Can an Accountant add financial value to your small business?
The dilemma is that while all companies can benefit from the opportunity to achieve what a financial manager and CFO can do, they come at a cost. The problem is this-does the expense outweigh the benefit a CFO creates?
In order for a company to adequately address this problem, we must first consider a business' needs in the sense of its finance feature.
Below are the hierarchy of needs for a business:
Level 1: bank balance accounting
The most fundamental and simple form of accounting is accounting for bank balances. Usually done on spreadsheets, for the sole purpose of filing your tax, you list all of your expenses and profits from your bank statements. The benefits of record keeping this way is that it's inexpensive and easy to do. It is a common method just getting started for solopreneurs and businesses.
Level 2: Accrual based bookkeeping
Accruals-based bookkeeping applies enhancements to accounting for bank accounts and sets the basis for the finance feature. It's the process of taking and structuring the building blocks of financial data into a format for interpretation and analysis
Many business owners find bookkeeping an operation motivated by compliance. It is also viewed as an administrative task that is low in value and commoditised. That is a mortal mistake. The truth is that bookkeeping is the most important layer of your company because it underpins all of your organization's finance work.
The illusion of tech
For SMEs, cloud technology has been a changer in game play. There are a myriad of accounting software tools and systems which automate a lot of previously manual processes. Setting up this app will save you money yourself. But be advised. You will pay a specialist if accounting is a field outside of your knowledge. Software companies paint a picture of the idea that clever UI and product marketing are easy to install yourself. If you have a simple business, surely stuffing anything up isn't difficult. But as your business grows and becomes more complex, just be conscious of the Dunning Kruger Effect. Prevention is always cheaper and better than rectification.
Level 3: Reporting and systems
The next move is to report on your business operations, with your records and transactions being properly accounted for. With so much business and financial data generated inside your company, the amount of information is easy to get overwhelmed. Its key is simplicity. A good financial manager will work with you to understand the financial drivers of your business model and establish additional systems to monitor and measure them. Remember, business data is not exclusive to your finances. You want to be measuring and managing other aspects of your business like operations, sales and marketing and people. Centralising all your business data allows you to identify trends and correlations to improving organisational performance.
The primary aim of reporting is to convey knowledge about this company to the specific stakeholders. And it's all about meaning. What you say to your Management Team would be different from what your Investor Board says. A financial planner will help you find out 'for whom is this? 'And draw up a structure from there.
Level 4: Operational Finance
Operational finance is the method of taking the historical data and using it to create statistical reports and forecasts. It is the method of creating a rolling budget, managing cash flow projections for the short term and conducting review of your target financial output relative to your actual operation. This is important for startups, because you are on top of the runway and burn rate.
Level 5: Strategic advisory
A CFO's sweet spot is policy advice. Partnering with a strategic CFO will help you develop your company's financial and operational plan. She will help you with financing strategies, pricing, capital raising, mergers and acquisitions and the formation of long-term shareholders. If you are looking to be a 'large' company, a strategic CFO in gold is worth its weight.
Level 6: Tax compliance
Tax is at the top of the pyramid of needs, as growing companies have to file its tax. Ensure that you work with a tax accountant who understands your business model and market so that you function from the right platform and optimize all the tax benefits and deductions available to you.
Robert Arnone’s mission is to serve as the trusted advisor for business owners that helps them achieve their financial goals. By applying expert knowledge in accounting and financial best practices in a personalized fashion, our clients are able to plan for and more importantly, achieve, financial success. We offer these services at a value that large accounting firms can't afford by holding dear the values of Integrity, Service, and Value. Contact us today for accounting services that go beyond your expectations!