2020 Worst Mistakes Performed by our Clients

Just after the year end, we take this opportunity to flag what we believe were the 5 worst mistakes some of our new clients did during the year together with lessons that can be learned from them.

We also take this opportunity to wish you Merry Christmas and a Safe New Year.

Top 5 Mistakes Performed by our Clients - Short Reference FYI

1. Cash Flow & False Future Expectations

Still, Cash is King.

The Future could be Better, Worse, but Unlikely the Same.

Cash Flow. Though most of our clients understand it and have mastered it in recent years, some of them are still not paying the attention it deserves, coupled with the false expectation that next year will be better (this thought is common by all businesses and entrepreneurs) we have seen some major operational nightmares in various sectors of the economy.

Whether or not these businesses will manage to overcome these hurdles remains to be seen.

It is crucial to master your cash flow and make realistic predictions.

Lessons Learned:

1. It is imperative to master your cash flow.
2. Expect the unexpected and have some cash buffer for it.
3. Do not expect next year results will be better. They could be worse.
4. Do not leave anything on the table; resolve your current issues immediately.

2. Overconfidence vs Expect the Unexpected

Unfortunately we have also experienced some high flying businesses getting overconfident with 2019 financial and operational results, investing heavily in infrastructure and personnel just to see it all disappear one year later with the arrival of COVID19.

Optimism, is what keeps the economies moving but be cautious of the unexpected. It is no surprise that Apple, one of the biggest companies in the world is so cash rich that most analysts are criticising it for poor / inefficient management of its resources.

Lessons Learned:

1. Keep some fat (Cash aside) that can last you for a significant amount of time; I believe a year would suffice.
2. Do not get Too Excited in good times, plan big, execute modestly or execute according to plan but be Vigilant and Brave to cut down staff, close down segments, leave premises and minimise losses immediately if the unexpected occurs.
3. Always have the best business advisers; they are the ones who will save you once things go sour with fast, commercially reasonable responses. Do not forget, as history showed, business will have to face make it or break it situations several times.
4. Do not rush to scale, there is plenty of time. Why risk it with over investing.

3. Expecting Different Results & Dinosaurs

Do not place your business's future on the outcome of the economy. Take Action. Be the one who makes things happen.

It is a surprise that to this date, with so much knowledge available to everyone, there are businesses that believe next year will be different (usually "much better" as entrepreneurs tend to be by nature optimists) when they are not DOING anything different, year on year.

Nothing will change unless deliberate drastic action is taken by the business and new challenges are pursued.

It is a mistake to believe that your business is doing really well when the overall economy is booming when compared to previous years.

Do not place your business's future on the outcome of the economy. Take Action. Be the one who makes things happen.

Lessons Learned:

1. Action. Action. Action.
2. If you do not do anything new, your business will grow or decline based on the overall economy.
3. Invest in Marketing.
4. Take Risks.
5. Try New Things; outside of what is expected of your industry.

4. Director vs Specialists and Service Providers

We have acquired new clients who have run into trouble with the authorities (VAT and TAX) and they are blaming their service providers and specialists. This is simply wrong.

Management of the Company is 100% responsible for all Company operations. It can not conveniently say i am the director and not the VAT specialist so you deal with it and knowingly not wanting to learn the subjects affecting the company.

No third party will take as much interest for your business as yourself. A good captain knows every inch of his ship and the cargo he / she is carrying. Similarly directors need to know all issues affecting their businesses. Not the details but the underlying principals, sufficient knowledge to know whether something does not seem right and consequently have it checked!

Lessons Learned:

1. You are as good as your knowledge on the issues affecting your company.
2. Capable, Trusted Accountants, Tax Experts and Service Providers are vital.
3. Whatever happens in your business, it is your responsibility. Period.
4. Spend time learning all issues affecting your business.

5. Investment in Personnel & Infrastructure vs Growth

Nothing great can be achieved unless there is continuous training in personnel and infrastructure. There is no place for scalability in an organisation with weak personnel, systems, procedures, machinery, computers and so on.

If growth is what you are looking for you must be constantly invest in your employees and operations.

Such Investment may well be the following:

• Personnel training every three months (type of training could vary).
• Replacing all computers, servers and updating software every 3 - 5 years (5 years is the maximum).
• Replacing machinery as soon as indicators show poor performance or just before significant reduction in market value.
• Cultural focus - what is the culture of the organisation and how it should be.
• Invest in your accountants, auditors and lawyers; have a healthy relationship with them, try to learn and get out of them as much as possible.
• Invest in your suppliers and clients - spent time with them, you never know what else there is out there.

Lessons Learned:

1. Internal and external trainings must become a regular, cultural characteristic of the firm.
2. Invest a certain amount of capital, year on year on your infrastructure, especially in good times.
3. Invest in systems and controls and have defined procedures circulated to staff.

A regulated audit and assurance firm like CYAUSE Audit Services Ltd can assist you with these steps.

4. Growth is like Fire, you need to place the right wood to the right place and ignite the fire.

CYAUSE Audit Services Ltd

We are truly an A to Z stop for Companies and High Net Worth Individuals operating in Cyprus and the rest of the world. From back office support, to Accounting, Payroll, Audit and Tax Engagements, CYAUSE Audit Services Ltd offers continuous high level services to its International and Local clients.

Our focus is not merely to keep your accounting records in shape and up to date at all times but rather to assist you prospect and grow together. This has always been our mission.

From the Far East to Central Europe CYAUSE Audit Services has clients from every corner of the world and specialises in the provisions of 100% support to international interest engagements and the Creation of any Company and Bank Account Anywhere in the World.

Our membership with ACCACE (European Network) and 3E International (Asian Network) ensures that we are wired and closely connecting in all jurisdictions getting the latest corporate news and tax developments ensuring our tax planing is accurate and validated before finalisation. These memberships also ensure that we have fast access to accurate information needed by our clients.

CYAUSE Audit Services is an Audit & Assurance firm with offices in Nicosia and Limassol in Cyprus.

During 2015 we have been awarded by local regulator I.C.P.A.C and the A.C.C.A (local and international association of Chartered Certified Accountants) for the Quality of our Audit Services and our Office Procedures.

Over the last years we have also been brave enough to create our own YouTube Channel which provides Explanatory Videos on Corporate Cyprus something of great value especially for overseas prospects considering relocating or setting up Cyprus Companies.

Amongst others we cover the following topics: Cyprus Taxation, How to Set up a Cyprus Company, Cyprus Tax Tips, Business Advice, Tax Advice, Interviews with Businesses and many more. All these information can be obtained from our YouTube Channel called Cyprus Accountants ACADEMY.

Our website www.cyprusaccountants.com.cy also provides a plethora of tax information about various jurisdictions as well as Cyprus Tax Calculators and Access to our Articles which you can use at your own time.

If you would like us to assist you applying for funding or any other related matter contact us at [email protected] or call us at +357 22 336 321 or visit our Website and YouTube channel.

Thank you,

Kyriakos Tramountanellis