Five Money Management Questions That Every Business Owner Should Ask Their Accountant
All business owners will know that running a business means juggling all manner of tasks and responsibilities to stay on top. However it is also an important skill to be able to delegate tasks which you are not such an expert on to professionals that will take care of it. The vast majority of small and medium enterprises employ the services of an accountant to do just that. Managing cash flow, monitoring expenses and paying as little tax as possible is vital to running a successful business but not everybody is an expert in finances. You may be tempted to hand over your company’s finances to your accountant and just assume that everything is in order, but it’s really important to keep a handle on what they are doing for you. So what questions should you ask your accountant regularly in order to remain tuned in to your business’s financial health?
1. How Does My Profit And Loss Account Look?
Your accountant will be keeping track of all money going into and coming out of your business using a Profit and Loss Sheet. It is this information that they will use at the end of the tax year to submit your figures to the Inland Revenue. However it is essential that you cast your eye over the report at least once a week to make sure you are on track and there is nothing important that you have missed. You should also check it over for errors – nobody is perfect and you may well spot a glaring error that your accountant has not.
2. How Is My Business Comparing To Competitors?
A good business person will be keeping an eager eye on their competitors’ results to see how they measure up in the marketplace. What are they spending on wages for example? Is your income better than theirs? What are they doing that you aren’t, and vice versa? An accountant will be able to help you identify your areas for improvement.
3. Is My Business’s Spending Efficient And How Could We Save Money?
Going through your expenses sheet with your accountant can be a very enlightening task. When little costs are added up they can have a big impact on your bottom line. Are you paying over the odds for your stationery? Could you cut costs on your hospitality budget? Are fuel costs being kept to a minimum? You and your accountant should be highlighting costs which could be saved and making sure that they are followed up.
4. Which Areas Of The Business Are Generating The Most Money?
Casting a critical eye over your accounts could show up some very interesting results. You may find that the area of the business you are ploughing the most time and effort into is actually generating less income than another area of the business that is just ticking over. Identifying where your attention needs to be focussed is critical to ensure you are maximising your profits.
5. Are We Maximising Cash Flow Wherever Possible?
Are companies taking too long to settle up their invoices? Ask your accountant to make sure they alert you to anybody that is taking too long to pay their bills. As long as they are aware of your payment terms they should be adhering to them, so make sure your accountant is hot on the heels of anyone who is taking too long to cough up.
With good communication you and your accountant will be able to work together to push your business up to the next financial level so don’t just leave them to it and hope for the best!
About the author:
Laura writes for www.liptrottandwoosey.com, an accountancy firm that specializes in helping small to medium sized business.
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