How To Use Your Financial Information To Your Business’s Advantage



Using your financial information to your business’s advantage. Surely a reflection on what happened the previous year is enough to spot a trend, isn’t it? (Cough!) Let’s consider this…

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General Custer marched 200 men to Little Bighorn, expecting to meet a similar number of Sioux warriors armed with bows and arrows. Imagine his surprise when he rode into 2,000 angry horsemen with rifles.

Custer’s decision had an unintended outcome (a massacre) because he’d made assumptions based on wishful thinking and out of date information.

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Thankfully, that wouldn’t happen today – would it? Unfortunately, General Custer’s example isn’t so rare; businesses still make important operational decisions in the dark, based on gut feeling or using figures from a previous year. But it needn’t be that way.

Financial information should be the primary tool used by all owners/managers for making sound and timely decisions, based upon up-to-date and verifiable information. No longer are these just available to large companies and organisations with a whole finance department, all you need now is:

  • Agile accounting software
  • A modern thinking accountant who isn’t stuck with an archival view of their profession / the world

Accounting Software

Probably the biggest change we’ve seen in accountancy in recent years is the development of Cloud-based software packages that business can run themselves, such as Xero, Quickbooks Online or Sage One. Safe and secure, you can log in anywhere in the world assuming you have an internet connection. You can see real-time information on your business in an easy to read and customisable format. You can even get it to do the fun stuff for you, like bank reconciliations using live bank feeds.

The right software can help you drill down into the figures, or different parts of the business and can measure them against specific KPIs.

Financial information can provide feedback about how operations are performing, which areas of your business are performing well and are profitable and which ones need working on, or abandoning altogether.

A modern-thinking accountant

The traditional accountant still thinks that their job is to do the work of HMRC, figuring out how much tax you owe each year and collect their cheque. When they’ve done that, they’re completing a historical record of your business, always looking back to the years gone by.

Your accountant should be able to analyse today’s figures and give advice at a strategic level on where the business needs to go, whether now is the time to invest and expand or prepare for predicted problems.

An accountant will deal with many and varied businesses so they should be rich in experience and be willing to use it to your benefit. Some clients are still reluctant to call their accountant as they fear they will be charged for every 6 minutes that they talk, (as they do with their solicitors). However, not all accountants are the same here!

What information will you need in order to make strategic decisions.

The right information at your fingertips

  • Your profit and loss shows the difference between your business’s income and expenses during a given period.
  • Your cash flow statement can help you predict shortfalls when covering day-to-day operating costs. It can influence when you buy or sell an asset, lend or borrow money, or make a capital investment, including hiring employees.
  • Your balance sheet shows how your profit and loss has translated into assets and liabilities at a given point in time. It shows how liquid your assets are or whether your money is too tied up in equipment. You need this information to decide whether you can afford to invest using your own assets or whether you need to take on additional debt.

All of these, in addition to regular monitoring of KPIs versus target can all be done in cloud based softwares.

What sort of accountant do you have?

Financial information based on solid figures gives owner/managers the insight to take their business in the right direction. Ask your accountant whether they can provide real time information and advice you need to make a timely decision.

If they can’t, Black and White Accounting is driving accountancy away from a traditional, number-crunching model towards a more collaborative relationship, building a partnership with clients as their financial and strategic business advisor.

We offer a dynamic approach, using your latest data and our understanding of your business operations and aspirations to give you strategic business advice when you need it, all for a fixed fee, so you get peace of mind knowing exactly how much you will be paying.

If you would like to learn more about how Black and White Accounting can help you make well-informed strategic business decisions to achieve your business goals, contact us or ring 0800 140 4644.