Your small business’ accountant is in a privileged position to help manage your working capital. Because she handles the day-to-day accounting activity, she has deep and complete knowledge about the finances of your business at all times. You can leverage this position and take advantage of the relationship your accountant has with your company.
Access to Information
Among the most significant benefits your accountant provides is their professional insight into your current financial position and the ability to professionally manage it. She is continually aware of important figures such as your company’s current cash balance, receivable amounts, and current debts. Your accountant may also be engaged in ongoing conversations with people who owe you money and whom you owe money to. Authorizing your accountant to handle day-to-day working capital management can have a continuous positive financial impact on your business in terms of things such as making sure that your company always maintains adequate cash flow.
If you’ve been with the same accountant for several years, she has intimate knowledge of what your company is like and how it operates. For example, she will know what percent of your receivables you can actually expect to receive. She knows what your actual and ideal inventory levels are. She knows which vendors you have been working with and what their payment terms are. Instead of being only focused on the current position of your company, your accountant can also leverage the knowledge she has about your history to make proper financial moves in preparation for dealing with future events.
Future Business Activity
Your accountant also likely possesses knowledge about what your company may look like in the future. She knows what your long-term balance sheet accounts are and when your non-current obligations will become due. She has all the information on when your accounts receivable will be collected or when your note receivables are due. Although working capital is a measure of current financial operations, it can quickly change if you don’t track long-term financial items. These long-term financial items are often best managed under the guiding hand of your accountant.
Future Industry Trends
One unique benefit your accountant can provide for your small business is insight about what the industry is doing. If your accountant contracts with other similar businesses, she has knowledge about what other businesses are doing in response to, or in anticipation of, how the overall marketplace for your industry is changing. Your accountant may also be likely to hold information about general economic trends such as inflation, employment, and market performance. These indicators can be beneficially factored into managing cash flow and working capital.
Managing Timing Needs
All of these benefits relate to the same central concept – your accountant knows what will change in your company’s finances and when it will change. Your accountant knows more than just your company’s basic monetary numbers. Your accountant, because of both professional and industry requirements, is tied to making certain necessary financial things happen at certain times. Your accountant may be the only member of your team who knows the precise timing of when certain cash flows will, or need to, happen.
As you aim to grow and improve your business, take advantage of using every resource available to you. This includes leveraging the knowledge a professional accountant has to efficiently manage your working capital.