Successful entrepreneurs and business owners know their numbers and rely on their accountant to provide specialist help and leadership in this area. Let’s face it, chances of success are far greater if you have a good grip on profitability, cashflow, financing and tax. Involving your accountant in the business and even making them your virtual CFO will empower you.
The following are the five most important questions to ask your accountant:
1. Can I have management reports, please?
I can’t stress how important it is to have regular financial reports for your business. An additional extra is a simple cashflow forecast that can be updated at each meeting.
Aside from sales every month, you should also ask to see a profit and loss, balance sheet, cashflow summary and a revised cashflow forecast for the next six months. You need these reports by the 10th day of every month. Don’t settle for anything less.
2. How can I improve my cashflow?
Cashflow is the life blood of your business, dictating the speed at which your business operates, its growth potential and how competitive it is. If your cashflow is healthy, you have room to sharpen the pencil on price when needed.
You need to know what affects your cashflow and what you can do to improve it. Sometimes it’s really simple things. Ask your accountant where they think the problem areas are and what they recommend you focus on to improve cashflow.
3. What am I worth?
If you’re running a business, you should be acting in a way that creates value. So when making decisions, you should consider how these will make your business more valuable.
Your accountant knows how business valuations work, so will be able to help with improvements you can make. This could be anything from hiring a great salesperson, winning a contract, or investing in your value chain to own another piece of the puzzle. Aside from day-to-day activity, you need to know how to build the value in your business. One day you might just want to sell it.
4. Can I lower my tax in a sensible and legal way?
A lot of this is about using smart structures and ensuring you are claiming all the tax deductible expenses you can. If you’re not being proactive with your taxes you can find yourself paying hidden tax costs such as penalties and interest.
Ask for a tax forecast annually before the end of the financial year and make lower tax an annual review point for your meetings. Tax should always be updated in your cashflow forecast model on a regular basis—you need to know what tax is coming up and make sure you have the cash to pay it.
5. Can I move to a monthly fee?
A monthly fee means your business is frequently top-of-mind for your accountant rather than once a year or every six months. It also helps you to budget and avoid those big surprise bills.
A monthly fee should cover the following things:
- Quarterly management reports
- Simple cashflow forecast, updated with management reports
- Annual tax review and forecast, before the financial year end
- Regular meetings to look at the numbers, at least quarterly
- Annual report and tax returns
Accountants can really make a difference so make sure you involve yours as much as possible to help your business run successfully.