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We really understand your business (that old chestnut)

It could be worse, I suppose. Your accountant might not even try to understand your business, seeing it as sufficient to simply process all your financial transactions and then tell you the outcome.

And it could be even worse than that, I suppose. Your accountant may say they understand your business but not actually do so!

But it could be better. It could make a difference.

What does “understanding your business” really mean?

For example, what if you are:

  • Project-based
  • A retailer
  • An exporter

The project-based business needs to record project revenues and related costs on a project by project basis so that they have clarity on project profitability and can compare financial progress with the original, agreed budget.

There is no use in getting to the end of the project, not making the expected profit and not being able to do anything about it.

A retailer might want to know in great detail that the mark-up or margin achieved on sales is what it ought to be. Regular stock counts will be important but credit control may be much less an issue to a retailer than to other businesses.

An exporter may worry more about being paid and being paid in good time in a currency that holds its value. VAT on exports can be a minefield, so it is important to get it right.

You know what’s important, so should your accountant

Anyone running a business will know what’s important to their business and the accountant should too.

But more than that, the accountant needs to make sure that:

  • systems and process will be right for the business
  • the structure of the accounts will produce meaningful reports that are produced in good time
  • transactions are recorded correctly for the taxman

And this needs to be done upfront.

The good news then is that, although they grow, most businesses don’t change too much in terms of what they do so the systems, procedures and reporting will act as a solid foundation for the business for some time to come.

But if they’re not right, they can get in the way and hold you back for a long time to come as well.

So the next time you hear an accountant saying that they understand your business, ask them what that means and how it might make a difference.

Because it should do.

 

Michael
@diaryofanomb