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Don't let your accountant let you down

 ‘In what way does your industry let its clients down?’. 


This was a question raised in a Facebook group I follow this week and it struck a chord with me as it is a topic I feel passionately about. I jumped on board with a 4 minute Facebook-live video and decided I still wanted to explore a little bit further. 


As an accountant with my own practice I have many conversations with clients about the role of accountants within their lives and we can bring to them. 


Traditionally it has always been that a client needs their accountant for compliance issues; filing annual accounts and tax returns. This means once a year the client supplies their financial information  to their accountant who then works their magic and produces the accounts and a tax liability that is then payable. 


How many of you reading this have said I will see my accountant because I need to file my end of year accounts? 


Or help where is the number of my accountant the tax return is due?


Actually, is this the best time to see your accountant, just once a year? 


Furthermore, if you are waiting until your next tax return is due you are already well into the following tax year by then and working with historic information. Don’t get me wrong a significant part of what accountants assist with is these compliance functions and ensuring a business to be the most tax efficient as possible. 


Just think about the conversation you have with your accountant when they have done the compliance work once a year:


Accountant:    I am glad to say that we have calculated your profits for last year and you made £X.


Client:              Great, I had no idea that I had done so well last year. Obviously, I saw the benefits of the cash in my bank and could increase my drawings slightly but I am surprised by this outcome. 


Accountant:    Yes it was a good year in comparison to the previous one where you only made £Y. Maybe you need to take the time to review what you did differently and how you can use that information. 


Client:              Thank you. I will go away and do that. Now what is my tax liability to pay and when?


This was an example of a good annual outcome but let’s turn it on its head and think about the results of this conversation if it had not been so good.



Accountant:    We have calculated the results for the year and your business is showing a loss of £X. Were you expecting this?


Client:              Well I knew things were tough and we had a hard year but I hadn’t expected that outcome. 


Accountant:    How are things now? You are six months in to a new financial year have things improved?


Client:              Not really. We have taken out additional borrowing as cashflow got tight and we are two months in arrears with HMRC. 


I have had a number of clients move over to use my services who have been in this situation. Their communication with their previous accountants had been on an annual basis for compliance assistance and they had been working without real financial information.


In worst case situations businesses get into trouble and this can be a build up over time or a sudden loss of a key contract. Whatever the cause the most difficult outcome for any business owner is to have to fold their business as it is insolvent and no longer viable. That is the toughest decision to make and will have been the cause of much stress, anxiety and sleepless nights before then.


What a difference it would have made in this latter scenario to know how much income you are generating, where the money is going to, how your cashflow can be affected by the unknown occurrences on a regular basis.


For me it is a sad situation that owner managed businesses are not having the support from their accountants and do not understand the role that their accountant can have in their business. 


I am supporting the trend for accountants from being a compliance led to a hands-on advisory function for clients. There is now a move with the increase in cloud accounting and software plus the change in the relationships that banks and other advisors have with their clients so that accountants are now adopting an advisory role. 


It can be normal to ring your accountant and say ‘hello’ and regularly see how things are going. Or to call and say ‘can you help me with this’ or ‘is this something you can support me with’ not just at compliance time but throughout the year. 


Accountants will take on a more pro-active role with their clients and in return will empower them with skills and knowledge so they can have a go themselves and gain a greater understanding of their business, its needs, its resources and ultimately its performance. Hopefully this will lead to more businesses not having to take the tough decision to fold and to having a stronger small business presence.


Take a few moments to think about the role your accountant plays in your business and whether this fits with what you want for your business not just now but in the future. 

on July 30 at 2:52

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