How an accountant can help you manage your cash flow

Managing your cash flow is key for any company but keeping on top of the books isn’t an easy – or particularly appealing – job.

Hiring an accountant to take over this responsibility means you can concentrate on your core business and spend less time worrying about your finances.

These are just some of the ways an accountant can help you manage your cash flow.

Predicting the future
Accountants aren’t psychic, but they can certainly help you understand how your finances might look in the future.

By simply sitting down with them to set out a cash flow forecast you will have a much better understanding of what is coming in and going out each month.

This can help you foresee any potential money troubles before they happen.

Chasing payments
With the average small UK business owed £25000, one of the most common reasons businesses find themselves in financial trouble is because clients fail to pay when expected.

If this happens regularly, your company can quickly end up in a precarious position through no fault of its own.

Chasing clients to pay their bills can be a mammoth task and can often drop to the bottom of a very long list, so having an accountant take care of this responsibility is hugely beneficial.

As seasoned experts, they will have a robust system in place meaning they know when invoices should be sent out, when payments are due and most importantly when clients need to be chased.

By saving you from potentially uncomfortable monetary conversations with clients, they can also protect you from souring important client-business relationships.

Sharing knowledge
You might be an expert in your industry but your accountant will hold the knowledge when it comes to the financial world.

Their expertise on taxation rules as well as knowledge of any changes to regulations means you shouldn’t be hit with harsh, unexpected penalties that could significantly impact your cash flow.

Similarly, if there is a time when you need a temporary cash injection, your accountant should be able to help you identify any possible funding opportunities which could help ensure your cash flow stays on track.

Highlighting savings
While looking through your books, accountants will be able to act upon their experience by advising areas where money is being lost and more importantly, how it can be saved.

By setting aside regular time with them to go through the figures, they will be able to immediately spot any unusual outliers where money is being lost.

This will also give them a chance to discuss with you areas where you could spend less, while highlighting additional opportunities to release cash when you might need to do so.

Simply having someone more detached from the business looking over your figures can be a real positive as they are likely to see things you may otherwise not have considered.

Timing is everything
The earlier you spot potential cash flow problems the better, and having an accountant can undoubtedly stop you falling into trouble.

While you might think it’s a good time to hire five new members of staff, your accountant might be aware of a significant outlay due to come out of your bank at the same time, so can advise that the recruitment be delayed.

Their knowledge of your finances means you shouldn’t get caught out and can ensure important decisions are taken at the right time.

Sensible savings
Although most business owners know keeping a cash reserve is necessary, it can be tempting to avoid doing so, particularly when money is tight.

A good accountant values the importance of putting money aside and is the best person to assess how much this should be and what your business can afford at certain points in the year.

Managing your cash flow is a vitally important job and one which can be difficult to do properly when running the operational side of the business.

Therefore, hiring an accountant will undoubtedly save you time and money, helping keep your company on firm financial grounding for the future.

Written by Hasib Howlader the director of Howlader&Co – a London based accountancy firm helping small and large businesses manage their finances. He is a chartered accountant and chartered tax advisor.


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