Employing an accountant can save money and keep a business in compliance
What is the main cause of SME failure? Cash flow. It’s as simple as that. Cash flow can make or break a business. There are of course many different reasons cash flow can be impeded, but whatever the cause, it requires insight and a swift response to prevent cash flow problems from killing your business.
Unpaid invoices, customers not settling overdue accounts, and a lack of accounts aptitude can add up to cause serious cash flow issues.
Hiring an accountant may appear an unnecessary expense for a small or medium-sized business, especially when, as business owner, you feel like you have your finger on the pulse. But, as your business starts to grow, it’s not uncommon for small problems with accounts processing and reporting to build.
As a business owner you may have been fully involved with the numbers at the outset, but as you find your time increasingly taken up with other critical business activities, it is easy for your attention to slip. Getting the next big order can seem way more important than updating your accounts.
Getting off on the right foot is essential for business success, as is managing growth. Here are 5 reasons why hiring an accountant is a shrewd move for SMEs.
- Managing cashflow
As a business owner trying to do everything, you may be telling yourself you will catch up with the numbers at the weekend. But in most cases seemingly innocuous tasks get continually put off. Before you know it, the backlog is causing a problem.
There is a real danger that when business owners or managers do everything themselves at the outset they then find it hard to delegate as the business grows. Successful businesses are, in fact, the ones led by entrepreneurs who know how to delegate to the rest of the team.
Insight into cash flow is vital for business. It informs almost every decision a business leader takes to protect a business and grow. Outsourcing some of the financial management to an accountant can help you to plan better and avoid common cash flow mistakes.
Managing cash flow is a major challenge for SMEs. A recent report in The Independent reveals that the practice of late payments is costing SMEs more than $2 billion every year.
- Staying compliant
Business accounting can quickly go from straightforward to complex as a business grows. Understanding tax obligations and staying compliant can be a minefield for SME business owners. A business faces severe financial penalties if it fails to maintain compliance.
A qualified accountant will be up-to-date with tax legislation and can compute and file your tax returns for you. An experienced accountant will be able to give advice on effective tax management that could ultimately save your business money.
- Staying informed
Measuring business metrics can prove invaluable. Understanding your company’s financial situation at a glance and tracking business metric ratios over time will assist you in making the right decisions for efficient growth. Keeping track of things like cash flow is essential.
An accountant can keep you up-to-date with all the financial information you need to make good business decisions.
- Managing growth
Accountants don’t just balance the books. They have a wealth of knowledge and skills to help businesses make the right decisions to grow. Wellden Turnbull, chartered accountants in London and Surrey, say the role of accountants is definitely changing and is much more centered around business advice than simply number-crunching.
Mismanaged growth in SMEs can be extremely costly, and even catastrophic. Yes, a business needs to spend money to grow (bringing in new staff, training existing staff, moving premises, and so on). But, keeping an eye on cash flow and profit margins is essential.
Seeking business advice will help you maximize your business potential and better manage periods of rapid growth. An accountant will help to set realistic targets and give timely advice to support your business growth. They will also have a wealth of experience to draw from to help you avoid the common mistakes SMEs make during periods of growth.
- Avoiding costly mistakes
Accountants are experts in their field. They will not only help you streamline processes and avoid simple costly slip-ups, they can help you develop a business plan and make long-term adjustments to save you money. Having an accountant can save money in a surprising amount of ways and can actually pay for itself in a relatively short amount of time.
Don’t let poor financial management halt your business in its tracks.
Written by: Mike James, BOSS Contributor
