(3/5) Added as Standard…
Added Value at the Heart of Accounting Services, Number 3 of 5 in this series introducing accountants and their role in business.
Added value services, as discussed in the overview, form, in fact, the core of the services that accountants deliver. The exact range of services that are offered as part of ‘added value’ will vary from firm to firm, but this article introduces some of the main concepts and illustrates some of the many benefits that professional accountancy can provide.
One of the more famous (and infamous) benefits that an accountant can bring, through a thorough understanding of the tax system, is a reduction in the corporation and/or capital gains tax that a company pays and, by the same token, the amount of income tax for which a Sole Trader or Self employed individual is liable. This process, properly conducted, is completely legitimate and achieved through advice, amongst other things, about the timing of purchases and revenue collection, and the allocation of costs.
The amount of information that can be gathered and derived, simply from your revenue and expenditure data, is staggering. Concepts like cashflow, performance against KPIs and debt age distribution are bread and butter to any accountant, and essential to any manager or entrepreneur looking to take their business forward. Any program for growth needs to incorporate an information gathering stage and this may well relate to information about competitors, as well as your own company. This information is freely available through annual submissions to Companies House, but can be difficult to interpret properly for untrained individuals.
In the modern world, it’s rare that a single meeting with your accountant each year, or even each quarter, will provide enough information about the state of your finances to enable the effective day-to day running of your business. Cloud accounting solutions like Xero, Wave, Freeagent and Sage provide 24hour access to your accounts (and in many cases, derived information about those accounts) from anywhere where you can connect to the internet. In combination with an accountant who understands them, and your business, these applications can be extremely powerful.
An experienced accountant takes a long view of every financial decision. They understand the financial environment in which a company is operating, and are able to predict better than most the effects of a changing and volatile climate –which is now the norm – on its finances. Most directors prefer to stick with a particular accountant, or firm of accountants for a long time because much of the benefit in strategy advice arises once the accountant understands the nuances of the company.
The role of an accountant, then, is much more than simply crunching numbers. Properly utilised, a good accountant is a huge asset to any company, and most smaller businesses, and their benefit goes far beyond compliance and tax reduction.
The next post in this series deals with Types of Accounting and Specialities from Agriculture to Forensics. The previous one is a closer look at Compliance. The other topics are an Overview and “Accounting in a Hostile Environment.”
Oct 21, 2014