Advisory Services: shaping your vision of accountancy

A key question for Accountants is: What is the breadth of services that your clients require to assist them to survive, grow and if they wish to ‘scale up’ their business operations?

Many large companies operate their businesses seemingly as a ‘group of small businesses’, whereby they have appointed an area manager, who is supported by an accountant and some clerical staff, to administer a number of businesses.

Within each area, a ‘rhythm of meetings’ is established by the area manager, to ensure that there is adequate communication within the group of businesses for which the area manager is responsible.

The head office of these companies has established a systems manual which identifies work requirements on a:

Daily Basis: daily KPIs – daily cash position

Weekly Basis: weekly performance and profit estimate – KPIs – business metrics. The area manager reviews performance of each business activity and if there are any problems or variations from expectations, a review is immediately undertaken to correct the problem.

Monthly Reports: monthly profit and loss account for each business activity – comparison to budget – monthly KPIs and business metrics

Fiscal Management Review: working capital evaluation – revised cash flow forecast – are charge out rates adequate?? – selling prices geared towards achieving profitability targets?

This process is then repeated during the following month.

The annual process will then comprise of:

Business due diligence review: to ensure that management has ‘an inch wide and a mile deep’ understanding of the business.

Business plan/business plan update: predictive accounting reports (the financial interpretation of the business plan) – budgets for each business operation – Key drivers of major financial activities (debtors, inventory, capital expenditure , creditors and others), cash flow forecast, projected balance sheets for at least the next 3 years.

Reports: prepared at the end of the month for submission to the company’s Board of Directors and if required to the company’s bankers.

Audit: during the year, auditors are in attendance at the company’s premises for the preparation of audit reports.

Special tasks/reports: undertaken during the year. These could relate to Research and Development, capital raising, exporting of products/services, and potentially many others.

Taxation return: has to be prepared, reviewed by the company directors and then lodged with the ATO.

This is a brief overview of how many larger businesses operate.

With today’s technology and communication facilities, accounting firms can be the key driver in guiding SMEs to implement a version of the large company management/financing systems, including the establishment of a ‘52 week business enhancement process’ for your SME clients.

This will create regular services for your clients, to assist them to survive in business and offer interesting and challenging work for your team members to undertake, thus contributing to your firm’s ability to attract and retain talent.

ESS BIZTOOLS has developed a series of product packages (35) to assist Accountants to deliver business services to your SME clients. This is the delivery of ‘real accounting services’.

At the centre of this delivery process is the need for strong fiscal management.

There are a lot of problems for SMEs at present!

“SMEs require more comprehensive financial information” – Paul Robson, CEO of MYOB in a 16 February 2024 article in the ‘Australian Financial Review’ .

According to Mr Robson, there is a need firm more ‘understanding of fiscal management’.

Furthermore, he indicated that ‘plenty of people start off with a good idea but run into a problem after 6 months’.

Amanda Gascoigne FCA GAICD from Amanda Gascoigne Consulting indicated that many small businesses are ‘struggling to stay afloat’.

What all this means for accountants is that our key clients – SMEs – urgently require additional services!

The annual set of accounts and tax returns are necessary.

BUT…

These documents do not supply the vital information that SMEs need to assist them to survive and scale up their businesses.

The lack of knowledge of fiscal management is causing many of the problems.

Most SMEs will not develop a complete understanding of financial management. They need input on fiscal management issues by a skilled accountant interested in delivering advisory services.

These are the types of services that accountants have been trained to deliver – real accounting services which will assist your SME clients to survive and add value to their businesses.

This process starts with you pointing out to your clients that lack of knowledge of ‘fiscal management is a high contributor to SME failure’. You can provide your clients with the virtual service!

Start with an understanding of their key suppliers – what are their payment terms?

Then determine how their customers will be paying them – if they are going to offer credit – implement debtors system:

• Credit application form.
• Processes to review the credit application form.
• If credit granted, preparation of ‘Welcome to New Customer Email’ which would include your client’s terms of trade with that customer.
• Debtors system implementation – due date for payment clearly shown on all tax invoices.
• Contact customers five days before due date for payment to remind them of the approaching payment date.
• Debtors statements email 24 hours after the end of the month.
• Monitoring of debtors days outstanding.
• The key financial payments and projected receivables information can then be incorporated within the cash flow forecast.
• Setting charge out rates – this is vital for all businesses, particularly tradespeople and professional service firms – based on team members’ targeted productivity – employment costs – business overheads – targeted profit – mark-up on external purchases made for clients.
• Regular monitoring of actual productivity being achieved by the individual team members.

Is there a need for change because productivity has varied? It is important that this occurs as close as possible to when the problem occurred. This is why weekly performance and profitability estimates reports are so important!

Another big problem area is setting retail prices to achieve profit target for retailers and the same system could be used for wholesalers. The variables here are considerable: classification of stock – stars – cash cows – problem lines – disasters – the effect is on volume of product and the mark-up.

Your role is to show the client how manipulating some of these figures can change the results. ESS BIZTOOLS has developed the resources to assist you to produce these reports.

This is the first component of FISCAL MANAGEMENT, which is at the core of the approach that SMEs need to implement for their business survival and their growth, and for many of them ‘scaling up’ in the future.

ESS BIZTOOLS can assist you in every step of the implementation journey. Visit our website – www.essbiztools.com.au – to explore the resources that you can access, to save you time from developing your own material.

If you require further information on any matter relating to the delivery of advisory services to your SME clients or the services provided by ESS BIZTOOLS, please do not hesitate to contact us.

ESS BIZTOOLS End of Financial Year Sale

We are having an END OF FINANCIAL YEAR SALE for the month of June. This is an opportunity to avail yourself to a lower-priced entry subscription, which will assist your firm to achieve an attractive return on investment whilst assisting your SME clients.

Advisory Intro Package

$89.10 (including GST) 12 x monthly or upfront discounted price of $891 (including GST) – more information HERE

Business Advisory Services Starter Package

$178 (including GST) 12 x monthly or upfront discounted price of $1,782 (including GST) – more information HERE

Advanced Package

$534.60 (including GST) 12 x monthly or upfront discounted price of $5,346 (including GST) – more information HERE

Financial Forecasting Package

$950.40 (including GST) 12 x monthly or upfront discounted price of $9,504 (including GST) – more information HERE

Don’t delay. This fantastic offer ends 30 June 2024.

Want to know more?

Visit www.essbiztools.com.au .

If you would like to have a discussion about how this concept of virtual CFO services can be supplied by Australian accounting firms please ring our Managing Director, Peter Towers, on 1800 232 088 and we will arrange a complimentary 45-minute Zoom meeting to discuss your firm’s position and to give you our advice.

We believe that this is the blueprint for the delivery of an enhanced range of services by Australian Accounting and Bookkeeping firms to assist SME businesses to add value to their businesses and to assist accountants and bookkeepers not only to attract but to retain outstanding talent who want to be involved in the delivery of “real accounting services”.

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