projections, statements and budgets, a company can make the necessary changes to ... A break-even analysis usually provi
The need for commercial accounting to maximise your company growth Very often, a business owner will regard an accountant as someone who prepares the annual accounts, completes the self-assessment tax return and deals with payroll. Although accountants do all those things and more, a commercial accountant will build a solid relationship with a business owner, thus maximising growth potential over a period of time. Why do you need a commercial accountant? Although you may require a professional body to produce accurate tax returns and statements, you also require someone to help you understand which growth options are available based on current and historic performance. With the use of financial projections, statements and budgets, a company can make the necessary changes to obtain maximum growth with minimal risk. A commercial accountant will utilise financial analysis to plan future growth, based on your limited resources. Start with break-even analysis A break-even analysis usually provides the basis of a business plan. A commercial accountant will study historic data to realise the point at which you are achieving adequate revenues to break even. To reach this conclusion, you will use the fixed and variable costs of producing the item, including all manpower, materials and costs of maintaining the business premises. Once you know how many units you need to sell to achieve break-even status, you can consider ways to reduce costs and introduce efficient practices to make a profit. Introduce KPIs Most companies now use Key Performance Indicators (KPIs), which measure performance. Introducing KPIs will help a company to achieve its business objectives over time by comparing objectives to performance. You can use this data to identify problems in production, looking for ways to improve performance. The use of KPIs is complex, with companies often likely to use the wrong KPIs for their type of business. To make them meaningful, relevant and strategic, professional assistance is sometimes required. Benchmarking Benchmarking is often used by accountants to help their client identify where they are excelling in their sector, where they aren't performing as well as expected, and how they can make changes to improve performance of the company. By producing reports from other companies in the same sector, a business owner can see at a glance where they are failing to meet the industry standards. The reports will indicate whether costs are too high or within the acceptable range to make a profit.
Building a partnership A commercial accountant is a professional who will perform all the mandatory duties within a business if required, but also gets to know the company and operations. By building a solid relationship with the owners and managers of a company, the necessary changes can be made to improve performance and outcomes. Commercial accountants are often viewed as trusted advisers who will provide guidance on cash flow analysis and management, working capital, ratios, budgeting and forecasting. Although taxes and accounting are both crucial elements of a business, there is far more needed in order to achieve growth, which is why you need the expertise and knowledge of a commercial accountant.
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