Your company is expanding, that is great news! However, the more income one has the more complicated your financial life becomes. Financial requirements of a growing business are swiftly expanding past the fundamental, critical service of bookkeeping. I have someone already to look after books, why do I need a management accountant?
The easy way out is that bookkeeping is retroactive, it documents what has already occurred and management accounting is future-focused, giving you the information, predictions and the roadmap you require to overcome your next growth all-time high.
When you are operating on adrenaline and guesswork it is time to go beyond compliance. To realise the potential of sustainable growth and profit maximisation, the adoption of management accounting is the panacea to thriving businesses in Adelaide.
1. Lack a Clear Financial Strategy
Are you aware of your business break-even point at the present? Do you believe in the profitability of your most popular service?
Lots of the business owners run their day-to-day funds without a strategy. They are aware of the amount of money they have at the bank, but they lack a written financial plan about where to go in future.
Unless you are sure about what you want to achieve financially, you do not know how to price your goods and services or even how to project in the next 12 months, then you are flying blind. A management accountant does not solely record transactions, he or she prepares a strategic financial path. They examine your present performance in order to establish actionable and measurable financial goals, so that all your decisions drive you to sustainable and profitable growth. This can be done by budgeting, variance analysis, and coming up with the financial viability of new projects.
2. Worried About Cash Flow
Cash is the blood of any business, however, when a business is expanding, it can be a tightrode walk with cash flow. Great sales are one thing but the bank account balance is always stressful. This is a typical indication that there has to be strategic financial management.
A management accountant on the other hand is an active manager who monitors, analyzes and foretells cash flow in the future. They come up with clear financial forecasts to enable you to predict the dips and surpluses so that you can plan. They can put in place measures to control the accounts payable and receivable better, control payment cycles and make sure that you have the working capital to run the business without worrying every month about whether you will be able to meet the pay roll next month.
3. Struggle to Afford Growth and Investments
Growth requires investment. These decisions have financial risk, and may be hiring your first new staff, or purchasing a higher-powered equipment, or any other costly marketing campaign. In case you are considering a big investment and you are not certain whether your business can actually afford such an investment, you do not have the data required to make a sound decision.
Your strategic partners in this process are a management accountant. Through financial modeling, they are able to show you how an investment will affect your balance sheet and profitability in the long-term that lets you take the plunge with hiring a new employee, or investing in new technology to run your business in Adelaide.
4. You’re Relying on “Gut Feeling” Instead of Data
I am simply feeling good about this new product line. Even though intuition is precious, crucial business judgments made without concrete financial information are risky in nature. Using intuition will ensure that you may be throwing capital into a low-margin project or be missing high-profit opportunities that may be lurking on your balance sheets.
A management accountant transforms the raw financial data into can be used and easily understood insights. They assist you in looking beyond the P&L statement to see what is really profitable in your products, risk areas, as well as areas that are not performing. They can do this by setting and monitoring custom Key Performance Indicators (KPIs) specific to your industry and that way every decision you make be it to staff or inventory is informed by real facts rather than wishful speculation.
5. Accounting Tasks
When you are taking hours per week to struggle with bookkeeping, bank reconciliations, chase invoices or worry about the latest changes to the tax laws, you are stealing much-needed time and energy to business operations, the ones that generate revenue and growth.
A competent bookkeeper leaves your records clean to comply with tax. These are the operational accounting functions that a management accountant undertakes and offers the high level and strategic information required to expand. They automate your financial operations, handle your reports, and make everything clean and compliant, so you can get on with running your organization, serving your customers and growing your business.
Bookkeeping to Strategic Management Accounting
As a startup is evolving into a successful scaling company, financial focus needs to shift. Bookkeeping is the key to staying alive and management accounting is the key to strategic development.When any of these five indicators are sounding to you it is a definite sign that you need an upgrade on your financial structure. Waiting until you are in a cash crunch or there is an opportunity you have not taken. Do it now, and leave your financial future to yourself.
