Your accountant won't save your business

Most business owners don't lose sleep over their P&L or their balance sheet. They lose sleep when they can't pay the VAT bill, the month end wages are a struggle, or when they're working harder than ever but somehow have less money to show for it.

The irony is that these problems rarely arrive without warning.

They develop over months, sometimes years, leaving clues that are visible to anyone who understands the numbers. 

Margins begin to shrink, overheads quietly creep upwards, customers take longer to pay on time and cash starts disappearing faster than it's coming in. By the time the problem becomes glaringly obvious, the opportunity to prevent it has often passed.

That's why understanding your numbers is one of the most important responsibilities of any business leader.

And one that I see and hear time and time again as not being done. You don’t know what to look at, You’re too afraid to look as you fear the answer or you are abdicating responsibility of the numbers to the accountant.

A few years back, one of my peer group attendees didn’t show up for a session.  I spoke to him later that week and learned that his business had gone pop!  He had run out of cash and couldn’t trade.

His accountant was also his business adviser/ mentor (yes, I know, don’t get me started).  He asked why he had not been informed that he was running out of cash and was told, “You didn’t pay me for that service!"

Your profit and loss account tells you whether your business model is generating sustainable profit. Your balance sheet reveals the financial strength of the business you've built, while a well-maintained cash flow forecast tells you whether today's decisions are likely to create or solve tomorrow's problems. Together they tell a story that no single report ever can.

Yet too many business owners never ask for or get these reports from their accountant monthly.  It’s usually at the year end when it is too late to act.

That's a missed opportunity because financial information should shape commercial decisions. The financial results of the previous month and year to date should influence pricing, recruitment, investment, growth plans and every significant decision you make for this month.

Think financial SatNav for your business.  If you are running late, you put your foot down a little or take a different route.  If ahead of time, you can afford a pit stop.

Last week, I attended a workshop ran by my accountant Debbie Whitaker of Not Just Numbers.

One thing Debbie does particularly well is simplify the numbers that matter. Rather than overwhelming business owners with pages of reports, she focuses on the measures that genuinely influence decision-making: turnover, gross profit, cash in the bank, debtor and creditor days, break-even and a handful of meaningful KPIs such as customer retention, sales pipeline and recurring revenue. 

More importantly, she takes time to explain what those numbers mean without jargon and how to use them to make better commercial decisions. 

That's why choosing the right accountant matters.

Debbie charges a few quid more than the average accountant, but you get what you pay for.

A proactive accountant doesn't just prepare accounts or submit tax returns. 
They help you understand what the numbers are saying, challenge your assumptions and encourage better decisions before problems become expensive. That's exactly what I've seen Debbie do over the years she has supported all of my businesses. 

She genuinely cares about the businesses she works with, taking the time to explain the story behind the figures rather than simply reporting them.

As her presentation neatly put it, "Turnover is vanity. Profit is sanity. Cash is reality."

Your numbers are already telling you where your business is heading. The only question is whether you're listening. 

Your accountant won't save your business. But they should be giving you the numbers and support for you to save your business. 

One of the first things I do when I walk into a session with a new client, is ask to look at their financials.  The quality of the reporting, the health of the finances and their understanding of what they are saying tells me a lot about the business and what needs to be done differently.

We then review the numbers every month and make changes to the plan to stay ahead of the curve.  Accountability is tough but it gets results.

So, let me leave you with one question...

If I asked to see your latest management accounts today, would you be confident enough to talk me through them and tell me what they say without looking to your accountant for the answers?