As fundamental as financial planning and operations are to any company, it takes more than money to ensure success. Startups and smaller companies typically do not need in-house financial experts, which is why many are turning to outsourced accounting advisors as a cost-effective solution However, not all partners offer broad business expertise to help grow your company.
A business-minded accounting advisor thinks differently because they combine financial accounting and reporting expertise with a strategic business perspective. . They understand that business operations and finance are inseparable, providing not only correct and useful financial statements, but also invaluable insights through proactive planning and data-driven analysis for daily decision-making and future planning.
An accounting advisory services partner has your back. They share facts, even when they may be uncomfortable, and give you straightforward advice. They can help with strategic planning, cash flow optimization, risk mitigation, creating relationships, and sharing insights to compare your business against others in your industry. They serve as a sounding board for the CEO and a supportive ally when challenges arise.
Advisors, like those in our Client Accounting and Advisory Services team, offer more than traditional accounting by providing:
Here are some examples of how the right advisor with a business mindset and experience can help strengthen your company.
A trusted advisor should be a neutral arbiter–someone who works for you and no one else. You need impartial guidance and recommendations based on your goals and priorities, not someone who tries to steer you in a specific direction or to other advisors you may not want or need. For example, an investor may want you to switch to their lawyer, but that lawyer is going to have the investor’s best interest at heart, not necessarily yours.
An advisor who does not bring those inherent conflicts to the table can come in and have hard conversations with you upfront. They will advise you about what to watch for so you do not inadvertently give up control. For example, get things in writing. But do not sign contracts that limit your ability to act in the future–an issue especially common in the startup world. What are the ramifications of things you do now? As soon as you sign, you are committed.
A business-minded accounting advisor sees the bigger picture, marrying business goals and financial practices in a future-looking approach that goes beyond the realm of accounting. You tell them what your strategic plan is, then they will model that to determine if your finances match your appetite for your strategy. They can help you navigate volatile markets and identify opportunities for sustainable growth.
Are you ever going to get to those target margins? This type of modeling may show that you will need a working capital loan or more equity. They can also determine how much leverage (level of debt) you can withstand.
Accounting advisors can connect your financial systems with modern technology, linking your accounting software with payment systems and banks. This reduces errors, speeds up processes, and gives you more accurate, up-to-date financial information.
Often, CEOs embark on a particular course of action only to discover later that they’ll have to carry a lot of receivables or a lot of inventory and they don’t have the wherewithal to achieve that goal. Enlisting the help of outsourced advisors with CFO-level insights can help you think through the details so you can make stronger, more practicable decisions to grow your company as you envision.
They will walk you through future-looking financial modeling to see if you really can get to your target margins. They will use automation tools to create dynamic forecasting models that adapt to changing conditions. What will be needed to accomplish that? Will the level of related debt be bearable? Conversely, the model may show your cash flow can sustain operations. You do not need money so there is no need to raise equity.
Advisors help spot cash flow issues before they become problems. They improve how quickly you get paid, suggest better payment terms, and ensure you have enough cash while putting extra money to work.
Many startup CEOs, especially, are running their business but are not necessarily finance experts. Every business faces challenges, but even if something goes seriously wrong, there is no need to hit the panic button. Bringing in accounting advisors can help you calmly develop a rational approach to tackle an issue.
For example, what if a global supply chain disruption affects your inventory management or rising interest rates impact your borrowing costs? An advisor can use modeling to determine the absolute minimum you can get by with in the near term. Then, looking at your wish list for acceleration, they can help you make the right decision and get the help you need to follow through.
They also keep you compliant with changing tax rules while finding potential tax savings.
How is your business doing, and how do you compare to other companies in your industry?
How can you afford to achieve the growth benchmarks you have set for your company? Client accounting services, backed by data analytics capabilities, can help improve your benchmarking to make better-informed, more timely decisions.
Looking at important milestones–a certain customer level, for example–tells you when you will be able to afford something you need. Maybe another employee, or another delivery vehicle.
Those are very small-scale examples, but the concept is the same for every business. The accounting advisory team you bring in should look at your plan, understand your cash flow, and model it so you can see when you hit certain milestones you can take the desired next steps. That includes milestones necessary to get bank financing or apply for some type of government program.
Advisors can analyze financial statements and rework them if needed so they reflect industry norms–where you put depreciation, certain overheads, etc. That way, you will have the data to accurately evaluate gross margins, etc. to compare your company with others in your industry. For example, professional services firms typically should have a 40% gross margin, 20% SG&A costs, and 20% EBITDA or operating profit.
Advisors can also help you track and report on your environmental and social efforts. This not only meets growing requirements but can make your company more attractive to customers and investors.
Outsourced accounting advisors concentrate on business strategy and financial management, emphasizing expertise in these domains rather than the intricacies of product or service offerings within your business. Collaborating with an experienced team is recommended, as it enhances the quality of counsel and aligns with your professional experience. Opting for accounting advisory services possessing robust business finance acumen coupled with industry-specific experience ensures the provision of high-caliber, pertinent answers, and guidance.