You have received the annual accounts. The tax return has been filed. The VAT deadline was met.
But you are still wondering:
- Did the business actually make enough profit?
- Why is there less cash than expected?
- Can I afford another employee?
- Should I increase my prices?
- Which part of the business is worth growing?
You have got the accounts—but where are the answers?
Filing accounts and tax returns is essential. But a business accountant can also help you understand what is happening now, spot problems earlier and make important decisions with better information.
What should your accountant help you with?
The answer depends on the service you have agreed and paid for. A year-end accounts package is not the same as monthly management accounts and financial advice.
However, when your records are current and your service includes regular reporting, your accountant should be able to help you answer practical questions about profit, cash, pricing, staffing, tax and growth.
Here are some of the most useful areas to discuss.
1. Is the business genuinely profitable?
Turnover tells you how much the business sold. Profit tells you how much remained after the costs of producing those sales and running the business.
Your accountant can help you compare this month with previous months, your budget and the same period last year. They can also show whether increasing sales are actually producing more profit.
2. Which parts of the business make the most money?
A total profit figure may hide important differences.
A restaurant group may have one strong venue supporting another. A creative agency may have one profitable service and another that uses too many hours. A CIC may need to see spending and remaining funds by project.
Tracking income and costs by venue, service, project or funding stream helps you decide what to grow, change or stop.
3. Where has the cash gone?
A profitable business can still have little money in the bank. Customers may not have paid, stock may have been purchased, loans may have been repaid and tax may still be due.
Your accountant should help you separate profit from cash and explain what money is genuinely available. For a clear example, read why £20,000 of profit can leave only £3,000 in the bank.
4. What tax is building up?
The current bank balance may include VAT collected from customers, PAYE due to HMRC or money needed for Corporation Tax or Self Assessment.
A regular tax forecast helps you reserve the right amount before the payment deadline arrives.
5. Can the business afford to recruit?
The cost of employing someone is more than their take-home pay. The business may also need to cover employer’s National Insurance, pension contributions, holiday pay, equipment, training and software.
Your accountant can help you model the full cost, the extra sales or time the employee may create and the effect on cash over the coming months.
6. Are the prices still right?
Supplier prices, wages, rent and software costs change. If your selling prices stay still, the profit from each sale can quietly shrink.
Your figures can show whether margins are falling and how much difference a price increase, menu change or revised package could make.
7. Is there a cash shortage approaching?
A 13-week cash-flow forecast can show when money is expected to arrive and when wages, VAT, PAYE, suppliers, rent and loan payments are due.
That gives you time to chase customers, delay non-essential spending, agree payment terms or arrange finance before the bank balance becomes a crisis.
A practical example: can you afford another employee?
Imagine your restaurant or agency is busy, but you and the team are exhausted.
Another employee could reduce the pressure, improve service and free you to concentrate on sales. But committing to a new monthly cost feels risky.
The bank balance cannot answer the question on its own. Some of that money may already be needed for VAT, PAYE, suppliers or loan repayments.
Turnover cannot answer it either. High sales do not always produce enough profit or cash.
A useful accountant would help you look at:
- The employee’s complete monthly cost
- Current and expected monthly profit
- Cash already committed to tax and other bills
- Whether quieter months are approaching
- How much extra income or capacity the new role could create
- What happens to cash if sales are lower than planned
The accountant cannot make the decision for you. Their job is to make the financial consequences clear enough for you to decide confidently.
Why useful advice sometimes gets lost
Many business owners only hear from their accountant when a deadline is approaching or a document is missing.
That does not automatically mean the accountant is doing a poor job. It may mean the relationship has been built around compliance work: bookkeeping, VAT returns, payroll, annual accounts and tax returns.
Those jobs matter, but they also take time. If records arrive late, much of the available time is spent chasing receipts, correcting transactions and rebuilding information from months ago.
Useful financial advice requires:
- Current and accurate bookkeeping
- A clear understanding of your plans
- Reports prepared often enough to influence decisions
- Time in the service for the accountant to review and explain the figures
You may already have a capable accountant. You may simply be buying a service that was designed to file the past rather than help you manage the present.
What should happen in a monthly financial meeting?
A useful meeting does not need to be long or full of accounting language. It should answer four questions:
- What happened? Review sales, profit, cash and the largest movements.
- Why did it happen? Identify changes in prices, wages, suppliers, customer payments or trading activity.
- What happens next? Look at upcoming tax, payroll, bills and expected income.
- What decision is needed? Agree the action the owner or team should take.
The reports supporting that conversation will usually include a profit and loss report, balance sheet, unpaid-customer report and short-term cash-flow forecast.
Questions to ask your accountant
Try taking these questions to your next meeting:
- What changed in the business this month?
- Are sales increasing faster or slower than costs?
- Which venue, service or project is most profitable?
- Which customers need chasing?
- How much should I reserve for tax?
- What is the biggest financial risk over the next three months?
- Can the business afford the decision I am considering?
- Is there anything in the figures that does not look right?
If you worry that you will not understand the answer, read how to understand your business finances when you are “not a numbers person”.
Get more than a filing service
Your accountant should not promise to run the business for you or remove every risk. But they can help you see what the numbers are saying, test the cost of your plans and prepare for problems before they reach the bank account.
The first step is to be clear about what you need. If you want monthly reporting, cash-flow support and time to discuss decisions, make sure those services are included rather than assuming they come automatically with the annual accounts.
At JERN Financials, we help hospitality businesses, creative businesses and CICs move from historical accounts to current, understandable financial information.
If you want clearer answers from your accounts, book a Financial Clarity conversation with JERN Financials.
The accounts should not be the end of the conversation. They should help you decide what to do next.