Looking beyond the numbers
Your accounting background should have prepared you perfectly for analysis, right?
Analysing something is all about taking a bunch of information and making sense of it in a way that is relevant to the situation, and then crafting a story. With experience, accountants should be able to critically analyse financial information to provide an insight into the workings of their client’s business.
How many of your accountants have these skills? Whilst you’d certainly expect that managers, partners and principals of accounting firms have this ability, is it reasonable to expect that accountants with little commercial experience would be able to think beyond the numbers?
As progressive accounting firms move from a compliance to advisory focus, their leaders are looking critically at steps they can take to really engage all their technical staff in actually thinking about business clients rather than just focusing on the numbers.
Some simple actions that your accountants can take to think more as analysts are outlined below.
- Take some time out to look at business client’s website and social media pages. Identify what it is that the business does and what products or services they sell. Look at their value proposition. Read their news and blog posts.
- Consider financial trends by looking at changes in key performance indicators over recent years. Your reporting systems should allow for a quick analysis of this data to identify patterns of change and perhaps consider future trends.
- Compare the client’s financial data with benchmark data from ATO and other external sources including benchmarking.com and Bstar. If your firm has clients in a specific industry, then conduct an internal analysis to compare and contrast individual results.
- Ask for feedback from the person with primary client relationship responsibility about what’s happening with the client. Show curiosity and interest. It only takes 10 minutes to get a brief which could be quite valuable in understanding the relationship between the figures and the client’s business situation.
- If you have the opportunity to engage with the client, then ask some simple open-ended questions to learn more about the client. These questions could include
- How’s business going for you?
- Can you tell me more about the products or services that you provide?
- What type of customer do you target?
- What financials do you focus on in your business?
- Get some experience in commercial audit. An exposure to an audit environment can give a accountants a stronger understanding of business processes and the impact of strategic decisions in business health.
- Engage in round table discussions about business client financials and situations. Bring client financials to the table and ask for feedback from other accountants on what they see and what issues should be considered. This can be a great learning experience for all accountants and can identify opportunities to add real value to clients.
- Develop a simple checklist of key ‘triggers’ that should be considered when looking at business client financials. These triggers may include:
- Growing business, cashflow issues
- Need for more focus on bookkeeping
- Stagnant business, not thinking ahead
- Operational and staffing issues
- Poor profitability, high costs
- Get some experience with financial forecasting and business potential analysis tools. These tools can be tremendously valuable in creating a story out of the numbers for the client. Consider tools such as Cashflow Story or Castaway. A simple balance sheet and statement of cashflows can be useful in highlighting current and potential business issues.
- Enrol in external courses to get a better understanding of the core elements of successful business analysis for accountants. Then use this information to develop your own internal systems and processes to encourage a greater level of curiosity about the numbers.
Dale Crosby | High Tech Soft Touch
dale.crosby@hightechsofttouch.com.au
