Guest post: 3 reasons accountants should be talking to their clients about business finance

 

Accountants provide valuable support to small businesses who rely on external expertise to keep their finances in shape. With only 26% of all SMEs having a qualified person in charge of finances the need for outside advise from a financial expert is clear.

Business finance

At any one time a third of SMEs utilise external finance for the running of their business, from working capital facilities through to term loans, and so business finance is naturally a hot topic for business owners.

In fact in 2018, 4 in 10 SMEs are planning a significant activity, including 19% looking to take on more staff, 17% planning to invest in new plant and machinery and 16% planning to develop a new product or service, according to the SME Finance Monitor report. How these activities are funded is a key question for business owners.

Advice from accountants

Of the areas of advice given by accountants, the importance of business finance advice is often under-estimated. Many businesses are first time borrowers and therefore lack experience at knowing what type of finance they require and what options are available. No longer is it the case that businesses are able to seek advice from their bank manager, and finance brokers are often criticised for giving biased advice. Therefore the role of the accountant and book-keeper in providing business finance advice is extremely important.

Value-adding conversations

So at your next client review why not try asking some more probing questions around their finance needs. Here are 3 suggestions to help get the conversation going:

1.     Improve cash flow

Symptom: low cash balances on bank statements; outstanding debtors; late payments.

Ask: is cashflow a problem? Is it causing stress/limiting growth? What steps have you taken to improve cashflow?

Potential suggestions: renegotiate trade terms; outsource credit control to the book-keeper; purchase assets using finance rather than using up cash; arrange working capital finance.

2.     Save on your finance costs

Symptom: large interest costs, large short-term creditors.

Ask: what finance do you use? Did you compare rates? Have you considered extending the term to reduce repayments?

Potential suggestions: ask a competing lender to give you a finance quote; compare multiple lender offers at www.bizl.co; ask the current lender about refinancing over a longer period to preserve cash.

3.     Invest in growth

Ask: what are your growth plans in the next 12 months? How will you fund this? If you could obtain enough funding, would that enable you to grow?

Potential suggestions: explore your finance options early so you know what is available; consider invoice finance to enable you to take on bigger contracts; consider the Government’s Enterprise Finance Guarantee scheme to access finance to grow within the UK.

Click here for more tips on how to find the right business finance.

Guest author: Josh Greenway is the Founder and CEO of www.bizl.co, an online business finance comparison platform that enables small businesses to compare finance options fast, free and easily.