Location: Channel Islands EN-GB

Why you should challenge your accountant

20 January 2016

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Dickson Wasake, an associate director at Baker Tilly Channel Islands, discusses 6 ways a good accountant can benefit an organization – at start up, growth and in challenging times. 

About the writer

Dickson Wasake, FCCA is an Associate Director in the Assurance and Accountancy practice of Baker Tilly Channel Islands Ltd. Dickson primarily handles the more complex accounting and advisory cases of the firm.

Article summary

For Small and Medium Size Enterprises (SMEs) in Jersey and Guernsey the “go to” person is often their accountant. Unfortunately they don’t always get the most out of their accountant, who could provide valuable support and advice to them during the key stages of a business’s life.

This article explores a range of services that local businesses may not be aware of that their accountant can provide.

Trusted advisor? 

Typically a business will go through 3 main cycles:

  • Phase 1: Start-up
  • Phase 2: Growth/Expansion
  • Phase 3: Challenging times

During each phase your accountant can support you in providing a range of services which go beyond the traditional bookkeeping or preparing of tax returns.

But are these services really needed?

When “Families in Business” undertook a UK survey, they found that:

  • 66% of all private sector firms are family businesses; and
  • 69% of family businesses want more “added value” extras from their accountants.

I would expect that if you ran the survey in the Channel Islands, the results would look very similar.

Phase 1: Start-up

1. Negotiations with bankers, financiers, family transition.

Your accountant brings experience and knowledge.  These initial discussions can involve forecasting and cash flow models or determining the Return on Investment (ROI), which are not for the faint hearted.

Bankers and Financiers are shrewd financial professionals and as such having a professional who “speaks their language” whilst maintaining independence is a comfort to them. We have been engaged on a number of Due Diligence (DD) transactions and so we often act for the buyer of a business which gives us an insight into what acquirers and their finance providers need. 

2. Cloud accounting services – access to real time accounting information

When the IEEE computer society predicted its Top 10 technology trends for 2014 one of its key predictions was the emergence of cloud based services.

In simple terms this means online access to information via an internet connection rather than a dedicated physical server. In accounting, this trend is manifesting itself through software such as Xero, Quickbooks online and Kashoo.

For your business, what this means is that you can ask your accountant to provide you with a cloud accounting option. This gives you, your Accountant and anyone else you choose to allow, real time access to your accounting information. 

Cloud accounting software like Xero can even be integrated to your bank accounts hence allowing real time reconciliation! 

3. Strategic/Business plans (or models) and monitoring their implementation

There are a myriad of challenges facing businesses in the Channel Islands today and in the future. These include:

  • Social media and its role in the attraction of customers;
  • The need consider cross border trade and engaging with different cultures; and
  • The continuous threat of “innovation disrupters” who are challenging traditional “brick and mortar” businesses.

The pace of technology change and disruption is a constant issue businesses need to consider.  In fact, when the Wall street Journal assessed the top 5 issues for CEOs of companies, one of top priority concerns was

“Having their business model disrupted by innovation”.

Almost every business can easily be disrupted by technology. A recent example is Airbnb which is a website for people to rent out lodging.  At December 2014 it had listings in 33,000 cities in 192 countries. 

It doesn’t own a bed but according to the Wall Street Journal it is likely to be valued at $10 billion – which would rank it ahead of some major hotel chains such as Wyndam, Hyatt and Intercontinental.

With these challenges, or simply a change in the local indirect tax legislation in the Islands, it is important for a business to have a formal strategic plan.  Such plans ultimately translate into whether a business is profitable, having your accountant as an advisor to your “board” or worth serious consideration. 

Phase 2: Growth and expansion

4. Networks – multi jurisdiction operations and access to leading edge information

When I go through the concourse at Gatwick airport, I always smile at the catchy HSBC “In the Future” adverts. One of them says: “In the future, even the smallest business will be multinational” 

How true! One of the key evolutions of our time is globalization, and the need to consider expansion.  This includes fast growing emerging markets which our ancestors would not have been able to access such as such as India, China and Brazil.

When venturing into new markets, the key challenge is how do you find trustworthy partners?  This is where your accountant can help.

Some accounting practices are part of an international network which gives them to access to people and information around the world.   If your business is looking to expand beyond Jersey or Guernsey, perhaps your first point of call should be your accountant.

As an example, Baker Tilly Channel Islands is part of the Baker Tilly International Network and at December 2014 there were member firms in 133 countries.  This represents coverage of about 68% of the world’s 195 countries and/or sovereign states.

5. Due diligence – whether buying or selling a business

When a business is growing or needs to expand, one of the ways it can do so is through a Merger or Acquisition.   These transactions aren’t just limited to global multinationals, Small and Medium Size (SME) businesses could benefit from pooling resources with a local competitor or supplier.  

In this case, your accountant can help you whether you are buying or selling:

Selling - having your accountant come in before the sale can provide you with insights into your business performance and other critical aspects which buyers look at. This “clean up” exercise can put you in better shape and help you negotiate a better price or ownership stake.

Buying – your accountant can undertake a due diligence (DD) which in simple terms can be akin to a detailed analysis of information presented by the seller to assess whether the business is worth the money the seller seeks. 

Phase 3: Challenging times

6. Business performance analysis including cost reduction

During challenging times your accountant should be your ally.  By analyzing your business they can identify issues and pinch points, areas of concern and what can be done. This analysis can be especially helpful to you in developing a cost cutting or business efficiency exercise. 

Your accountant can do this by using industry standard measures of financial performance, and benchmarking them to the norm and top performers. The results will form the basis of a strategic plan to improve performance and plan for the future.  If need be, it will also provide a solid foundation for negotiations for further funding.

Want to find out more?

Why not contact us for a free consultation to see whether this is something that would benefit you or your clients. Contact Dickson: dickson@bakertillyci.co.je  DL: +44 (0)1534 755 119 

Disclaimer: Statements and opinions expressed in articles, reviews and other materials herein are those of the author(s).

While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur.

Baker Tilly Channel Islands Limited will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.



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