Tag Archives: Accountants

What’s the difference…?

Recently I was at a networking lunch where I was asked why a business would use my services instead of relying on their usual accountant.

It’s clear from the number of accountants who have introduced me to their clients that I’m not their competition. I don’t replace the services that a traditional accountant offers; I work alongside them to improve the information they have to work with and help their clients understand the figures.

The first thing to recognise is that a large number of businesses don’t need my help.

A lot of businesses follow quite a simple model; they buy in goods, add a set margin and sell on. (Simple doesn’t mean easy; it’s just not difficult to understand) There’s a few accounting jobs there that have to be got right but so long as the margin is right, and costs are kept under control the business will run successfully using the standard accounting reports.

The same applies to established businesses who understand what makes them profits. If doing what they’ve always done works for them, then they don’t need my help. (I’m happy to work with them, but they probably don’t feel the need.)

So which businesses does that leave?

I specialise in helping food manufacturing businesses where working out the cost of the product is more complicated and where making one key product creates a number of other products which are often less profitable or harder to sell.

In these sorts of cases the answers that business owners need doesn’t come from analysing the year end accounts differently, or from producing the accounts more often. The figures required come from changing what you measure in order to get information that shines a light on what’s happening inside the business.

– Does it matter how much the total gross margin is if you make a huge profit on one product, but lose most of it on the others? Questions that management accountants answer

– Would you be able to sell more units at a slightly lower price and actually increase your bottom line?

– What will happen to profit if you increase sales by gaining a new customer but need to employ more people and change your delivery method?

It’s all too easy to allow customer demand to dictate how a business grows, but if you have the right information you can make sure that the business is developing in the way that the owners and management want it to.

It’s when they want that kind of information, plus my experience of working in business, managing finance teams and understanding the accounting information that businesses come to me.

How do I get good advice from my Accountant?

Every professional adviser (Solicitors, Accountants, Consultants, etc) takes pride in giving good advice.

However sometimes it feels hard to get the advice you’re looking for and in this case it usually turns out that no-one’s satisfied. Getting good advice means asking the rights questions

Compare business advice to going to see a Doctor: you go in and say “My arm’s been sore since I fell over”. They might say “You’ve got a broken arm, lets put a plaster on it.”

But if you said “Doctor, my big toe’s a bit sore.” they wouldn’t look at your arm… You didn’t ask them too!

Here are my tips to help make sure you get the advice you need from your adviser:

1. Remember that you’re paying.

In my experience most people expect not to understand what their professional adviser tells them.

Advisers are very clever, well qualified people who are engaged for what they know about their subject. But hold on: they are clever and well educated and so they should have the understanding and skills to explain the important points to their client.

One of the best bits of advice I was given when I started my training was that I should never leave my client’s office until I knew (and fully understood) the answer to the questions I had – it was unprofessional to go back and ask again.

The same applies in reverse, you’re the only person who really knows whether you understand the advice or not!

There's no such thing as a silly question

It’s not a stupid question – I don’t know what it is…

2. Expect to ask questions.

Don’t be afraid of asking a stupid question, if you’ve got a question then ask it!

This especially applies if you’re in a group. Everyone else will be nodding sagely in response to the advice, but if there’s something you don’t understand then I guarantee that you’re not the only one!

3. Think about what advice you need in advance.

You can’t expect good advice if you say to your accountant “Tell me what I need to know”.

You will get lots of advice, some of it will be big and you will probably get a bill that looks like you’ve had good advice.

What you need to say is something like “Tell me what I need to know about buying a business” or “Tell me what I need to know about suing another business” (I’ve had a busy week!).

Or better still you could say “Tell me what I need to do to … (choose your ending!)”.

This requires time and effort from you, which I guess is why it is often missing!

This raises an interesting point about advice from accountants.

A large proportion of their work is helping people make sure they are not paying more tax than they ought to. Grey HairSo when you sit down in front of them and say “Give me advice” they can often help you even if you haven’t specified what kind of advice you want.

But if it isn’t tax advice that you want…..

4. Make sure the advice you want is something your adviser can help with.

It’s always useful to add “Is this something you can help me with?” to your request for help.

To repeat what I said earlier, consultants like giving good advice. Their reputations are built on their knowledge.

If you ask them for advice in an area where they have little experience it is sometimes difficult for them to say “I don’t know about that”. You need to make it as easy as possible to point you in the direction of someone who does.

5. Let them know when they’ve hit the target

It’s easy to think that because you’ve paid the bill your adviser will be happy (they will be happy!).

But if the adviser really has solved your problem perfectly they will always appreciate a “thank you”. Just a phone call is enough, but in some way communicate that they gave you good advice.

On target

This helps them know that they understood what you wanted and gives you a relationship that will help avoid problems with points 1 to 4 in future!