Everything looked fine. Then I asked three simple questions.
A few months ago, I spoke to the founder of a £3m business who told me, confidently:
“Our finance function is sorted.”
They had a bookkeeper, supported by an accounting firm that came in once a year to prepare the year-end accounts.
Payroll ran on time, VAT returns were filed and invoices went out.
On the surface, everything looked fine.
Then I asked a few simple questions.
“What’s your gross margin by product line?”
“Which clients are genuinely profitable?”
“What’s your cash position likely to look like in six months?”
Silence. The business owner was stumped.
Not because his accounting department wasn’t capable – but because it wasn’t built to answer those kinds of questions.
The question I followed up with is one I believe every business owner should consider:
What is your accounting department actually for?
Most founders haven’t consciously thought about it.
But if you’re turning over £1m+, it’s worth a couple of minutes.
The answer is fairly simple.
A properly functioning accounting department should fulfil three distinct roles.
1. Transactional – Recording what’s happened and managing the mechanics of money in and money out. This includes processing sales invoices, purchase invoices and expenses, and reconciling bank accounts.
2. Compliance – Making sure everything is done properly and legally – from VAT returns and payroll to HMRC submissions and year-end accounts.
3. Service – Providing meaningful financial information that helps you make better decisions. This includes clear monthly management accounts, cash flow forecasting, budgets, margin analysis and providing insight into risk and opportunity.
In many growing businesses, the first pillar is handled thoroughly. The second usually happens.
It’s the third — the part that actively supports the owner — that’s often missing.
What about your business? Do you have all three pillars — or just one or two?
If the third layer is missing, it’s a bit like having a marketing function that can produce content but can’t tell you what’s working or what to try next. Or an IT department that keeps the systems running but never improves them.
Things tick along. But they don’t help your business move forward.
In that £3m business I mentioned earlier, nothing was technically “wrong”. Invoices were raised, payroll ran and VAT was filed.
But because finance was only fulfilling one or two of its three roles, the business was quietly underserved.
The owner had to rely on instinct to make decisions rather than clear financial data. He wasn’t entirely sure what his true financial position was, despite healthy revenue. Growth felt more stressful than it needed to be.
When finance only records history and keeps you compliant, you’re permanently looking backwards. You know what happened last month, but you have limited clarity about what’s ahead and find it hard to make confident decisions.
When the third pillar is properly in place, finance feels different.
You have the information you need to make decisions with confidence. You can see potential cash pressure before it becomes urgent. Margins are monitored deliberately and understood clearly.
The numbers move from the background of the business to the centre of decision-making.
That’s the difference between having “accounts” and having a fully functioning finance department.
At Insight Associates, we work with £1m+ businesses who are ready to put all three layers properly in place.
We ensure your finance function operates effectively at every level — transactional, compliance and service — just as a larger corporate organisation would expect as standard.
And we make sure it actively supports your growth, strengthening decision-making rather than slowing it down.
If that’s something you’d like to explore, simply email garry@insightassociates.co.uk or call us on 01279 647 447 to arrange a conversation.
Warmly,
Garry
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