HOW YOUR ACCOUNTANT CAN HELP IN TOUGH TIMES

It’s so difficult to separate personal from business during tough times, when the business is your livelihood. When your business starts going backwards, the tough times get tougher, but in a down economy, making good decisions is critical.

Informed decisions should come from accurate financial numbers, which determine the levers to pull to increase your profits. Your accountant will understand what the numbers mean, determining if the figures are correct and take the time to point out important issues.

While you maintain your business mindset and mental health during this uncertain time, hand the numbers over to your accountant to devise a game plan.

Your accountant can work out how to get on top of your business related stress points, so they stop having power over you. Many businesses will wait too long before decreasing costs after revenue has gone down, causing that company to lose substantial amounts of money, so it is vital to keep the financial records up to date enabling you to react quickly when revenue drops. Accountants will be able to review financial statements and point out costs that are adversely affecting a company.

Cash flow is king in a down economy. An accountant can create cash flow statements for businesses, so that they can easily see how much cash has come in and how much has gone out and from what different sources. Having a correct balance sheet will show the liquidity and sustainability of that business and an accurate profit and loss statement shows how the business is currently doing and what room you really have to move.

Work alongside them to devise a budget, which will help determine where the business is going and what steps you will need to take to get there. Comparisons to similar businesses records and trends are important when devising a budget and your accountant can access this information and interpret the figures so they can be useful for your company’s budget.

It is important to re-analyse your business plan and determine your company’s risk tolerance to debt when implementing new plans and ideas. Your accountant can review loans to help determine what you can do to relieve pressure on terms and requirements associated with the financing. If a company has a lot of debt without liquid assets, this can cause a company to be over leveraged which makes it difficult to obtain financing in the future, which you will want to avoid.

During these difficult times, it is more important than ever for businesses to analyse their numbers to ensure survival. Working with an accountant can help businesses maintain financial stability to withstand this economic storm and perhaps even just sit tight and ride it out. Those still standing once things begin to improve, will be in front of those who let things dissolve.