In a fast-moving world, communication and keeping up to date with the latest information is a pillar of business success. A survey examining how SMEs use accounting services revealed that accountants are the most important business service providers for improving business performance.
When ranking their impact on improving performance, accountants are seen as more important than solicitors, business networks, bankers and consultants.
At the same time, many SMEs don’t take full advantage of the benefits of regular contact with their accountant.
It’s more than tax and compliance
For some businesses, accounting is seen as a service to meet tax and compliance obligations, so they only get in touch with their accountant for tax reporting.
But accountants can provide much more to improve business operations and results, including creating cash flow forecasts and advice on purchasing significant assets, buying or selling a business, introducing new business lines, updating staffing requirements, and borrowing for working capital.
A proactive accountant can also help you understand how your accounting software works and use it to quickly check your books to find important indicators such as your cash flow, turnover and profit levels.
Regular communication with an accountant can help you be proactive with tax planning to be in the best position at the end of the financial year instead of scrambling at the last minute or missing opportunities to minimise your tax.
The lack of regular communication between business owners and their accountants means businesses are not maximising results from getting the best advice.
Why are SMEs reluctant to stay in touch with their accountants?
When speaking with businesses frustrated with their current accountant, they tell us they wish their accountant was more proactive. They also tell us that they don’t want to be charged every time they call their accountant for advice.
Based on this feedback, we charge a fixed fee for a service and then deliver several times the value of that fixed fee.
Here’s one example of how this worked for one client who came to us for help. The business was in a real mess. After conducting a thorough audit of his systems and structures, we were able to help him:
- Eliminate $150K of unnecessary expenditure in Week 1
- Outsource his payroll tax, super, and annual leave processing so that he no longer has any ongoing employment liabilities
- Implement a real-time accounting system so we could track his progress daily.
There’s more work to do, but we helped him achieve an $800K turnaround in his business.
When he first approached us, we asked him why he wasn’t seeking help with these problems from his current accountant. He answered that he feared the $250 charge from his accountant every time he called him for advice.
The survey mentioned above supports what this and other clients have told us. First, 23% of SMEs that switched accountants did so because the fees were too high, and nearly a quarter of SMEs switched accountants did so because their accountant was reactive, not proactive.
In addition, regarding paying for accounting services, 54% of SMEs preferred a fixed fee arrangement, while 52% of accounting firm income resulted from hourly billing. This highlights the mismatch between how businesses want to pay for accounting services and how they are charged. The result has been a reluctance of SMEs to seek help when needed.
Bridging the gap between accountants and businesses
Many accounting firms provide good service to their clients for the first two years and then switch to an arrangement where they only help with tax and compliance issues or when a serious problem arrives.
By listening to our clients, we understand that businesses want a proactive approach where they get the advice they need without being billed each time they call their accountant.
Our approach with clients is simple:
- We ensure you have the right systems in place – having the right systems and processes in place can make the difference between success and failure. Having up-to-date accounting systems will help you monitor the health of your business and avoid unpleasant surprises. It will also make it easier to sell your business if you have systems in place to help the purchaser take over the operation.
- We ensure you have the most tax-efficient structures in place – this can make a big difference in the tax you pay.
- We provide ongoing taxation and business advice – not just once a year, so you can plan and minimise your tax while maximising your results.
- We can also do your compliance work, but we offer much more.
Has your accountant reached out to you lately?
If you are like many businesses, you are not getting proactive support from your accountant, or you don’t want to be charged each time you get help.
The team at Equil Advisory offers proactive accounting and business support to improve your business results.
Get in touch to find out how we can help your business.
