Business owners should take the opportunity to discuss business matters with an accountant. Jeff Bergman, CPA, Tax Manager at Salmon Sims Thomas discusses different ways that they can help grow your business. These five guidelines go beyond taxes and explain the benefits of being informed about the internal details of your company.
1. Review your budget. Monitoring cash flow is very important. In speaking with an accountant you will be able to identify unnecessary costs and how to be smarter or more selective with purchasing decisions. Discuss collection policies in obtaining cash from sales so that the process can be smoother and more efficient. Lastly, evaluate pricing policies to industry averages. Perhaps the business is undercharging and there is money left over.
2. Inquire about new technologies. Accountants usually have access to a number of Software as a Service (SaaS) programs that exceed the role and function of traditional desktop software. The programs enable accountants to quickly identify red flags, find risk indicators and provide ongoing plans for improvement. This gives business owners the tools to not only succeed, but to grow.
3. Review Inventory Management. Business owners can often get distracted with the focus on other important matters. However, it is vital to speak with an accountant to determine the common gradual increases made in the inventory levels. Business owners can meet with their Certified Public Accountant (CPA) to find inventory tracking methods, realign with industry standards and help prioritize resources and improve time management. There is also the matter of creating a back-up plan for emergencies within the company that a CPA can help discuss.
4. Understand the concept of mis-financing. “Mis-finance” is the idea of borrowing short-term capital to pay for long-term assets. One way to drain out the cash from a business and reduce the amount of time the asset has to pay for itself is purchasing equipment, leasehold improvements, etc. It is important to correctly match the term to the useful life of an asset. This will free up the line of credit for seasonal working capital needs.
5. Become an expert in expense control. Managing expenses is a factor that can make or break a business. The mirror technique approach examines the growth or decline of sales over a period of time and modifies operating expenses accordingly. In other words, if sales decrease by 15 percent during a projected period, the operating expenses should also decrease by 15 percent. In speaking with an accountant, business owners are able to tell where their money is and where it is going.