One of the most important skills for every accountant to build in the era of ever-increasing automation is becoming a strategic advisor to your client’s business. It prevents you from becoming a commodity cost – at best justified as a time-saver, and at worst, as a painful additional cost of doing business.

Shifting your client’s mentality to see you as a strategic advisor is not necessarily simple – it requires getting under the skin of their business – not only spotting issues before they occur, but providing solutions that fit with the nature of the business and their leadership. However, there is one overriding issue that affects almost all small business, and is therefore ripe territory to begin these strategic conversations: cash flow management.

Shockingly, most new businesses will fail in the first five years. The biggest reason for business failure is poor cash flow management. Sometimes this is simply as a result of not paying attention to, or understanding, the importance of cash within a business. But for most, despite their best efforts, it’s unfortunately all too easy to run out of cash.

Here are my top five solutions to heading off cash flow issues before they occur. By discussing them with your client, you can help avoid them becoming the next business to feel the pain of unexpected cash flow issues, and begin to cement your role as an indispensable strategic advisor.

  1. Make a business plan

No business is immune to changing consumer preferences, whether the shift from the high street to online, or an increasing reluctance to deal in cash. Seemingly small changes can add up. Consider whether your client just needs to buy a card machine, or they actually need to invest in a new till system, staff training, or if they have a physical space, do they need to rethink how the space is used by customers? Without a plan, the client is in danger of realising all too late that these changes are needed. They may not have set aside the funding required, and it could even lead to the ultimate collapse of the business as they struggle to meet consumer demand.

None of this is to say that sitting down with a blank document titled ‘Business Plan’ and being tasked with filling it in is anything less than a daunting prospect. Leverage your consultative relationship to provide templates, financial analysis, and insight into macro-trends, leaving them to focus on what they know best – their business.

  1. Set aside time to keep on top of invoicing

How many times have you seen invoices sat in your client’s system that are two months old but never been chased? Everyone is time poor – you, your clients, and their clients. The end result is rather than any malicious desire to delay payments, many of your client’s clients will simply have not got round to processing payments. Encourage your client to provide regular nudges – they may well be amazed with the amount their bank balance suddenly gets topped up. Better still, invest a small amount of time to setup an automated system: in QuickBooks for example, it’s possible to embed a direct payment link within invoice and create follow-up emails, all within the core product.

  1. Weigh up payment terms when making contracting decisions

The lucky ones of us will have experienced the feeling of landing the contract of our dreams, with the big-name brand that propels your business to the big time. Far be it from me to detract from that feeling. It’s why so many people go into business in the first place. But cash is one of the more important of a number of elements to consider aside from the headline price tag, in weighing up whether the contract is one to pursue.

If your client won’t get paid until six months after delivery, and they have to make a large outlay to scale up to deliver on the contract, can you provide any analysis of their finances to nudge them into considering how their business will survive with a cash deficit for that amount of time? Similarly, can you help your client by checking to see if their new customer has signed up to the Prompt Payment Code.

  1. Consider invoice factoring, or appropriate debt financing

Managing business finances is, in many ways, not dissimilar from managing personal finances. But in some crucial ways it’s different. Look at any FTSE or AIM-listed large business. They’ll all have debt – or leverage – that allows them to deliver on contracts and win new business without being constrained by the immediacies of cash flowing in and out of the business on any given day. Your client may not be in a position to go out to a consortium of lenders, but it could make business sense to use an invoice factoring company to receive sometimes up to 98% of invoice value the next working day after the invoice is issued – while the factoring company manages the hassle of chasing payments. With modern cloud accounting software, it is often possible to integrate this with existing financial processes through an add-on app.

  1. Track your cash

This should go without saying, but democratising access to financial information is key. In the long run, clients will only appreciate learning how to read and understand cash flow statements and other fundamentals of their business finances. The role still remains wide open for accountants to analyse, consult and advise on actions to be taken as a result.

Many cloud accounting platforms such as QuickBooks now allow you to segregate access to different users, and provide a very simple interface that clearly and accessibly shows the business’s cash position. There’s no excuse in the era of cloud accounting for your clients to be working blind.

Cash is King, but it needn’t rule over you. Take these simple steps to bring it in check, and you’ll be reaping the peace of mind rewards from day one.

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