Is a financial blind spot holding your business back? Accountancy and advisory experts Hayward Wright are here to help.
Today, the firm offers the full range of accountancy and advisory support to owner managed businesses, SMEs, start-ups and larger corporates on all the usual ‘bread and butter’ of business, from payroll and bookkeeping to tax, as well as more complex advisory and strategic services.
But when it comes to blind spots in managing a business’s finances, the same three fundamental issues crop up time and again – with cash flow consistently top of the list.
It’s an all-too-familiar scene in the world of business: profit hogs the spotlight, when in reality, it’s cash that keeps the lights on.
Understanding the figures
“Primarily, I see many clients with amazing sales pipelines and great plans for growth, who don’t properly consider how cash moves in and out of their business. It’s a very common problem,” explains Alistair, Director and Head of Acquisitions.
“People tend to focus on profits, but at the end of the day, cash is king.”
He adds: “It’s really important for people to understand how cash flows in and out of their business and how that relates to profit.”
Secondly, he advises that while businesses are deeply invested in what they do on a daily basis, it’s crucial to keep an eye on the financials.
“I always say to clients, look I get it, you’re very good at what you do, but you need to understand your financials.
“Accountants and financial advisors like us can certainly help around the periphery, but don’t be scared to look at the numbers yourselves.
“And thirdly, I would advise clients to be more aware of what’s happening in the markets around them. We all do it; we operate in our own little silo and tend to react to what the media says -which isn’t always right!”
Help from the Hayward Wright team starts with building a financial forecast, laying out profit and loss, balance sheets and cash flow.
Regardless, Alistair strongly advises clients to retain a decent working knowledge of their own figures.
“We have helped numerous businesses to identify not just the numbers but also important KPIs.
“A spreadsheet full of data will make most people switch off.
“But if you can identify four of five key performance indicators that really drive your business, you can see where the true value lies. This may be the proportion of revenue spent on wages, for example.”
Constant changes in tax and compliance make independent financial ‘nous’ even more important.
And while new systems like the government’s Make Tax Digital (MTD) aim to make businesses engage with their finances more directly, it’s still an uphill process in terms of awareness, Alistair admits.
“Other than registering with MTD, there isn’t really anything to do until July when the first returns are due.
“But if businesses are willing to see beyond this perceived new layer of red tape and bureaucracy, and think, well, I’m putting all this data into a digital solution, they could then ask, ‘How can I use that information to improve my business’?
“MTD won’t have a big effect on companies with a turnover of more than £90,000 which are already VAT registered. It is businesses with a £50,000 to £90,000 turnover that are most directly impacted.”
Dealing with the taxman
Alongside this, HMRC activity is clearly stepping up.
Alistair and colleagues in the accountancy sector are seeing more enquiries and follow-ups from the taxman, particularly in debt management.
“I definitely think there is a remit to go out and collect more tax – it’s a softly softly approach at the minute, for example, polite suggestions to double check tax returns and update where necessary.
“If errors are corrected early on, I think it’ll be fairly straightforward with fairly light penalties.
“But ignore those early warnings, and the situation could soon escalate.
“That’s why there’s no point burying your head in the sand,” he says. “HMRC don’t make a lot of mistakes, but if you feel there’s an issue, get an independent sense check. Even if you’re being threatened with significant penalties, we can potentially help minimise issues that arise.”
So, whether it’s restructuring payments, negotiating with HMRC or securing new finance, there’s always a fresh perspective to hand.
Positive signs
On a lighter note, Alistair sees positive signs in the local economy. “I’m ever the optimist,” he laughs.
“People still want to do business and there is money and opportunity out there. It’s all about being realistic about your services and the going rates.
“I encourage clients to look at their business from every angle – not just by trying to charge more or discounting work to bring in quick cash. That can only make things worse in the long term.
“Having good quality numbers and forecasts to hand certainly makes everything easier when you’re talking to lenders.
“And that all comes back to my initial comment about understanding the basics of your finances.”
Do you need help?
And finally, what is Alistair’s advice to businesses who may be struggling?
“Please speak to the professionals. I know it can feel scary and tempting to just chase the next invoice.
“It’s important to step back and get a different point of view when you can’t see the wood for the trees. I know because I’ve been there myself!
“Here at Hayward Wright, we offer a range of advisory sessions and are more than happy to point you in the right direction with an informal chat.
“We’ve also got some really good contacts in the insolvency industry, and that isn’t as negative as it sounds.
“Taking that kind of advice doesn’t necessarily mean insolvency and bankruptcy – it could just mean restructuring. And sometimes, the situation can even be turned around in days rather than weeks or months.
“We are a very friendly, approachable bunch and we genuinely want to help. Most of our recruitment process is based on attracting team members with the right attitude – not just technical skills.
“Plus, we have a really strong network of – for example, solicitors – who share our values.”
Contact Hayward Wright on 0333 006 8809 or email the team on mail@haywardwright.co.uk. To find out more about our company, our team, and why clients choose us, visit our website here.
