The Art & Science of Cash-Flow Forecasting. Part 3


Busy Bookkeeping Understanding Cashflow in Business
Becoming the New Age Bookkeeper – the Financial Advisor SMEs Need
According to the Onpay 2019 Small Business Finance and HR Report, small business owners who have the most faith in their bookkeepers and accountants are more likely to see a significant increase in revenue. 86% of small business owners agree their bookkeeper / accountant is a trusted advisor they can turn to for a range of business advice going beyond booking keeping, tax prep and compliance.
In fact, bookkeepers and accountants offering strategic advisory services to small business clients including funding advice is just what the need of the hour is and a win-win for everyone. While it allows accounting professionals to deepen their relationships with current and existing clients, it can help clients make intelligent financial decisions and improve their business results while setting themselves up for growth.
Onpay 2019 Small Business Finance and HR Report – Summary Extracts
When asked to describe what separates successful and unsuccessful entrepreneurs, Apple co-founder Steve Jobs said it boils down to one thing: Pure perseverance.
If small business owners don’t commit to their passion, learn from their setbacks and keep pushing forward, any momentum they’ve built can quickly peter out. The good news? Overcoming some of the hurdles they face — like how to innovate, deliver value, or make the world a better place — is often the reason they started their businesses in the first place. Their passion for solving these problems is what makes them who they are.
The bad news? Small business owners have other duties to juggle to make everything work. For example, taking care of payroll and HR sucks up almost 40 hours of bandwidth a month — a daunting number because over 40% of small business owners prefer to handle finances and accounting themselves.
To better understand how entrepreneurs manage their back office responsibilities, we surveyed more than 1000 small business owners and managers. We asked them which tasks they do themselves, which ones they outsource, and when they turn to software. We also took a deep look at how they work with accountants and other key advisors.
This report includes several sets of benchmark data, plus insights that small business owners and their advisors can use to make sure they’re on the right path. While entrepreneurs may enjoy blazing their own trail in many respects, we found that there are some well-traveled routes that often lead to more successful outcomes.
Entrepreneurs are often on a bit of an island when it comes to figuring out their finances and HR. Close to half of business owners and managers handle finances and accounting themselves, and 70 percent of small businesses take care of all their finances in house. Until a business reaches 50 employees, it’s also likely the owner will be responsible for its human resources function.
Despite everything they have on their plates, small business owners are generally confident that they’re performing back office tasks well. However, when asked about specific tasks (like having an updated employee handbook), their confidence wanes. It’s also clear that they make mistakes along the way. For example, 28% have been audited or have received a notice from the IRS.
With that said, software and external advisors can make a big difference for those who choose to use them. Payroll and accounting software are the most common apps that small businesses add to their back office. Using them tends to save time and help business owners feel more confident in their finances.
Entrepreneurs’ most-trusted advisor for business questions is most commonly their bookkeeper / accountant. Bookkeepers and Accountants do a lot of things well for their small business clients, but there are also some opportunities to improve or add more value. For example, only 61% of business owners are completely satisfied with the breadth of services their accountant offers, and they usually don’t consider their accountant to be proactive. The upside? Small business owners who have the most faith in their bookkeeper / accountant are more likely to expect a significant increase in 2019 revenue.
Small businesses and their bookkeeper / accountant
Although only 30% of small business owners choose to work with a bookkeeper / accountant, it appears that bookkeepers / accountants are their most important advisor — and most business owners are very happy with the services they receive. To understand a little more about this relationship, we took a close look at how bookkeepers / accountants and small business owners work together, then we dove into the factors that make some bookkeepers / accountants “trusted advisors” in the eyes of their clients.
When it comes to the actual services bookkeepers / accountants provide, small business owners expect their accountant to help them with tax-related matters and bookkeeping before anything else. However, there’s a good chance that many of their clients expect a higher level of service. Over 25% of small businesses said they expect their accountant to help with each of the following financial and advisory services:
  • Payroll (38%)
  • Accounts payable/accounts receivable (37%)
  • Financial projections (32%)
  • Cash flow (27%)
  • Choosing a business entity (26%)
  • Business consulting (25%)
A significant number also expect help with things like software recommendations, employee benefits, and HR:
Taken in aggregate, small businesses expect a lot from their bookkeeper / accountant. However, only 61% of small business owners are totally satisfied with the range of services they provides.