As business owners, it is important to work closely with related parties involved directly with their business management related matters. It includes company secretary, accountant and auditors to name a few.
As business grows, it is important that the function to work in the business be shifted to working on it. Here, let me bring you to a situation where the business plays an important role to ensure that they receive the right service by avoiding under-delivered service from their accountant.
1. Communicate your specific interest and goals for the company.
Many business owners assumed that an accountant is the person who will assist them on accounting matters for the company. Yet, an accountant in general may only look up for a compliance-delivered service kind a like, that many expected and available in the market.
Therefore, as a business owner, prior to appointment of an accounting firm for your company, go through all related important points with them, including explaining to them how your business model is. A medical manufacturing company may have a different accounting model from a pharmacy. A preschool center may have different sets of charts of accounts and its revenue model from a day care center.
Regardless how reliable and trustworthy your potential accountant is, be sure that you communicate all those item in your business as part of your interest.
In fact, your accountant must know your plan for the company’s growth at least for the next 3 years.
Take a classic example. If you have plan to expand to a new premise, or acquiring new asset in the next 18 months, and would need to get bank facilities for the said purpose, your accountant should be able to translate this goal while preparing your accounting reports.
In the event that you already have a track record from previous years, your accountant should still ask you a lot of questions to understand further on your situation. By then, he should be able to give some technical advice necessary based on your current financial position.
Having a formal meet up with your accountant before engaging them officially, become crucial to ensure information related communicated well. To understand and be clear with the scope of service provided by an accounting firm is another important thing to be noted by business owners.
2. Get the basic understanding of what are the important terms in a financial management report.
While it is normal for all business owners to be concerned on what is the bottom line like, he must be given the right information on his business numbers. An accountant must be able to translate and at least walk through all items in a financial report for the company and what does it means.
Most Directors of SMEs, will look and be interested much in the value of the business and GP performance of the company. Should there be an amount of transactions in ‘uncategorised’ or ‘other income’ category, an accountant must be able to highlight the impact to the numbers in the report. If an accountant fail to raise any concern about how the numbers reflect on the GP and overall company’s value, it is clear that you are getting under-delivered service.
If such situation occurs, it shows that the accountant may have taken the information lightly and he does not actually go through the management account in detail. Although the management account prepared by other clerical staff, an accountant must have a sharp eyes on important details.
In the event where the value of equity become negative, an accountant must be able to highlight the impact to the directors as well. As an experienced accountant, regardless of the years in service, a basic fundamental of an accounting advice must come from the firm.
As many business owners do not have any accounting background, it does not mean that an accountant can take advantage on hos side to give an under-delivered service.
3. Get your accountant to ask you and at the same time answer your question.
Observing on how many business owners who are appointing accountant based on the wrong preference, it is important that one must know which should come first.
Instead if getting a cheap and fast service from your accountant, you may want to switch to an experienced and firm accountant. Instead of having an accountant who takes it all from you, you may want to get the one who will insist to sit and talk to your about your company’s financial report. Instead of an accountant who will take piles and boxes of receipts from you, you may want to engage with accountant who advise you what to do so your issues in documents management is resolved.
Studying the background of some accounting firm, which engaged with most business owners (especially SMEs), many can be categorized in a group of young accountant with lack of experience. Many has not putting the right emphasis of the good practices in practical and reality for a company in developing the company’s finance system.
Without the right knowledge and experience, many accountant fail to highlight the risk and the company’s exposure based on the numbers from their financial reports. Most of accountants have a typical understanding and make assumptions that business owners have the same understanding and expectations in the business. Again, this relate well to the points discussed earlier.
In conclusion, as there are lots of accountant and accounting firm out there, a business owner must be ready to take the challenge of getting equipped with basic knowledge of accounting. The directors themselves need to have a strong solid basic understanding on what an accounting firm should be giving them beyond a compliance advice. They must know their responsibilities and duties when it comes to the company’s financial work relation with an accountant-auditor-tax agent.
For this purpose, I would rather say that business owner must choose an accountant who is not playing the salesman role but rather an accountant who can give you the right advise, asking you the right questions and ready with the right information to share with you.