Cash flow and the accountant

Following the successful Accountex Summit North conference, we consider how the accountants’ role has evolved, with a focus on advice around cash flow.

By Ruksana Alom on 09/09/2019

We consider how the accountants’ role has evolved | iwoca
Image: Johanna Buguet

At iwoca we recently surveyed 1,000 small business owners about the cash flow obstacles they’ve faced, and their experiences when seeking finance. We found that 50% would consider their bank as their first point of call – despite many feeling that banks didn't meet their needs service effectively. Only 13% of respondents told us they find dealing with banks very easy when accessing finance.

When it comes to finance Della Hudson, accountant and author of The Numbers Business, suggests that many problems are caused by business owners misunderstanding how to get the best out of borrowing. This is where accountants can add value for clients – advising how to use finance and where to access it.

Accountants are on-side for their clients

Accountants can forecast tricky situations before they happen. “We’re more trusted than their bank managers,” says Hudson. “Small businesses don’t have anyone else on their side ready to consult and advise. With a relationship that’s built up over time, we almost have a counselling role. We’re the people who can be totally honest with them.”

Accountants are relied upon to give insight into the financial health and direction of the business and to suggest practical solutions to problems including finance. We're seeing this more and more, as accountants take on a more advisory role beyond managing tax.

Access to working capital can make the difference

Most businesses will have spells when cash flow is negative. They might then take a short term loan to smooth out the operation. At iwoca, the most common reasons our customers take finance, are to help them:

  • Buy stock and inventory
  • Cover long invoice periods
  • Manage late payments
  • Pay unexpected bills

Accountants are in the unique position to offer information and ideas, whenever these scenarios arise.

Accounting firms can be outsourced finance departments

ICAEW research found that 72% of businesses see added value from having a good relationship with their accountant, and are the preferred source of advice compared to any other profession.

Firms nowadays have access to the raw financial data of businesses, which – with the help of cloud bookkeeping and forecasting apps – enables them to foresee possible dangers before they arise. This is when the accountant can take on the role of a finance manager to help their clients maintain the financial future of the company. The result? More of a focus on advice about finance in accountants firms.

iwoca at Accountex