The true value of an accountant? Focusing on where you’re going, not where you’ve been

The best accountants don’t just tell you where your business has been; they tell you where your business should be going and help you to get there. Leonherman Practice Director Joanna Jeffrey outlines the true value that clients should gain from using an accountant and provides a case study of how this value might be realised in practice.

It’s about where you’re going, not just where you’ve been

Many people think that the value of an accountant comes from their ability to accurately crunch your numbers, review your trading performance over the last year and compile your transactions into a set of year-end accounts.

But while there’s no doubt that this is a key part of their role, any decent accountant can report the facts after they’ve happened.

The real value an accountant should bring – which is harder to find – is an ability to look forward, to help you see the things you can’t, to identify opportunities for growth and to advise you as you take your business forward.

In short, the best accountants don’t just tell you where your business has been, they tell you where your business should be going, and help you to get there.

They present you with valuable, real-time information and expert business advice on which you can base your future business decisions.

Here’s how this might look in practice, using a real-world case client case study:

The Scenario

A business client makes widgets for the automotive industry. The company Directors want to know whether they should invest in a new process that will improve productivity and create a new revenue stream by enabling the business to diversify into the emerging mega-widgets market.

The business’s year end accounts showed there was strong trading in the final quarter of the past financial year, but the Directors don’t have any more management information on which to base their investment decision and they’re unsure whether last year’s accounts are a sound enough basis on which to base their investment decision.

What should the client do now?

Here’s what we would expect the most valuable accountants to do.

1. Prepare up to date Management Accounts

Firstly, the accountant should quickly produce management accounts for the business. This recent financial snapshot will enable the business’s Directors to base their investment decision on the most recent trading figures and trends, rather than on last year’s numbers.

2. Produce a financial forecast

Next, the accounting firm should prepare a financial forecast that gives the company’s Directors meaningful data and valuable insight into what the business might look like if they went ahead with the investment decision. A good financial model should consider different scenarios and contingencies, to ensure that the client gets the most accurate prediction of their future growth.

The value of the accounting firm doesn’t just come from helping the client to look backward at past performance, but from providing an accurate and clear forward-looking vision of the future.

3. Check if there is a potential R&D tax credits claim

Next, dependent on how robust the business’s new processes will look, and whether this can be adequately evidenced, there could also be an R&D tax credits claim to be made to HMRC which could provide a valuable cash injection to the client.

The accountant should introduce the client to an R&D tax credit expert who can advise and support the business with any R&D claim that could be made with regards to the client’s investment.

4. Move the client to a cloud accounting product

The accounting firm might also ask the client to consider moving their legacy accounting system across to a cloud accounting product.

This would help the client’s accounts team to reconcile ledgers more frequently and give the Directors access to up-to-the-minute sales and cash collections reports which can enhance their investment decision.

5. Take the pressure off! Consider moving the client to an outsourced finance team

Finally, the accounting firm might move some or all of their client’s accounting function to the accountant’s outsourced Finance team. So instead of focusing on balancing ledgers and daily bookkeeping, the client can focus on the areas of their business that are most important to their growth.

The strategic information offered by an outsourced FD team, from monthly management reports and guidance on new legislation, to cash-flow and profit forecasts will also enable the client to free up their time, make informed investment decisions in the future, and give them the best chance of achieving their business objectives without paying a hefty salary.

Want real value from your accountant? Leonherman can help…

As you can see, the best accountants offer value well-beyond traditional bookkeeping and year-end accounts services. They are advisors not just administrators.

It goes without saying that Leonherman could provide all the accounting services outlined in this article.

So, if you’re looking for an accountant who takes a strategic approach not a static approach, who will tell you where your business should be going, and give you the support and guidance to successfully get there, then we’d be delighted to talk with you.

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