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How does an accountant save you money?

Anna Stubbs • Apr 10, 2024

Turning a profit will be high on your list of goals as a business owner. And if you want to generate the best margins, that means keeping an eye on the money that’s going out of the business, as well as what’s coming in.

So, how can your accountant help with this?

The days where your accountant just did the bookkeeping, compiled your accounts and filed your tax return are well and truly over. Modern accounting firms are far more interested in helping you with your financial performance, your business strategy and offering flexible value-add services that put you in better control of your finances.

If you partner with the right accountant, we can actually save you money – in both the short, medium and long-term. And that’s good news for the growth of your business.

Key ways your accountant can enhance your financial health

The less expenditure you have as a company, the bigger your profit margin. It sounds incredibly simple, doesn’t it? - The smaller your costs, the larger your profit. But if you’re not fully in control of your financial management, it’s very difficult to know WHERE you’re spending money, and WHY you’re not achieving your profit targets.

This is where working with a finance professional adds a huge amount of value. Your accountant helps put you back in the driving seat of your finances – and that’s never been more needed than in the current economic climate.

So, what specific things can your accountant do and what will the impact be on the future of your business?

  1. Tax advice and planning – tax costs can be one of your biggest outgoings as a business, so we’ll focus on getting your tax planning under control, applying for all the relevant tax incentives and ensuring you minimise the taxes on your profits. By paying only what you’re legally required to pay – and making use of any reliefs – we can significantly cut your tax spend in the business.
  2. Cashflow management and advice – ‘Cash is King’ may be a cliche, but it’s true. Unless you can balance the cash inflows and outflows from your business, you’ll never have the liquid cash to pay your bills, cover your payroll costs or cover your operational expenses. We’ll show you where money is going out, and coming in, so you achieve the ideal positive cashflow position.
  3. Cost control and spend management – to improve your cashflow, you need to reduce your cash outflows. An important way to do this is to focus on cost control and spend management, reducing your expenditure, removing unnecessary costs and negotiating better deals with your suppliers. The more you cut costs back, the better your cashflow will be and the easier it will be to thrive, grow and become more profitable.
  4. Forecasting and financial modelling – when we understand the key financial drivers in your business, we can build you a full financial model. This allows us to change the variables, run different scenarios and forecast the various future paths of your business. Being able to project these numbers forward gives you a clearer view of the path ahead – and that’s invaluable in the challenging economic times that we all face at present.
  5. Better management reporting and information – your decision-making stands or falls on the information you have available to you. We provide detailed management accounts, breakdowns of key metrics and forecasts of your cashflow, spending, aged debt and revenue – all of which helps you to save money, make sound decisions and keep the revenues flowing into your business.

Talk to us about cutting costs and boosting profit

Rather than running your business on a wing and prayer, by working with an accountant you get a clear picture on your business financials. We’ll help you cut unnecessary costs, optimise the most profitable parts of the business and increase your overall return on investment.

Let’s talk about how we can work together to support your ongoing business profitability.

The seventh cause of poor cashflow - Sales levels are too low

By Anna Stubbs • 19 Apr, 2024
It might sound obvious, but it isn’t to many businesses. If current sales levels don’t support the overheads and other cash demands on the business, then your overdraft will keep increasing. This means that your business in its current state is not viable (unless you have ongoing access to new funds from investors or financiers). There are five ways to improve your sales levels. These are: 1 . Increase customer retention . Stop your customers from defecting to the competition. 2 . Generate more leads . Gain more enquiries from people who are not yet customers. 3. Increase your sales conversion rate. Get more of your prospects to buy from you. 4. Increase transaction frequency. Engage your customers to buy from you more often. 5. Increase transaction value. Help your customers to buy more products or services from you. There are literally hundreds of individual strategies that you can implement within these categories to increase sales. Sending you a list would be pretty silly of us and overwhelming for you. Some strategies don’t apply to your industry, and some just won’t work in your business for whatever reason. What we have found through experiencing a wide range of client situations over the years, is that certain things do work in each type of business. There’s a pattern that we see in clients - both good and bad! How does a business grow its sales without its owners becoming overwhelmed by a mountain of change? The best and most supportive way to grow and improve a business is to have someone looking over your shoulder from time to time, helping you build a plan and a forecast, and keeping you accountable to making the changes that will make the most important differences. Without that support, we all end up in our business and never working on it. Talk to us about how we can provide that support.

The sixth cause of poor cashflow - Overheads are too high

By Anna Stubbs • 19 Apr, 2024
Overheads isn’t typically a place where you will find a lot of wastage. Our experience is that business owners are very careful about managing their expenses, and the smaller the business, the truer that statement is. Having said that, as a business grows, so do the layers of hierarchy. Management control can deteriorate, and the business can become a bit flabby. The trick is to trim the fat but not the muscle when evaluating your expenses. As an absolute minimum, every business should do a thorough review of its overheads at the same time every year, so that it becomes a natural routine. Here are some questions to ask yourself: Do appropriate managers and key staff have individual expense budgets? If so, how are these managed? Have you conducted a formal review of all debt service costs and related fees? What policies and cost control processes are in place for sales staff? Include all working away allowances, vehicle reimbursement expenses, entertainment, and credit card use. What was your total marketing and advertising spend for the last 12 months? Have you analysed each component of spend based on effectiveness and results to the business? When was the last time you renewed your IT support contract? Have you negotiated a fixed monthly fee? If so, is your current fee and contract appropriate (consider migration of services to cloud)? List all subscriptions you pay monthly for SaaS cloud services. Are you using all these services and on the right plan for each? Conduct a cost-benefit analysis. And finally, do you consider your accounting fees a cost or an investment? If they’re a cost, you need to reduce them. If you’re getting value from your annual spend with us, maybe you should invest more to get better business outcomes! Best practice for keeping control over spending is to set budgets and monitor them monthly. Talk to us about the best way to do that. We can show you the impact reducing your overheads can have on your cashflow.

The fifth cause of poor cashflow - Gross profit margins are too low

By Anna Stubbs • 19 Apr, 2024
Your gross profit margin is what is left from your total sales after variable costs are deducted. For example, if you're a retailer and your sales in a given period are £1,000,000, and the cost of the goods you sell in that period is £650,000, then your gross profit margin is £350,000, or 35%. In the above example, if you implement some strategies to improve the margin from 35% to 39%, your gross profit will improve from £350,000 to £390,000. That’s an increase in profit of £40,000. You may need to increase your overheads a little to get that increase, however, if you get the results, it will be well worth your investment and energy. There are many ways to lift gross profit. Some will be appropriate for your business, and some won’t. For example, if you’re a retailer, you could focus on reducing stock shrinkage and theft, avoiding some discounting, and making sure you minimise obsolete stock. If you’re a contractor, you might focus on rework and wastage, ensuring all work and materials on jobs get billed, and team member productivity. We can help you to determine the best strategies to lift your margins. We can then run your figures through our Cashflow & Profit Improvement Calculator to show you the impact of seemingly small changes. Don’t let poor margins destroy your cashflow and working capital. Get some help from us to make a better plan.
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