If I had to choose one quality that really defines Beyond, it would probably be our proactive approach to financial management. It’s one of the key differences between a modern accountancy firm like ours and the traditional practice that would have been typical a couple of decades ago.
We’ve changed how we work because business itself has changed so fundamentally in recent times. With the creation of the internet and exponential growth rate of technology have come a host of new pressures on business. Not only are we now competing in a global market, but customer behaviours and expectations have changed radically.
Always-on attitudes and real-time information
What does this mean for business? Time simply doesn’t work the way it used to. Markets change quickly, demand ebbs and flows, customers leave as easily as they arrive. Opportunities appear and then disappear in the blink of an eye. Competitors can literally materialise overnight and be taking revenue from you by the end of the day. It’s fast, it’s non-stop, and it’s all happening in real time.
If you ran a business in the early noughties, it’s almost certain that you didn’t bother much with your accounts until your year-end had passed. After all, you don’t have to file your previous year’s outcome until nine months after your year-end. No pressure there! But that means some of the data you were looking at was up to 20 months out of date!
Closing the stable door after the data has bolted
Not knowing how you performed until you’re more than half-way through the following year is no way to run a smart business. By that point, it could well be too late to fix anything that had gone wrong. When you have access to fresh information, you can take action straight away and make realistic changes before it’s too late. Where things are going well, you can see that and continue in the right direction with confidence.
When you have access to fresh information, you can take action straight away and make realistic changes before it’s too late.
This is what I mean by taking a proactive approach to running a business. Keeping your books, your reporting, and your financial projections up to date so that data is available in real-time, which will allow you to address challenges and spot opportunities.
Managing the four cycles of accounting
The way we ensure a proactive approach is via our 4 Cycles framework. When we deliver an outsourced accounting solution to a client, we ensure that each of the cycles is met – whether that is handled in-house or by us – for maximum benefit to the business.
The weekly cycle – Bookkeeping
This is tackled weekly because fresh data is absolutely essential to proactive accounts management. Your bookkeeper – this could be an external service or an employee – keeps all your transactions up to date in your accounting software and runs your payroll, so that your projections are based on solid data.
Depending on the company size, this input may be from one hour to two days per week. Modern accounting solutions such as Xero make many of these tasks much simpler than they used to be, but nonetheless you should ensure that someone experienced oversees the bookkeeping to make sure nothing slips through the cracks. Ideally, this is done by a Management Accountant.
What gets done in this cycle? Reconciling bank transactions, sending invoices, credit control, posting bills, supplier reconciliation, payroll, VAT returns, expense claims, and answering emails.
The monthly cycle – Management Accounting
The monthly cycle represents the real hands-on accounting work. A Management Accountant provides guidance and review to the bookkeeper and reports to the person in the Financial Director function. Both of these roles are crucial, but that doesn’t mean you’ll have to hire these as full-time employees. Until you exceed turnovers of €5 million, it doesn’t make financial sense to have these in-house and outsourcing is much more cost-effective.
The level of input required from the Management Accountant will depend on the size of your business but also on how actively you are seeking to grow. The important thing is that they are experienced enough to spot issues as they arrive and ensure that the data coming from bookkeeping is accurate and up to date. This is, after all, the data you’ll be basing your decisions on.
So, your Management Accountant will review Profit & Loss accounts, track areas such as budgets and departmental performance, and respond to financial queries. In addition, they must respond to the quarterly cycle strategy with day-to-day tactics and tasks that will drive financial management forward.
What gets done in this cycle? Preparation of management accounts and management reporting, oversight of bookkeeper, payroll and VAT, implementation of system improvements and efficiencies, providing support to the management team.
The quarterly cycle – Financial Strategy
For companies serious about growth, the quarterly cycle provides structure for crucial strategic thinking and action. This is the kind of expertise that would be provided by a CFO in a larger firm. This experienced accountant meets regularly with the management team – although meetings could be monthly, I think it’s fine to schedule these on a quarterly basis.
The CFO’s remit is to ensure that wider financial issues don’t get overlooked or opportunities unidentified. They will focus on results and look to the future, setting up projects for the next quarter that will improve performance. A good way to organise this is using Rapid Improvement Projects (RIPs). This involves identifying a particular priority that can be acted upon within three months and will bring real benefit to the company. Good examples of RIPs I’ve seen implemented are:
- Implementing a new app or software (e.g. a CRM, POS, or job tracking tool)
- A cost-reduction exercise
- A focus on a particular revenue stream or customer group
What gets done in this cycle? Financial planning, identification and measurement of key drivers and performance indicators, implementation of strategic projects for positive change.
The yearly cycle – Accounting Compliance
Annual compliance involves producing a set of accounts and filing all the various annual returns that a company is legally obliged to do. This is traditionally the only input your accountant would have had into your business – a once-yearly snapshot of how things are going. While not as relevant to the proactive approach I’m describing, the yearly cycle closes off these obligations and allows you to benchmark yourself against past performance as well as against others in your industry or using the same business model as you are.
Each cycle feeds into the next one, so they are interdependent but also build a much stronger awareness of the company’s financials. If you’ve been keeping everything up to date, you’ll know exactly what your year looked like within the first few days of January. You’ll also be able to submit all your filings straight away and claim any tax refunds that are due to you or start tax planning if you have a liability. Up-to-date accounts will also help you if you are going for funding or just need a bank loan.
What gets done in this cycle? Annual return and accounts for CRO, annual Corporation Tax, payroll and VAT returns to Revenue, income tax returns (Form 11s) for directors.
The secret to business growth
This proactive approach ensures finances are always up to date, insights are in real time, and decisions are fact-based and forward-thinking. Not only do we live by this methodology ourselves, but we’ve seen real improvements in the businesses that adopt this way of thinking.