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Guide to Improving Your Clients’ Financial Literacy for Accountants

Do your clients fully understand the service you provide for them? Improving your clients’ financial literacy ensures they comprehend the processes and procedures you perform for them. This deepens the relationship and ensures mutual respect between the accountant and the client. Developing your clients’ financial literacy will also help them as individuals and as business owners, adding greater value to their businesses.

In this article, we will explore:

What is financial literacy?

First, we will define the meaning of financial literacy. What does financial literacy mean for business owners? 

Financial literacy is an understanding of a vast array of financial skills. Business owners require financial literacy in every day of their lives from budgeting to banking and all transactions in between.

Why is good financial literacy important for clients?

The importance of financial literacy should not be understated for both individuals and business owners. Good financial literacy is important for clients so they can make the best business decisions and avoid making financial mistakes. Ultimately, this helps your accounting business to grow and to succeed.

Here are the main benefits of improving the financial literacy skills of your clients:

  • Reducing expenses: Tracking and managing money that is spent in the business can help your clients realize that they need to decrease costs and reduce expenses. Reduced expenses can help a business grow and increase its profit.

  • Reducing debt levels: Do your clients know how much they owe in debt and how much of their money is paying off interest every month? Managing debt effectively and consolidating debts can help clients reduce their debt levels and the amount of money they spend on repaying those debts. Once again, spending less money in business helps to increase profits and limit bad debts.

  • Emergency fund preparation: Do your clients have enough cash in an emergency or contingency fund to use when needed? Being aware of finances and improving financial literacy can help to encourage a client to increase their emergency planning and the funds available.

  • Retirement preparation: Improving a client’s financial literacy can help them plan their future better. What are their plans for retirement? Do they have a pension? Better financial literacy will ensure that your clients are thinking about long-term decisions.

  • Greater accuracy: Improved financial literacy will help your clients maintain greater accuracy inside their accounts, understanding the processes better and feeling more confident. The number of errors made should be reduced and financial data should offer greater transparency.
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How to improve your clients’ financial literacy

To improve your clients’ financial literacy, you must think about the psychology of money in detail and take some practical steps:

1. Money mindset coaching

What is money mindset? Money mindset refers to how one thinks about money and what money means to an individual. Money mindset coaching examines thought processes and the reasons behind why financial decisions are made. To understand your client’s money mindset, consider the following:

  • What are your clients' daily habits surrounding money and their relationship with money?
  • What influences the financial choices your clients make?
  • What are their core financial beliefs?

Once this has been recognized, you can guide your clients in making a money mindset shift to improve their self-awareness and make better financial decisions. The most productive attitude towards money looks at creating as much value as possible for the business and others and monetary rewards will follow.

Encourage clients to understand that money is not a negative object and how they can use money to add value to their business. Bridge the knowledge gap for your clients and improve their financial relationships.

Watch our video for further information on money mindset and relationships with money. 

2. Educating clients on QuickBooks Online accounting software

Educate your clients on a practical level to improve their financial literacy. For example, implementing a training program to educate clients on QuickBooks Online accounting software can save your clients time when completing their own financial tasks and managing their finances.

An effective client communication strategy will help you work with your clients to identify knowledge gaps to determine how you can better educate them in managing their money, reducing expenses and increasing profits.

3. Introducing digital tools

Introduce your clients to digital tools that can improve their productivity and increase their financial literacy. Digital tools include apps that can be integrated into QuickBooks to automate a variety of accounting and business processes to save your clients time. Many digital tools are simple to use and could be a good move to improve your clients’ financial literacy.

Learn more about how to guide your clients in selecting the best apps for QuickBooks Online to improve their financial literacy.

Watch our video to learn how to leverage technology and digital tools to become a more valuable advisor to your clients.

How can improving clients’ financial literacy help accountants?

Improving your clients’ financial literacy will help them view you as an essential part of their business and help build trust with your clients and improve your relationship. Clients possessing excellent financial knowledge will look after their books to a better extent, reducing error and streamlining your collaboration.  This makes your job easier and reduces the number of hours you spend working on one client, allowing you to grow your client portfolio.

Overall, improving clients’ financial literacy adds value to the service you are giving to them. The client experience is enhanced, resulting in satisfied clients and numerous referrals. This leads to higher business profits for your accounting firm.

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