Jun 16, 2015
Over the years, there have been a number of reports as to
whether small/medium enterprise operators really understand
financial accounts.
Today, with cloud technology and the numerous accounting software
packages that are around, there’s really no excuse as to why
small/medium enterprises shouldn’t have a clearer understanding on
what their financial accounts are revealing.
I believe that this is an opportunity for accountants to commence a
Chief Financial Officer (CFO) service to assist their small/medium
enterprise clients to understand the financial accounts and,
therefore, become more financially savvy.
This would start with showing clients how to:
• Analyse a profit & loss account.
• Calculate the ratios and the KPIs.
• Review the balance sheet.
• Calculate the important ratios, in particular,
items such as debtors’ days outstanding and creditors’ days
outstanding and how these figures compare to budget estimates.
The source and application of funds statement is a great statement
to show the client what happened to the cash movements in the
business. How many times have you been asked: “If I made a
profit (of $50,000 or $200,000), where is it? It’s not in my
bank account and I haven’t spent it.”
A client needs to be shown that they’ve invested more in stock,
debtors, capital expenditure, etc., to understand where the profit
is.
Benchmarking is a great tool to enable a small/medium enterprise
operator to have a clear understanding of how their business
operations compare to those of their peers. Why not show the
clients some reports from benchmarking.com, so the client can
perform regular, ongoing benchmarking comparisons.
If you’re interested in receiving additional information to assist
you to offer a CFO service to your clients, please contact us.