The key to really understanding your business lies in being able to make sense of the numbers. They will tell a story all on their very own. If you can make sense of this story you will most definitely be better informed and consequently, be able to make better decisions moving forward. This could be the thing that helps you achieve great success or simply avoid failure. It is that powerful.
What is the point?
In a nutshell, if you don’t know where your money is either coming from or going then there is a good chance you will lose control of your business. When you can manage this even in the simplest of terms there is a stronger potential for growth and improved profitability.
How can I do this easily?
Well, accounting is all about keeping financial records. The simplest and easiest way is to use some form of accounting software. At Ekstra Accounting Solutions we partner with Xero the cloud accounting software provider. At the simplest level, you can keep track of your income and your expenses using mobile applications to capture your financial documents as you go, save and store your documents electronically as well as being able to attach them to your transactions. All with the use of the camera on your phone!
Well once you have captured the actuals you can then get access to some simple reports that will tell you how much you have made in income and how much expenditure you have also incurred leaving you with either a profit or a loss. Now with this information to hand, you have a clearer picture of your cashflow and as we all know “cash is king”.
In my opinion, there are 5 main reasons for keeping financial records in any business.
- Legal obligations to HMRC and companies house is registered as a limited company
- Analysing performance. Gives you the ability to check to see how your business is doing
- External communication. It’s important when you go to banks and lending institutions or even seeking grants that you have evidence of your past performance on which they will base their decision
- Creation of budget. Using your financial records enables you to create a budget, a plan if you like of what you are going to achieve in the future. You know the old saying “If you fail to plan you plan to fail”
- Developing a strategy. Once you have a budget and compared it to your actuals it should help you to have a better understanding to develop a strategy to achieve your goals.
Accounting is therefore like the language of your business and it is also the way we accountants determine the “health” of your business.
Do I really need an accountant to do this for me?
Not to avoid answering this question but I saw this picture on a recent LinkedIn post that was all about that specific question. A picture says more than 1000 words. I think you know what I mean. Clearly, these guys can build a wall!!!!
In our experience, there are five stages to a business Lifecycle that ranges from business start-up through to fully established and in growth mode.
At Ekstra Accounting Solutions we cater for each stage of that journey offering services tailored to your specific situation. Go along to our website to find out more about what these are.
So, what is the role of a professional accountant?
I see the role of the modern accountant as one who asks the challenging questions, resolves issues, provides solutions, and offers an objective independent view. In my view, it is not someone who just does the adding up or even checking that you have done your sums correctly. After all, you can get software that is so simple and easy to use in today’s era of modern technology that will capture and record all the information for you. What you really need is someone to help you to understand and make sense of it all. To find out the “story” of your business and then help you to make the improvements and changes that you desire.
Ekstra Accounting Solutions – Why are we different?
Well, we see ourselves as that valuable asset providing guidance, advice, and help in businesses to reduce cost, improve the top and bottom lines, and mitigate risks. Our focus is on “engaging, educating, and empowering” you the business owner to help you create and drive the strategic direction of the business as and when you need it. Included in our fees are unlimited advice and support to all our clients. Our motto is “Your success is our goal”
If you would like to find out more about us why not contact us today through any of the following ways. We look forward to hearing from you.
Tel 07458 302 512