In 2005, I undertook a survey of 1500 SMEs asking what additional help they needed from their accountant. At that time, 58% of the respondents said that they needed more help from their help in managing their cash flow. I suspect that 10 years later, that number, if anything, would be higher. And yet so few businesses have a live, working, cash flow and budget. Why is that the case? The feedback I receive from accountants is that it is difficult to do in a meaningful way. Specifically, to create a three way forecast including P&L, cash flow and balance sheet is not a trivial exercise. Furthermore, accountants have found it difficult to sell the forecast as a standalone.
I recommend that accountants should consider wrapping service around a product and backing it into a client need. For example, imagine this scenario with a business client:
- Present a review of the past three years’ performance to your client
- Have the client set some quick targets for the next 12 months
- Ask the client this critical question – how are you going to achieve those targets?
- Go into some more detailed planning to determine what needs to be done to move towards the targets
- Ask the client what attention needs to be paid to seasonality and non-P&L related cash demands on the business (e.g. capital expenditure, owners’ drawings)
- Recommend a cash management program to ensure that those needs can be met within the plan.
Your cash management program might then include a cash flow planning meeting, the creation of the three way forecast, weekly monitoring and alerts, monthly or quarterly meetings and accountability around achieving the plan. It is a very different value proposition than trying to ‘flog’ a cash flow forecast.
So how do you quickly and accurately prepare the forecasts? Even with service wrapped around it, you need an efficient way to carry out this part of the process. That’s why we have spent the past 12 months working on a web based forecasting tool that we have now integrated with our PANALITIX software. The key to this will be the ability to connect with your clients’ online accounting systems so that you have real time information against which to monitor your clients’ forecasts. The forecasting tool is ready now with more development to come over the course of the next six months as we gather feedback from initial users. You can take a free trial here: https://panalitix.com/freetrial/
This is a great example of the power of cloud technology. The most critical realisation is that technology is only a tool, and without embedded content and your human interaction skills, nothing will change. We continue to move down the line of automating accounting data and ‘how to’ content for your clients (stay tuned for more on that) but when the client needs help, you need a process to back that up. The best investment you can make is to develop the skills and gain access to the content that will enable you to offer a wide range of services to your clients that really make a difference.
– See more at: http://www.colindunnblog.com/2015/05/cash-flow-the-number-one-issue-for-small-business/#sthash.xyDnlbvx.dpuf