Running a business or a department in a large organisation can be stressful and complicated. It is not uncommon for managers and directors become entrenched in the day to day operations of the business. As a consequence they frequently lose sight of the bigger financial picture.
At times there can be a failure to equate day to day decision making with the overall profitability of the business.
Subsequent failure to see the impact that day to day decisions are having on profits frequently leads to financial fire fighting.
Understanding the financial aspects of a business will facilitate proactive decision making and management. Often it is difficult to see the business solely in terms of numbers or from a financial perspective when making decisions. What may sound like a good idea may well not stack up financially.
It is always a good idea to ensure that an accountant is actively involved in the running of your business on a day to day basis. Implementing a ongoing role for an accountant within your business can change the profitability of your business considerably. Good management reports from an accountant on a regular basis can easily enable you to view your business or department from a helicopter perspective. Learning to read your business financially is just as important as being outstanding in your particular field of business.
Regular access to management reports will improve efficiency and profitability. The old adage of ‘cash is king’ rings true for every single business. Knowing how much it costs to produce your services or goods or what is your income and expenditure is vital information for any business. Neglecting the financial side of your business can result in disastrous effects. Do not be afraid of talking to an accountant about bookkeeping, payroll or the production of management reports. You will be surprised at how reasonably priced these services are. You will definitely be amazed at the difference that the input of an accountant can make to your business.
For example payroll costs are a common area with which businesses struggle. It is easy to overlook the real cost of employing staff. Staffing costs should not be simply based on annual salaries. Costs such as:
- National insurances
- Sick pay
- Maternity pay
- Holiday costs
All need to be taken into consideration. Enlisting the services of an accountant will give a true insight into the cost of employees. Tracking payroll costs in real time as they relate to specific projects or long term will give true perspective of profitability. Working with an accountant will go a long way in identifying areas for improvement. Seeing this information in a clear format enables a business to identify areas where costs can be cut in order for maximise profits.
Accurate up to date financial information about a business opens up many diverse opportunities and avenues for a business. Sound financial information is not only required for good management decisions but will also be necessary when seeking to attract investors, business finance or when seeking to add additional product lines. Operating more proactively has the advantage of adding peace of mind, business leverage and maximising profitability. There is no doubt that the objective experience of an accountant can bring numerous advantages to your business.