Entrepreneurs and small business owners tend to hire accountants who understand the nature of small business, and who can provide them with practical advice and guidance year-round, not just help filing their taxes. They’re looking for a partner, as well as an accountant. While you might not be hired as a financial planner or business advisor, if you’re interested in focusing on small business client or start-ups, it pays to have a business savvy mind.
No business venture is without it’s risk, but for small business owners, even if they’ve got a solid business model, and done their homework, unexpected changes in cash flow can easily put the venture into the red. Many small businesses secure their financing through lines of credit, a company credit card, or a small business loan, but when sales go down, or costs suddenly shift, the plans currently in place for repaying debt can become an overwhelming burden.
Luckily, there are some common-sense tips you can give your client to help them keep their business, and confidence afloat during troubling times.
Advise them to regularly review expenses
Getting your client to conduct a review of their expenses is one of the first steps you should advise they take when they’re tackling debt. By looking at where costs can be cut or finding alternative solutions at a lower cost, clients can reduce the burden of their debt and start moving back into the black.
Consider advising clients to reduce budgets in innovative ways. Remember, your job is to look at the big picture!
Help them master their cash flow statement
Most small business owners, and entrepreneurs are hyper focused on daily, monthly and annual sales. Many of them can’t tell you if the money in their bank account increased or decreased by the end of the month. According to the experts, being ignorant about cash flow is one of the top reasons that small business fail, so helping your client make sense of their statements could make all the differences to the success of the venture.
Help them evaluate and prioritise their debts
Its important clients begin paying off debts with higher interest rates first, because this is what is going to help them manage their overall debt faster. This is especially important if the debt is from credit cards. Advise clients to make the minimum repayment for smaller balances and focus on repaying the balances with the highest interest rates to help save the business money in the long run.
Refer them to other experts for help
If the above efforts have failed, then a debt consolidation loan might be the next option. In these cases, it’s best to enlist in some help from the professionals.
Debt consolidation agencies can do the hard-work for you: negotiating with creditors on your behalf to either extend, change or renew credit agreements. Typically, debt consolidation through a firm will cost a monthly fee, but it’s often less-expensive than filing for bankruptcy.
Director of Accounting for Private Educational Institutions at Jefferson+Partners (Sydney) from 2007-2015. Founded and led Lebrau & Partners Pty. Ltd. from 2015 until now - a boutique accounting firm serving educational institutions across the Asia Pacific (both public and private, primary, secondary and tertiary institutions).
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