Can accountants really advise their clients on cashflow?

There is a constant push to add more value to clients. Compliance work might be the bread and butter of revenue, but long term relationships and client retention lie in being a trusted business partner.

We all know that, but what remains a challenge is how much value you can be expected to add and how you can align the provision of additional services with maintaining productivity and your expected hourly rate.

Regular strategic reviews and help with tax planning, business exits and long-term retirement plans are all reasonably straightforward. They are occasional activities, take a measurable amount of time, which you can charge for, and your experience gives you confidence in your ability to deliver.

But what happens when it comes to managing cashflow? Now, you are really putting your head under the bonnet. Can you be expected to keep on top of this for a client?

We think the question lies more in how to do it, rather than whether it should be done.

Cashflow is the lifeblood of every business (you might have heard that before!), but it is a very real fact that many business owners do not have a strong enough grip on their cash situation. With 53% of the country’s SMEs experiencing severe late payments, it is common for businesses to feel pressure with the management of their cashflow. And that’s just one cause: overtrading; seasonal business and unexpected or large bills can all chip away at a business’ liquidity.

The best accountants are already stepping up to the plate and it is time many more did so. More businesses could be turned into long established, profitable enterprises if they had the right guidance available to them when it comes to cash management.

There are only a handful of important questions when monitoring cashflow:

  • When is a shortfall or surplus likely to occur?
  • What will cause it?
  • How much will it be?
  • How can it be addressed?

Then there is the validation issue of how many cash-in and cash-out transactions remain unreconciled, which could exaggerate or solve the problem when brought up to date.

A short list it might be, but it doesn’t diminish the difficulty of each question, and the challenge is multiplied when you are trying to monitor 10’s or maybe 100’s of customers at the same time. You might already be trying to help certain clients, but are hindered by unproductive, manual processes.

So maybe it is too difficult and, for all its importance, day-to-day cashflow management has to be left to the client.

Not so.

The advent of cloud accounting and the connectivity of bank accounts to accounting systems has significantly enhanced the remote monitoring that can be done. By overlaying a dashboard reporting tool like CaFE onto the accountant’s view of the accounting system, it is possible to see, at a glance, the clients that have an impending cashflow issue and then drill down into the detail of those in most need of attention.

The all important productivity is unaffected as the information is always there and it is up to the firm to decide when and how to use it. Any issues are therefore managed by exception. Time can be billed to any clients that are contacted as there is legitimate purpose in doing so, or it can be built into a management agreement.

The solutions offered might range from recommending better credit control to supporting a borrowing application. Either way, a single phone call to a client sliding unwittingly towards being unable to pay the VAT bill or the salaries on time could not only save them from avoidable stress, but earn their lasting respect. And how better could you define a trusted business partner?

January 26, 2017 by Makoto Fukuhara Categories: Accountants and bookkeepers