The role of the accountant has evolved and value adding is crucial. What was once the ‘traditional accountant’ has now become the ‘outsourced CFO’ as businesses now turn to their accountant for strategic advice. Below outline three basic methods accountants can value add and ultimately create a competitive advantage.
Managing cash and the levers that optimise an organisation’s liquidity is critical to its success. The administration of these components is known as working capital management. A business without sufficient cash to be able to pay their debts will fail. Conversely a business with too much cash available will endure an opportunity cost from investments not taken up.
Finding the right balance is key. One measurement of working capital is Inventory plus Accounts Receivables less Accounts Payables. To decrease working capital, an organisation can reduce the amount of inventory it holds, reduce debtor levels, or increase trade creditor levels – ultimately increasing cash flow.
Accountants play a critical role in being able to advise what the optimal level should be and provide methods of achieving this, examples include:
Without measures to assess organisational goals, businesses will be unaware if targets are met, they will remain static, and will not find areas of improvement. Accountants can provide these measures through various means – for example:
One valuable measurement tool is the balanced scorecard (BSC). The BSC provides a framework for developing financial and non-financial measures to monitor the achievement of an organisation’s strategic objectives.
It takes a wholistic approach and breaks down the organisation into four perspectives: financial, customer, internal process, and learning and growth.
Goals are determined for each quadrant with accompanying KPI’s used to measure performance.
Traditional costing methods allocate overhead costs to products or services based on a single organisation-wide measure.
This can spell a recipe for disaster, for example:
Fortunately, todays accountant has an accurate solution – Activity-based Costing (ABC). ABC allocates overhead costs based on the amount of activity required to produce the product or service. Through the use of such techniques accountants can better position their clients to maximise wealth.
Businesses can now assess their core competencies and create competitive advantages. These value adding techniques are only a few of many available, and are necessities to obtaining success in a highly competitive world.
By Adam Jacobson
Aged care is a complex area that often requires careful consideration and advice from a suitably qualified expert with relevant skills and knowledge.
Whether you are considering aged care for yourself or for someone else your trusted advisor can provide you with some basic understanding when it comes to making an informed decision.
Are you feeling unwell? (cough, cough) How do you know when to visit the doctor? How do you know when your business accounts aren’t feeling well?
It is important to reconcile your business bank accounts regularly. Reconciling your business accounts regularly avoids any documents being misplaced before reconciling and it also detects potentially fraudulent entries early. Whilst your bank account now reconciles to your statement ensuring you review the un-presented items on your bank reconciliation report and you can also investigate any long outstanding transactions or unusual items that you know have occurred. Keeping in mind that these transactions may be duplicates.
Always remember to review the creditor’s detailed report and if an invoice appears that you’ve already paid, then it is possible that the payment may have been allocated incorrectly and require appropriate action or the invoice could possibly be a duplicate.
Also, ensure that you have not forgotten to pay a supplier. Whilst these things can happen and a supplier might not have contacted you for the payment it doesn’t mean they’re not grumbling about it.
As accountants, we come across many instances where clients either do not have any personal insurance cover at all or insufficient cover to meet their needs in the event of serious injury or illness.
Most people don’t think twice about whether to insure their car or their home, but often don’t consider the importance of life insurance. Personal Insurance cover will enable you and your family to maintain the same standard of living by providing payments to cover any outstanding debts and everyday expenses.
By making sure you have the right cover and with the right terms is crucial. We recommend reviewing your policies on a regular basis.
Most larger businesses have an internal Chief Financial Officer (CFO) or a Financial Controller. Clearly, larger businesses can afford an in-house CFO, but it goes beyond an affordability issue. Large, successful businesses also understand how crucial the CFO role is to their business performance.
This is management input that all businesses require regardless of their size.
In the May Budget, the government introduced some changes in an attempt to reduce the pressure on housing affordability. Here is what you need to know about how these changes will affect you?
For a long time now deducting travel expenses for traveling to a property you own for rental purposes was the norm, whether it be in your state or interstate.
As per the 2017/18 budget, the government intends to disallow all travel expenses relating to inspecting, maintaining, or collecting rent for a residential investment property from 1 July 2017.
So, what does that mean for every couple or individual who may own a residential property in their personal name(s)? From the 1 July 2017 you will not be able to claim expenditure from traveling by car, plane or any other way to your residential rental property as a tax deduction against rental income. Furthermore, as per current legislation, the expenditure cannot be added to the cost base of your rental property for capital gains purposes. Read more
Most business owners invest a lot of time, effort and money into their commercial babies. Hoping that years, and in some cases decades, of hard work will mean that one day they will be able to sell and enjoy a comfortable retirement.
Unfortunately, there is a common misconception among business owners about the dollar value of their business. This stems from the unquantifiable emotional investment that is rarely reflected in the ventures dollar value.
Read More, for 3 main drivers and other factors that impact the value of an enterprise!
First of all, Aston Martin are designing a personal submarine, Elon Musk is touting the use of the BFR to reduce intercontinental flights to 30 minutes and we live in a world where you turn on your home lights and heating with the use of your smartphone! So moving your business to the cloud is absolutely the right choice!
We live in an ever-changing world of technology and it seems like we are always eager to be hooked on the next new gadget and smart device apps!
At AS Partners we have noticed that technology has advanced further in the last five years, then in the twenty years before that and furthermore, we have advised and supported numerous businesses when it comes to moving into the cloud. As a result, these business clients with annual revenues of up to $15M have experienced strategic advantages! Read on for the top 4 reasons why you should move your business to the cloud too!
Cash flow is an important aspect of every business. So it is important to know that bad cash flow management can lead to businesses going belly up. But it is not only businesses on struggle street that can have cash flow problems. In fact, quite often it is that growing business’s when moving into their next growth spurt that often experience cash flow problems. So, if you want to boost and improve your business cash flow then check out these 6 steps that will surely get you on your way!!