Would your accountant notice this?11th July 2017
“Dennis” was practically bankrupt when I first met him.
Not personally, that is, but his company.
It was a tragic story.
The company he founded, in the health industry, was booming. But somehow, the in-house bookkeeper had miscalculated the amount of VAT they had to put aside each month, and saved only a fraction of the funds they needed to pay their quarterly bill.
They got in trouble with one bill… And while that was being sorted out, with the next one as well.
Before they knew it, they had built up a huge debt to HMRC which was going to be very difficult to repay.
That was when they approached us to sort out their finances. But before we got started, I had one, incredulous, question: “Didn’t your accountant pick up on the problem!?”
It turns out the answer was no.
The company’s accountant never had the chance to spot the issue, because he only saw their accounts once a year. He simply wasn’t close enough to the business to notice what was going on and to challenge the figures the bookkeeper was producing.
By the time he saw the books, it was too late.
It’s a similar story in practically every distressed business we’ve ever worked with.
Regular as clockwork, it turns out that there was no one intimately involved with the business who really understood their finances. There was no one keeping a close eye on what was going on financially, who could identify mistakes and understand their consequences.
Many business owners expect their accountant to be that person.
But like in the healthcare business I just told you about, your accountant is often not around the business enough to notice when things go wrong, and not proactive enough to ask the right questions about how the business is doing.
So take a moment, and think about the accountant your business works with. Then ask yourself these questions:
• “Are they doing enough for us?”
• “Do they know my business well enough?”
• “How quickly would they notice, if something went terribly wrong?”
If the answer to the first two questions is “No”, and the answer to the third question is “not quickly enough”, you need to rethink.
If you want your business to grow successfully, it is absolutely crucial that you have someone on board who is proactively managing the finances – particularly if you, like so many business owners, are actually not that comfortable with numbers.
It’s the only way to avoid financial disasters. And the best way I know to make sure you’re making smart financial decisions.
One option is to ask your accountant to be more proactive. You’ll need to be very clear on exactly what additional services you want from them.
But be warned, this may not be possible to achieve. For many accountants, this level of involvement in a business is not something they have the time or willingness to offer.
They are focused on producing your annual accounts and filing your taxes (basic things your business needs) rather than on giving you advice about where to save money, how to budget and financial planning (the things you, as business owner, really want).
It’s also possible to switch accountants, finding a firm that is genuinely proactive. But this can be difficult to find, for the same reasons your current accountant probably isn’t proactive enough.
A third option is to talk to us, here at Insight Associates. As an outsourced finance department – not “just” accountants - managing your finances proactively and responsibly is what our business is about.
On our watch, it would be impossible for a mistake like the VAT example to ever happen, because we closely monitor every financial transaction on your behalf. If something seems out of place, we will know immediately – because we will get to know your business intimately.
This also allows us to offer you the very best financial advice, planning and guidance, entirely bespoke to your company and your situation.
You can be confident you are making sound financial decisions, based on real data and information, instead of operating on gut instinct or incorrect figures.
You will be entirely in control of the financial side of your business, perhaps for the first time.
If that’s something you’re interested in, let’s talk. Your finances are the last thing you want to leave to chance.