In The 7 Traits of Today’s Accountant, I talked about speaking wider than the numbers being a neglected skill among accountants. Let me elaborate.
The ability to interpret a set of financial statements or management accounts is fundamental to report on the performance of the business, satisfy compliance requirements and inform the client of the tax to pay.
But, then what? Most business clients don’t understand these reports let alone the value that lies within them.
The statements are a necessary evil, a must have; a grudge purchase.
Thankfully, technology is making the job more efficient, more timely and, as a result, there’s a great opportunity for Today’s Accountant to go so much further.
Speaking beyond the financial statements and management accountants is an essential way to help clients improve their business results.
Let’s look at two examples:
A high growth business is very likely to experience pain. Costs will probably increase in chunks (e.g. new employees or premises), attention may be diverted away from margins (in the endless pursuit of higher sales) and owners may be distracted from collecting debtors or even invoicing clients which will strain cashflow. Drawings levels may be too high and the client is highly unlikely to understand what an overdrawn shareholder current account is (textbook Accountanese).
A traditional Accountant will likely congratulate the client on their rapid growth, after all many business coaches strive for nothing else. Then, they’ll shatter the client with the tax bill, perhaps with the quip “well you’re making money, so you have to pay tax and, oh, by the way, you need to reduce your drawings.”
An Accountant who can speak wider than the numbers will:
Many clients fall into this category; sales or margins are inadequate; the business is under-resourced and the client is often working for lower than the minimum wage.
The traditional accountant will look at the reports and offer ‘quick fixes’ completely out of context. Suggestions might include increasing prices (when the client is only converting 25% of proposals currently) or cost cutting (meaning the owner will have even more work to do).
An Accountant who can speak wider than the numbers will:
Speaking wider than the numbers is simply being more commercial. Recognising the value of support that can be offered and packaging it in such a way as the client will invest to get the desired outcomes and return on that investment.