Is Your Accountant a Financial Accountant or a Management Accountant?
First question: how would you know? You’ve met them and they said they’re an accountant which is great, as you need an Accountant! They seemed like a nice person and someone you can work with. Happy days and decision made. They will do everything you need. Well, maybe not… Let us explain the difference.
|
|
Wants to understand your business in detail |
Needs to understand what trade you’re in |
Will analyse your income steams – what’s your bestselling service or product? Then work with you on the why. |
Will give you a basic overview of what your financial figures mean. |
Will analyse your Gross Profit, explain to you what your margin is and what that means |
N/A |
Will analyse all your overheads and critically ask you why you spend £x on XYZ and have you ever tried ‘ABC’. |
N/A |
Will work with you to ensure you’re the most efficient business you can be. |
N/A |
Will produce Management Accounts so you can see Profit & Loss within 14 days of your Month End. You can then react and make informed decisions. |
N/A |
Can analyse any part of your business finances to prove something works or it doesn’t. |
Can complete analysis but wouldn’t normally unless you asked for the information. This will be an additional charge. |
Will become your additional Trusted Business Partner – a sounding board for any ideas you have. |
All Accountants should be a Trusted Business Adviser |
Will identify new processes and talk them through with you, explaining why they may work in your business. You can then decide if you want to try them or not. |
N/A |
Is proactive with their approach to your finances. Will let you know when things are going well and how that happened as well as helping put the brakes on when needed |
N/A |
Will speak to you regularly- at least every month. |
Normally have 1 meeting per year to sign off your Year End Accounts – maybe 2 if you have Tax Planning. |
Will complete tax planning with you before your Year End, to take advantage of every tax allowance you can. |
All Accountants should offer Tax Planning prior to Year End. |
Will produce your Financial Year End Accounts and file with Companies House |
Will produce your Financial Year End Accounts and file with Companies House |
Will complete your Annual Tax Return and file with HMRC |
Will complete your Annual Tax Return and file with HMRC |
Works currently and focuses on the future |
Works historically and reports on the past |
So, there is a massive difference between working with a Management Accountant and a Financial Accountant. It all boils down to this: what do you want? What support do you need? Do you want to use accurate financial information to help run your business?
If I wanted a plug changing in my house, I need a qualified electrician. Any qualified electrician would be fine. If I wanted to have my house rewired completely, I would be more interested in how and what my electrician is going to do, how that impacts me, what benefits are there for the rewire and so on. It’s a very different decision …
So, ask yourself this: what do you want to achieve with your Accountant? What benefits do you want to receive for you and your business?
An Accountant should be an asset to your business, so pick wisely. They are a proactive part to your business growth, not just a reporting function for Government Offices.