Your Financial Business Support » accountant

What does an Accountant do?

EdHart — Wed, 04 May 2011 11:24:33 +0000

I met a prospective client a couple of days ago. He is starting a business based on his many years experience and contacts in his specialist field. We met on the basis that he needed an accountant, and could I help?

The word Accountant has become a much overused description of someone who provides financial assistance to a business. Calling yourself an Accountant implies expertise in a wide range of disciplines:

Bookkeeper
Payroll
Management Accountant
Finance Director
Auditor
Actuary
Treasury (Investments)
Business Tax (Corporation, CGT, VAT)
Personal Tax (NI, PAYE)
Pensions

I believe that every business needs all of the above, just not necessarily all at once, or all the time. When choosing someone to be your “Accountant”, are you paying for all the above services “just in case”, or being quite precise about what kind of support you need?

If you manage your business well, you will be able to select when and who provides you with “Bookkeeping” (needed on a regular basis) separately from your “Auditor” (only needed once a year); be able to pay for “Tax” or “Investment” advice only when you need it. You should ask for general support and guidance from a “Finance Director” only as and when you need to.

The various functions of Accountancy can (and often are) outsourced. Accountancy is a big pool with all sorts of fish in it. As a business owner you should dip into the pool only for what you need, when you need it.

Does my prospective client need an Accountant? No. His needs are far more subtle and demanding than a generalist. Are yours?

What’s really important?

EdHart — Sun, 01 Mar 2009 21:51:33 +0000

A good management accountant is worth their weight in gold. Not because they will generate sales, or improve your PR, but because they will keep you focused on what is really important to the long term survival of your business.

It doesn’t matter whether you are a sole trader, have a turnover of £100k, £100M, or are the Chancellor of the Exchequer, the same principles apply:

Create Key Performance Indicators that are relevant to, and understood by, all those involved – and don’t just focus on the financial KPI’s. Take advice on KPI’s, you need to be objective.
Identify what KPI’s are leading indicators, and which are lagging indicators.
Use qualitative and quantitative measures. Ask for suggestions, and not just from those within your organisation.
Be aware of how KPI’s affect people, and how change makes them feel.
Know the difference between making an investment, and incurring an expense.

When the world around you appears to be losing its way, make sure you have someone who is prepared to talk to you about the reality of your financial priorities.

Management and Financial Accounts

EdHart — Tue, 02 Dec 2008 11:25:46 +0000

Met an interesting person yesterday – which sparked a debate about types of accountants. Not whether they are interesting or boring (!), but whether they are financial or management accountants.

Financial Accountants produce the raw data – they are the unsung heroes and heroines who make sure your numbers are produced on a timely and accurate basis, that debts are called in, and creditors appeased.

Management Accountants are a different breed. They look at the data and ask the “difficult questions”. Such as “Is this a good number?”, “Have we achieved what we thought we would, and if not, why not?”, and perhaps the most important question, “What is the implication of this data to our financial future?”.

Most businesses have Financial Accountants (for example the bookkeeper). I believe businesses need both kinds of accountant, and that it is very hard to find someone who can be both.

Who is asking the difficult questions in your organisation?