A lot of potential clients ask us the same question during the discovery process. That is – “What questions should I be asking my accountant to improve the position of my business?”. I’ve come up with a list of a few of the questions you should consider asking your current accountant.
1. Where are the current risks for me in this business?
This is a really important question to ask because it lets you know where your exposure is from your current business operation. You may have business liabilities that mean you are in turn personally liable as a director. There may be a situation where your structure is not adequate for your current business operation. At Tradies Accountant we have found that builders, plumbers and electricians are not structured in a way that mitigates their risk from other regulatory bodies. As a business owner you should understand what risks you are taking and how this impacts both the business and your personal situation.
2. How do I improve the cash position of my company?
Accountants generally understand the cycle of cash in business operations. They should be able to provide you with advice on how to improve this cycle if you are struggling with cash flow in your business. The construction industry can make managing cash flow difficult as income for contractors can lag behind expenditure on projects. For builders it can be a big process to work out how to manage cash flow when doing multiple projects. This is definitely where an accountant can add value to your business. They should be able to provide you with a few steps on what’s required to improve the cash position in your company.
3. What systems should I be using for my company?
An accountant should have a good understanding of the best accounting software to use for your business. An industry specific accountant or adviser should be talking to you about management software and other systems that will help improve the efficiency of your business. This is really crucial for your business. Trade businesses usually have specific requirements in relation to job costing and other reporting. You need to have an accountant that understands the current systems in the market. They should also be able to guide you in terms of the investment required for a system that will be able to produce job costing reports. Once you have these reports you can then start to analyse the results with your accountant so you can see how to improve on your margins.
4. What are my current margins and how do I improve them?
You need to understand your current gross profit margin and your overhead margins. Your accountant should have an understanding of the industry average for the construction industry. This will help you to understand where you are below industry average and how you can improve in that area. Although you do not want to focus solely on industry averages it is a good starting to point to find out where your business is performing in contrast to the industry. This knowledge is really important because it will help you scale your business.
At Tradies Accountant we work with clients closely on the above topics. Obviously there are a lot more areas to address with an accountant but this this is a good starting point.