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£100,000+ added to this client’s bottom line: How proactive accounting could help grow your business (Part 1)

Mar 4

In business, you ideally want a return on investment in most (if not all) areas.


When you think of your accounting, you might think that identifying where you could reduce your tax liability is a good enough return on investment in that department.


But that’s just scratching the surface.


A £100,000+ return on investment:


With one of our clients, for example, we have helped them to add at least £100,000 to their bottom line because of our proactive approach to accounting, finance and tax.


In this article, I am going to outline how we have helped them achieve that.


I am also going to identify the three simple steps for you to implement into your accounting and finance process to help you:

🔍 Understand your finances better, so that 

📈 You can grow your business


Your business might be in a similar situation to theirs:


🤦‍♀️ Is your accounting process like this?


When the owner of this business, which operates in the automotive industry, initially spoke to us, their existing accountant was mainly focused on organising their accounts at their year-end.


The owner was not getting any feedback or information throughout the year, so the year-end was also when they found out how much their tax liability would be.


The team had access to information, but it was not very useful for them. 


They could not see how they were performing when they were looking at it.


🙏 A common myth about accountants:


If the above resonates with you, the good news is that it does not have to be like that.


As I have already outlined, and what we will drill down into more in this article, a more proactive approach to your accounting and finance can help you understand your finances better, so that you can grow your business.


Many traditional accounting firms focus on the compliance, so this business owner did not realise what they could have access to. 


You don’t know what you don’t know


If you are used to traditional accounting, focused mainly on year-end accounts, a more proactive approach and year-round communication is not something you would realise you need until you know about it. 


After almost 2 decades in business, our team often hear this from business owners, because you don’t know what you don’t know.



Do you make decisions like this business owner?


One of the biggest challenges this business owner faced was that he and his team were making decisions based on their gut feeling, and were not able to back things up with data.


He also did not feel comfortable communicating with his accountant or asking them questions.


This caused other issues within the business:


Importantly, these challenges were causing other issues within the business.


🤯 For example, by not understanding their finances and not knowing their likely tax liability until the last minute, the owner was often dealing with the stress of paying tax bills at the last minute.


😩 The owner also felt like he had to be on-site a lot because he was making decisions based on his gut feeling.


Something for you to take note of before I share how we helped this client:


As I highlighted earlier, this client did not feel comfortable communicating with his accountant, so did not feel like he could ask them questions throughout the year.


Part of what it means to have a proactive accountant and accounting process is to have regular communication with your accountant. 


That could be monthly, or it could be more often. 


My team and I believe that communication is a two-way street as well.


We make it as easy as possible for our clients to communicate with us, and we communicate with them regularly too.


With this client and his team, from very early on in our relationship they were happy to pick up the phone to our team whenever they had a question.


On a scale of 1-10 (where 1 is ‘not at all’ and 10 is ‘very happy’) how happy are you with the level of communication you have with your accountant?


So, how can you start implementing a proactive approach to accounting?


To help you, I have outlined 3 simple steps below, based on the work we did with this client when they started working with us, and the work we continue to do for them today.


Each of these 3 steps were pivotal in how we have helped them:

📈 Make their business more efficient, and

📈 Add at least £100,000 to their bottom line


Step 1: Auditing and understanding


Initially, we sought to understand their initial process and looked at what their previous accountant was doing.


Why?


Because you cannot make changes unless you understand what is going on.


And you might also get ideas for how to expand on existing processes.


For your business, you have 3 options right now:


1️⃣ If you feel you are able to, you can speak to your existing accountant and ask them what your existing accounting process is


2️⃣ You can map this out on your own


3️⃣ If you are ready to engage a new, proactive accountant, one of the first things they should do is identify and understand your existing process



Step 2: Identifying potential improvements


With our initial understanding, we then started identifying potential improvements so we could make things more efficient.


For example, we started looking at:

🎯 Where we could automate part of the financial data and reporting, and 

🎯 How we could get the data into a simple format, so that the business owner and his team can understand it easily and make decisions based on it.


You might have heard of management accounts- which in simple terms is where you regularly receive a snapshot report of where your business is and how it is performing.


This client did not have access to that reporting, so our initial improvements were aimed at gathering the data so that we could create that reporting functionality. 


Initial questions we asked during this stage, that you could ask, were:

🔍 How do we make this accounting process more efficient?

🔍 How can we ensure it takes less time?

🔍 How do we get the information that is useful to the team, out of their system, to help them make better strategic decisions?


Step 3: Implementing those changes


After we identified the changes, we then implemented those into their financial and accounting process.


🎯 We organised a way that they would be able to see better reporting, including management accounts, so that they would be able to access financial information that would be relevant and useful for them.


By streamlining their processes and implementing more proactive accounting, these reports meant that the team were able to make more informed decisions, and did not have to rely on their gut feeling.


Both our team and our client estimate that more than £100,000 has been added to their bottom line, as a direct result of their more proactive accounting process.


Now of course no one can guarantee a result like this, but a proactive accounting process and a proactive accountant should provide you with a positive return on investment. 


That could be financial growth, time savings, or a reduction in stress levels. Ultimately, all three of these will help business growth too.


We also estimate that the owner has got back at least half of his working week because of the systems and processes that the business now has in place.


🔍 What would you do with the added time if you could focus more on growth than firefighting all the time?


SJO Accountants was founded by Sara Otley in 2008, and with expansion, our team now has more than 6 decades of experience in the accounting and finance industry.


We primarily help business owners with at least 5 team members to understand their finances better so they can grow their business, by implementing a proactive approach to accounting, finance & tax. 


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