Proactive vs Reactive: Partner with Your Accountant
📍 Don’t start talking to your accountant when you’re in a hole. Have an open, honest relationship with your accountant. I see it time and time again, it’s frustrating. Business owners only call their accountant when they need help. It’s the wrong approach. It’s best to have an ongoing relationship with your accountant where you talk to them every couple of weeks, once a month, emails, text messages, whatever it is.
📍 If you have that type of relationship with your accountant, you’re going to be more aware of your business reporting and financial position. Too many business owners are reactive and only call their accountant when they need help.
📍Most of the time, when you need help, it’s too late to actually do something.
📍 This is why the best approach for accountants and advisory to work with their business owners is to ensure there’s ongoing reporting, ongoing tax planning, and ongoing conversations. Sure, it might not be able to eliminate all the problems and haphazard issues that may arise, but at least you’re in a greater position to make more accurate decisions. The other option is you only talk to your accountant once a year, you’re relying on your bookkeeping data, which may not have high data integrity, and you may be making the wrong decisions based on the wrong information. You may then be asking your accountant to review your Xero file and make sure everything is accurate. Trouble is, it might take months to get your Xero file up to speed and to a level where you can accurately make decisions. Now this might be happening and you might be wanting decisions to be made now because they’re critical to your business.
📍 So you’ve got yourself in a hole. Don’t be reactive. Be a good business person. Have good reporting and have a good relationship with your accountant ongoing. Do tax planning throughout the year. Make good business decisions throughout the year. Not at the last moment when things are tough. The benefit to having an ongoing and open relationship with your accountant is that they’re different to your internal team. Internally, you may have an administration person, a CFO, a finance manager, they’re great. But the reality is, they’re going to be thinking and seeing the same things that you do. Internally, in your office, there’s a culture, there’s an ecosystem where you think alike, you see the same reports, you have the same culture.
📍 An accountant isn’t in your office, they’re going to see things from an external perspective. An accountant has a wide variety of different industries experience. An accountant talks to numerous clients each day, so they understand what it’s like in different industries in the current economic climate. Your internal team are great because they know your data, your way. But they don’t necessarily know what it’s like outside of that office. And that’s why it’s imperative to have an accountant on your team that you can talk to. It doesn’t have to be daily. Your accountant shouldn’t be involved in your business on a day to day basis because then they’re becoming part of your internal team and then you’re undoing all those benefits of having an external accountant from an external perspective. So my biggest message is it’s okay to be reactive in business when you need to but be informed reactive.
📍 Don’t be reactive and not have the quality of data and reporting and the conversations with your accountant when it’s too late. If you have ongoing relationship with your accountant and you call them with a reactive decision that needs to be made, they’re going to be able to help you. If you call your accountant with a reactive decision and you haven’t spoken to them for months, they’re going to ask, what are you talking about? I don’t know your business. Have that relationship with your accountant. It’s your responsibility and your accountant’s responsibility to have that relationship. Yes, it does cost money, but so does running a business, it should be an investment to make your business better and you as a business owner more informed to make informed decisions. What price do you put on that? That’s what you need to ask yourself. What cost does it have to have an accountant in your pocket versus what does it cost your business? Not having that resource.