How to ensure you have your house in order, so you can get clarity around your financial situation

Today I wanted to talk about a common statement that we hear so many of our clients coming to us with, which is “I just met with my accountant and…

Today I wanted to talk about a common statement that we hear so many of our clients coming to us with, which is “I just met with my accountant and they are telling me that everything is ok and that we are doing well. But I just don’t feel that is the case and I don’t have clarity on what that means”

I hear this all the time. 

You see, what you have to remember is that your accountant, their role is to prepare the books, make sure that you are compliant, to make sure that you are accounting for things correctly, that you are lodging with the ATO on time and to support and help you with structures and make sure you are not over or underpaying your taxes. That’s their primary role.

See what you need is something that is going to help you understand where is the hidden cash and profitability in my business, where is the money being left on the table, where is the leakage. And that’s where you need a different set of reports. It’s almost like you need to run two sets of accounts. You need to run your financial accounts which is what your accountant does and then you need a set of management reports or accounts. And this is where you need forecasts, dashboards, you need to be able to run ratio analysis, but most importantly you need to be able to interpret the data and then understand what you need to push or pull to influence the result.

Now, what’s more important than all this is, you need to:

  1. Get super clear on what result you’re after. 
  2. Understand what are the key metrics that sit under that and;
  3. Ensure you have got your infrastructure, your house in order to be able to get the clarity you need.

Let me give you an example, we were working with a client a couple of weeks ago, and one of the first things we do is a data audit of your Xero account, and what we found? A lot of it didn’t make sense. 

There were some months that this expense line was up, some months it was down. They had double ups of accounts so there was “Bad Debt” and another line was “Bad Debt Expense”. They had Advertising, Marketing, Website, Google, Facebook…all of these various lines with information and data going everywhere. It was an absolute mess. And what they had done? They had relied on their bookkeeper to sort this out. I have to say, from an accounting and tax perspective, they were paying no more or no less tax than they should have. They were compliant, the accountant was doing their role in regards to ensuring the compliance part was done. But the business owner had no real clarity on what was going on beyond that.

So we went in and did a total clean. We literally reviewed the last 12 months worth of transactions and realigned them into the correct accounts. And when we presented this back to the client they said “wow, this makes more sense”. Now they could make better and faster decisions because they had the data at their fingertips. 

We were also able to build and overlay cash flow and profit forecasts for them that aligned with their goals, and made it super easy for them to understand what they needed to do strategically to achieve those goals along with regular check ins and measures to be able to make that happen.

So if you are sitting there and asking yourself “I’m being told everything is ok but I’m just not clear and it’s not making sense to me” it’s probably because:

  1. Your data is not set up properly
  2. You are unclear in regards to what you should be looking for or at to understand what you need to do or not do

And that’s what a CFO does. 

A CFO comes in and helps you get the financial clarity and understanding of what you need to do, what you need to pull and push and overlay a degree of strategy to make that happen.

Hope this has been helpful!

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