Business Development

Nice, neat rubbish numbers - ready for a Xero HealthCheck

Posted on February 10, 2023

We all know the importance of producing sound quality management accounts - measuring is the start of improving profitability. There they are - nice, neat numbers but how sure are you of the quality? Is it sound? Does the bank reconcile? Is the PAYE balance correct? What’s in the suspense account? Does it correctly incorporate opening balances from the previous year? What’s the quality of the purchase ledger balances and the sales ledger?

These questions are relevant to all reporting but it may be that your checking procedures are not good enough or maybe there aren’t any. This directly risks the integrity of the information. If you’re going to use the accounts to take action to improve your profitability, surely what it’s all about, then it’s essential that your data is sound, otherwise your profitability will be directly affected.

For example, when looking at your Balance Sheet you probably assume that the bank reconciles. We’ve lost count of the systems we’ve checked where the bank doesn’t reconcile. That is usually associated with major quality questions over the whole accounting. In turn that directly affects reporting of your profitability and performance. Your assumption is that the book-keeper knows what they are doing – but do they?

Usually the book-keeping is in the hands of just one person. That book-keeper may be friendly, punctual, efficient, even professionally qualified however that proves nothing about the quality and state of reconciliation of the accounts. Everyone in the business will assume that all is well unless there is a fire but is that safe? It’s likely that no one in the business is really able to or is measuring the quality of the accounts. That is taking an unnecessary risk.

So how can this exposure be dealt with. Someone else in or outside the business, someone who knows what they are doing, should check the quality. In our opinion it's safest to use a qualified accountant - that need not cost much as it's a quick exercise for a professional and it’s only a one-off task.

The sample shows the sort of detail that is covered. The 30 traffic lights make it easy to focus on areas that need attention. It’s all on one page and is very easy to understand.

The Benefits of a Xero HealthCheck

improves the quality of the management reports
reduces the risk of wrong numbers
easy to understand traffic light status
saves unnecessary cost at the Year End

Extra benefits of Outsourcing the Xero HealthCheck

access the required skill set of a professional
discreet, confidential checking of a book-keeper's work
independent

Good times for a HealthCheck

before the first set of management accounts are produced
when there is any sort of doubt about the book-keeper
before issuing ‘special’ accounts e.g. an application for bank funding

A Xero HealthCheck is quick and easy, so no excuses!

This entry was posted in Accounting, Business Development and tagged in bookkeeping; management accounts; management information; reporting by Caroline

Getting the most from your Accountant

Posted on September 15, 2022

Many business owners simply see their accountant as a cost and someone to whom they send a bag of paperwork at the end of their financial year – some even refer to them as the “necessary evil”! Whilst this may suit some business owners, those with growth ambitions should consider their accountant as an investment. One that, like any other, needs attention in order to maximise a return.

Accountants are not simply there to keep a business compliant. They can provide a wealth of knowledge and experience, which if taken advantage of, can position your business for significant growth and success.

Here are 5 ways that you, as a business owner, can get the most from your accountant:

1) Exploit their network. Successful accountants tend to have a large professional network, full of valuable contacts. ‘It’s not what you know’ is an old cliché, but it does have some truth. Ask yourself ‘who does my accountant know who can benefit my business?’ Then ask for an introduction.

2) Don’t be a stranger. Your accountant will struggle to help your business if they only see your figures once a year. Be proactive in providing information. Forewarned, after all, is forearmed. And whilst good at anticipating things, even the most clairvoyant accountant would be hard pushed to be aware of seminal events – for example, large capital sales or investments. The more information your accountant has, the more likely they are to be able to add value.

3) Honesty is the best policy. Remember, accountants are there to help. Whether their focus is to support the maximisation of profit or to minimise tax, hiding information from your accountant could result in serious consequences in the long run.

4) Ask for advice. With the breadth and depth of experience that many accountants have, asking them for advice could be a wise idea. If you accountant is unable or unwilling to offer more than simple transactional support, consider engaging a new firm. Taking advantage of the experience that your accountant has could help turn their ‘cost’ into an investment.

5) Consider them as part of your management team. Your accountant has a vested interest in supporting your business to succeed; it ultimately means business for them! Using your accountant in conjunction with your finance director for example could give you more time to drive the business forward without having to sacrifice financial control and compliance.

By taking a proactive approach to your relationship with your accountant, and considering them as an investment as opposed to a cost, you can realise significant benefits to your business growth ambitions.

Credit to Tectona Partnership for this article https://tectonapartnership.com/12-getting-the-most-from-your-accountant/

This entry was posted in Accounting, Business Development, Management Accounts by Caroline