Four Ways Firms can Make the Most out of Their Accountant

There is no denying that accountancy is an integral aspect of business management. Accountants’ financial expertise and knowledge around specific issues, such as tax planning and compliance should not be taken for granted and is an invaluable resource for any business.

However, some businesses don’t get enough out of their accountants. In today’s business world, accounting and tax advice should be the bare minimum.

The best accountancy firms, and therefore the best accountants will be able to provide deeper focus and insight to every element of business strategy, rather than just the financials.
Depending on how much advice and assistance they provide, they may even become an essential strategic business partner.

With that in mind, we’ve selected four key elements of business strategy which businesses should rely on their accountants for.

Understanding the numbers

You should look to your accountant as your Finance Director who will help you understand all the aspects of a balance sheet, profit & loss and cash flow. ‘I don’t understand’ is not an option for the savvy business leader. The financials are a reflection of everything that happens in your business and as a key decision maker you should understand the impact of your decisions. It might be as simple as understanding how much working capital you need to keep in your business to protect and invest, or understanding why you’re deferring revenue on the basis you do.
It goes without saying these days that the best information is current – not waiting weeks or even months to see how you did last month or last quarter. Technology can play a big part here and your accountant should be able to advise how to take advantage.

Levers of profitability and cash

What drives profitability and cash flow in your business? Is the business model working for you and what’s the effect of changing it? Accountants have access to historical and short-term financial data and can analyse and extrapolate details to help spot patterns and predict future trends. Through this information, accountants can advise senior leaders on key details, such as pricing strategies, and distribution channels to optimise the profit potential of the business.
KPI’s (Key Performance Indicators) should be leading not lagging. There’s no doubt that revenue is a KPI, but it’s a lag indicator – once it’s measured there’s no way to affect it. What ‘lead’ indicators can you measure in your business that your teams can affect and predict future results.

Growth

Every company will have growth on their agenda. Your accountant should be helping you to understand how sustainable and predictable growth is. Each and every part of the business can either accelerate or derail the growth of your business. A great sales team combined with weak operational capability will not produce a sustainable business. What areas of your business are weak and acting as a drag, or even worse, on your business. Advisers should help you understand this and more importantly take action!

Risk Management and Control

Similar to the previous point, all business decisions are made by weighing up risk and reward. Risk management objectives and decisions must be based on quantitative and qualitative data, rather than subjective data. Accountants can assist firms with obtaining this data, which in turn can help leaders to set SMART goals.
In addition, accountants should be prepared to estimate and explain elements of risk to business leaders and forecast how severe an impact a strategic decision could have on the firm, in both the short and the long term.

Conclusion

In the past, an accountant’s overall usefulness to a business tended to be underplayed. They were viewed solely as bean counters and not involved close enough with long term strategic planning. As a result, many firms found themselves struggling, having not garnered the relevant and most useful information.
The best businesses involve their accountants with every step of the strategic process, to ensure they understand the direction the business is heading in and can therefore give the necessary advice to business leaders to minimise risk, and maximise growth.