Accountants do tax and compliance work – we all know that. But the best ones do so much more. They are excellent problem solvers and strategic advisors for small business.
Accountants do more than you think. They can remove or automate administrative tasks that distract you from your core business. Get an accountant and you’ll run your business with more clarity and confidence.
Starting a new business can be exhilarating, but it takes more than a good idea. You need to know it will make money – and you need to convince investors and lenders of the same thing. An accountant can do that for you.
They’ll help test your idea, identify your start-up and operating costs, and create credible revenue forecasts. They also know which lenders are playing ball at any one time, so you can approach the right people for finance. Plus they’ll work on your pitch, so you’re ready to impress those lenders.
There are so many moving parts in a business. Sometimes it’s hard to know where to focus. Accountants can help you figure out what’s important.
They’ll work with you to set goals – personal, professional and financial – then give you tools to measure your progress. You’ll end up with a set of key performance indicators (KPIs) that tell you how your business is doing.
If you have accounting software, your accountant will set up dashboards that allow you to check your KPIs at any time of the day or night.
Many profitable businesses fail because they run out of money at the wrong time and can’t afford to pay suppliers or staff. Even a highly active business won’t last long if payments are slow to come in, or expenditure is too high.
Accountants know that revenue ebbs and flows, and that costs do the same. They’ll help you predict the effect on cash flow and come up with strategies to manage the situation. They’ll organise cash reserves and come up with a spending plan that ensure there’s always money in the bank. It’ll make payday less stressful, supplier relations easier – and sleep deeper.
There’s good debt and bad debt. Your accountant can help you tell one from the other. They’ll find the least expensive borrowing strategies for your business – with the right mix of repayment flexibility and low interest. If you need refinancing, they’ll take care of that too.
Accountants will also advise when spare cash should be used to pay back loans, and when it should be reinvested in the business. They’ll do that by considering the numbers behind your business and looking at how your debt’s structured to develop a specific strategy for you. It’s not just blanket advice.
Unpaid invoices are a fact of business. Chasing those debtors is a distraction you don’t need, but you can’t afford to ignore the problem. Your accountant can take the headache away.
They can set up invoice systems that send automatic reminders to customers when their bill is due and/or overdue. Some accountants will even call businesses that don’t respond to emails.
If invoices remain unpaid after this, your accountant can arrange accounts receivable financing – where a business will buy your unpaid invoices from you and chase the payment themselves.
Applying for a loan is both an art and a science. A good accountant will do more than just pull together your numbers. They can help you craft a compelling story.
Lenders obviously need to see solid financials and credible forecasts, but that’s just the beginning. An accountant will tie it all together in a presentation that sells the wider vision for your business. There won’t be any spreadsheets. You’ll be armed with graphs and charts that visualise the numbers – allowing your lender to literally see the opportunity. And they’ll use powerful forecasting tools that loan officers trust.
Detailed budgeting can eat up a lot of your time and energy. As a result, many businesses end up working off a vague set of numbers that are full of assumptions and estimates. Your accountant can help you produce a rigorous, accurate budget that gives you real confidence. You’ll know the real cost of doing business. You’ll know how much money you can reinvest. And you’ll know what you can pay yourself.
Your accountant will automate a lot of your business’s accounting so that sales and expense data flows directly into your accounts. They’ll also set you up with invoicing systems that tell you what’s been paid and what hasn’t. Smart software will even send reminder emails to clients who haven’t paid so you don’t have to.
There are dozens of other automated systems they can implement for you, such as:
Do you spend a lot on storage, or lose money writing off obsolete or damaged goods? Or do you sometimes lose revenue because you run out of stock? Smart inventory management is critical to doing good business.
Your accountant will identify the cost of holding inventory and come up with strategies to save some of that money. Plus they’ll review your sales data to help predict stock needs, so you can place accurate orders. They can even set up software that tracks stock levels and auto-orders items as they run low.
Smart business software can automate a lot of the things you do manually. An accountant can take away those distractions by setting up affordable software for things like:
This is one of the most important things an accountant can do for you. Automating business processes takes away pain, lowers costs and ensures everything runs smoothly. Just make sure you find a tech-savvy accountant that knows about business apps.
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This article is an extract from the Xero website and is written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of its contents.