In today’s competitive business landscape, many small and medium-size business owners are struggling to come to terms with increasingly complex accounting challenges. There is now a need to get better insights from their data, alongside the ongoing concerns to maintain profits, hire the right staff and evolve their business to keep them relevant.
Most industries are facing some form of disruption and accounting is no different. We’ve previously touched upon the importance of making sure your accountant is part of your team rather than an external advisor. But in practice, it’s often not clear how you might go about rethinking the way you approach accounting within your business, especially when many of the services available today simply weren’t possible with technology from a decade ago.
When we work with local businesses, they often have sub-par finance systems and functions, but that can be sorted out relatively quickly. Generally, the book-keepers are literally keeping books up to date and nobody is actually looking at the accounts until they are sent to the accountant. The problem with this is errors are only spotted a long time after the fact, and timely information isn’t available for decision making. In the end, it doesn’t matter how good your internal staff or advisors are, if they don’t have good information out of the gate it makes everything, from risk management to preparing GST returns, more complicated and often more costly when information is found to be missing or incorrect.
The question is how, in practice, do you actually address this? It’s essential to start by building good foundations and making sure the data going into your accounting system is accurate. Often the endless job of coding information could be sped up and made more accurate with the right cloud accounting system. For some businesses, especially where transaction volumes are low, it makes sense to look at outsourcing basic accounting functions so you can be comfortable that accurate records are being kept. It also means that when it comes to making decisions and getting advice further down the track, your upfront investment allows for better, more cost-effective advice.
Whether your book-keeping is done in-house or outsourced, the next thing to consider is whether the right accounting adjustments are being made each month. The beauty of cloud accounting systems is that it’s possible to have year-end quality accounts every month but businesses often miss crucial adjustments like accruing for holiday pay, monthly carry forwards – even something as simple as spreading costs over the correct period of time to ensure that the good months really are good, and the bad months really are bad. This normally comes back to having someone internally performing the accounting function because they know enough to get by, but it doesn’t necessarily give you the extra comfort you need as a business owner.
Often, we find small and medium-sized businesses are not able to utilise the services of a full-time internal financial controller so they will either make do without one, or employ someone who knows enough about accounting to get the job done but doesn’t have the experience to add extra value and provide key decision makers with key financial insights. This is where a virtual financial controller can help fill a gap in expertise. It’s often less costly than a part-time internal financial controller, but you get access to a deeper skill set on an as needed basis.
It’s important to note that there are a range of services offered by different firms, often with confusingly similar names, so it’s important to dig into what is really being offered so you can find the right mix for your business. It may be that some help with getting the right processes in place is sufficient to get basic accounting functions working better, or it may be that you’re already happy with your book-keeper and you instead need help with higher-level accounting functions.
We love seeing businesses grow, and being a part of the team. In fact, the reality is that whether we’re supplying basic outsourcing services, a virtual financial controller or getting one of our savvy accountants involved in strategic planning, the best measure of success for us is seeing your business growing to a point where we don’t need to provide outsourced or virtual services anymore, and instead we can help you on the next part of your journey.
Download the “3 Accounting Trends to Grow Your Business” infographic to find out how smart organisations are reconsidering the way they think about accounting