e. a balance sheet, is a useful tool in analysing the financials of the business. Management accounts are also used by banks and external financiers in deciding the creditworthiness and credit risk of a business when deciding to advance cash or extend overdrafts. Your accountant should be able to prepare accurate monthly, or even fortnightly, management accounts.
ii) Preparing cash flow forecasts
Cash is the life blood of the business and cash management is important to ensure the business survives. It is important to identify and predict times of too much cash and too little cash so plans can be put in place to ensure the business can pay its debts as they fall due. An accountant should be able to prepare cash flow forecasts and budgets to identify the peaks and troughs in cash levels enabling you to put in the necessary plans to get more cash, e.g. an extended over draft, for those times when a cash deficit is projected and save cash, e.g. in an overnight deposit account, for those times when a cash surplus is projected.
iii) Preparing budgets
In addition to projecting cash flows projected profit and loss accounts and balance sheets are a useful tool to control the business. By comparing actual results to projected results, i.e. carrying out variance analysis, it is possible to see where expenses are too high or too low and amend the business behaviour accordingly. An accountant should be able to assist in preparing budgets to allow this variance analysis to happen.
iv) The provision of payroll services
Managing the payroll can be a difficult task and knowledge and experience of payroll and taxes is important. Some businesses do not have the resources and employees with the requisite skills to run the payroll in house. Many accountants offer a payroll service for their clients, the cost of which is often more beneficial than employing a full time person whose duty it is to prepare the business’ payroll function.
v) Company secretarial services
A company secretary plays an important role and there are many different types of forms, certificates and other documentation that requires filing within specific deadlines. Company law can be quite complex and with changes in laws it is important to be abreast of the changes to ensure your business doesn’t fall foul of any filing requirements. Many accountants offer company secretarial services so you don’t have to keep up with the changes in company law allowing you to concentrate on running your business.
vi) The provision of corporate finance services
Corporate finance is a specialist and wide encompassing area and it activities include things like fundraising, preparing cash flow forecasts, buying businesses, selling businesses and valuing businesses amongst much more. Many accountants offer this service therefore if you are looking to buy or sell a business, raise some money etc. an accountant should be able to assist you with this.
vii) The provision of insolvency services
Insolvency is another highly specialised area that many accountants offer. If your business is struggling and looking to set up an agreement with creditors to pay them off over a number of years, set up a CVA or commence the liquidation of your business an accountant should be able to assist you with this.
Accountants now offer a whole range of services many of which may or may not be of use to your business. Some people are more sophisticated than others when it comes to financial aspects and are more than capable of preparing their own budgets, forecasts and management accounts, whereas some people would not know where to start. It is these people that have the most to gain from the accountants shift to a business adviser.
Accountants are trying to become a larger part of their client’s business and by providing all these services, and on the provision you take advantage of them, you are likely to have contact all year with your accountant and not just when the year-end accounts need preparing. This is a good thing as it will develop the working relationship with your accountant and you will find your accountant will be on hand to offer financial help and advice whenever you need it, which should add value and help you and your business develop.