Certified Public Accountant (CPA) firms can never guarantee the skillset or business acumen of their clients. In fact, a business’ lack of financial management structures tends to be one of the top reasons for consulting with a CPA in the first place.
While CPAs will always be, by definition, financial problem solvers, a lack of understanding on their clients’ part may lead to unnecessary issues arising and further business forensics may reveal that the problems clients come with can be deeper than even they suspect.
So how can CPAs manage their clients’ poor business habits and helps not just getting them out of jeopardy but actually working towards growth? The answer may start with creating a holistic approach to cash flow management.
Analysis and trend tracking
A business cannot operate without accurately and efficiently tracking the money coming in and going out of its operations. Without a clear, systematic understanding of how money is moving within the network of one’s business, it becomes impossible to identify areas of bottlenecking, underfunding or outright wastage.
Cash flow analysis doesn’t just deal with tracking daily revenues and expenditures, however. There is also a great emphasis placed on tracing a business’ financial trajectory over a sustained period to mark out any patterns that may have led to jeopardy.
Financial analysis from a day-to-day, quarterly, and annual perspective is the first step to creating a robust cash flow management system, but while analysis deals in the past and present, CPAs should also have an eye on their clients’ future.
If cash flow is simply the movement of incoming and outgoing finances, then there’s a dual approach that needs to be taken in order to effectively combat poor business habits.
Minimize unnecessary expenditure
When it comes to outgoing finances, CPAs should focus on showing clients where they can cut costs, combine processes and cut unnecessary overheads. Clients in jeopardy often need a wider perspective on their overall operations, and someone who can clearly point to where a few smart tweaks can stop them from losing money.
Streamline the transaction process
Managing incoming finances will be just as important. Many companies are held back by not digitizing their payment options, not only giving consumers faster payment avenues to buy their products or services but creating an efficient electronic record of transactions for bookkeeping, auditing and analysis.
Many clients neglect the fact that they don’t have to outright own their assets in order to use them effectively. High-maintenance and high-specialty equipment that might be necessary for seasonal or occasional work can incur a huge upfront cost to buy, especially for smaller and newer businesses.
Shifting clients from owning expensive equipment to leasing allows them to budget per use, with their key responsibility being to ensure that the leased equipment pays out its own rental while also bringing in a profit. This also removes maintenance cost, replacing it with much more affordable insurance deposits as needed.
Ultimately, poor business management is a matter of habit. Cash flow management represents an opportunity to pull businesses out of crisis while also educating clients on the mentality behind running a business at a profit. And an educated client is one that serves as a mark of quality for any CPA.
To learn more about becoming a Cash Flow Advisor – visit Dryrun.com/partners/ to connect with our Cash Flow experts and get on a better path to support your clients.