Financial Forecasting – vital when SMEs and Accountants need to know the truth!
Accountants Minute 332
Congratulations to Mr Anthony Cook from Fitzpatricks Private Wealth Brisbane on winning our holiday package competition. We hope you enjoy your well-deserved holiday!
The next winner could be you, scroll down to find out more…
Financial Forecasting – vital when SMEs and Accountants need to know the truth!
Accounting services are in high demand, according to many accountancy firms surveyed by CommBank.
That’s certainly good news. But don’t breathe that sigh of relief too soon..
When we look in-depth at the results, we find that those high demand services as per surveyed accountants projected over the next 6-12 months are in specific areas.
So, let’s take a look at what those areas are…
The key area of interest is Corporate Finance (including M&A). This is a specialty that smaller and mid-sized practices may need to consider developing some interest in.
Other accountancy groups, involved in providing their SME clients with Business Advisory Services, reported:-
- They were enjoying the best business conditions in 7 years
- They see endless opportunities going forward; and
- They’re confident in increasing their fees because of the quality of services they provide
This survey involved 45 firms of various sizes from all around Australia.
The responses confirm that the surveyed practices are confident in their ongoing success, despite the tough financial times that are predicted over the next two years.
Their only concerns are being able to attract the right sort of talent to their firms, and keep them.
Most of these accountants are confident that the type of work they’re now providing for their clients offers career interest that will keep their in-house team members engaged and away from those “Help Wanted” ads. We all know how expensive and frustrating constant recruitment can be.
They also say that an increasing number of SME clients are looking to them to provide additional services and they’re more than willing to pay for them.
Are some of your SME clients crying “help” because they’d like to receive additional commercial services from you to help them add value to their businesses?
Australian Tax Commissioner, Chris Jordan, has issued a blunt warning to the accountancy profession, saying:
“You must understand that if your business model is high-volume, low margin, simple tax returns, your business will not be viable in 3-5 years.”
Commissioner Jordan urged accountancy practices to diversify to remain viable for the longer term.
“Focus on becoming a brilliant and trusted advisor,” he said.
If your accountancy firm is in that low margin category described by the Commissioner, it’s time to start implementing your exit strategy now!
That way, you’ll be well established in a more profitable segment of the accountancy market before the new technology, to which the Commissioner referred, is fully operational industry-wide.
If you’ve already recognised that risk category and started to make plans, but you’re not yet servicing your business clients beyond an annual set of accounts, balance sheet, a taxation estimate and, perhaps some information supplied to your client’s bank, then you need to take some positive steps.
Over the next couple of years, you’re likely to find yourself in a tough battle to keep some of your SME clients.
As the Tax Commissioner says, you need to become proactive, or the future is going to be here before you know it.
Look seriously at proposing virtual Chief Financial Officer (CFO) services to some of your SME clients. You may be surprised how open they are to the suggestion.
In that role, you can introduce “Financial Forecasting” to your clients as the key product.
If you don’t step up proactively, you run the real risk of your competitors starting to contact your clients.
In recent weeks, we’ve looked at what US Accountant Adam Hale, a Partner of Summit CPA, had to say about the success of using the “Financial Forecasting” model when his firm introduced their clients to virtual CFO services.
Adam indicated that he had no trouble finding clients, getting paid – his firm’s average virtual CFO fee is US$80,000 – and they get paid weekly by a direct drawdown. Happy days!
He also indicated that they have no problem attracting or retaining high quality talent to their firms because the accounting team love performing the virtual CFO role.
Getting in now and offering virtual CFO services will give your firm a distinct point of difference in your marketplace.
So, how do you start the process?
Well, begin by analysing your clients and asking yourself a few questions.
Who amongst my SME client base is operating a growing business?
Who aspires to operate a growing business?
Who needs ongoing financial advice?
Quite frankly, most SMEs need a “sounding board” – someone to talk to about their business on a monthly basis.
The next step is to determine what services your firm can offer. You may be amazed at the breath of services you have experience in.
Based on the US experience, our suggestion is that you’re upfront with your clients.
Tell them that your virtual CFO package has to be on at least a monthly basis, but they can elect for your services to be weekly or bimonthly.
An integral part of those services must be “Financial Forecasts”. If you’re providing virtual CFO services then these forecasts need to be compulsory for all clients or you won’t be able to do your job effectively.
Adam Hale has told us that when they decided to make “Financial Forecasting” a compulsory component of their virtual CFO service, they expected to get some push-back. Instead, they were pleasantly surprised to have virtually no rejections when they outlined all the elements of the package to their clients.
“Financial Forecasts” include:
- Developing an understanding of the “business of the business”, just as you would if you were the full-time CFO – this is very important if you are going to be the key financial advisor to your client.
- The budgetary process – includes preparing budgets for each individual business unit within the business, not putting all transactions into one profit and loss account.
- Effective budgets require key drivers to prepare a range of supporting schedules. These will directly link to the key documents within the financial forecasts – budgets – projected cash flow – projected balance sheet.
- The projected cash flow forecasts prepared on an overall business basis and need to include all transactions that you expect to be processed through the business’s bank account.
Our recommendation is that the projected balance sheets should be prepared out to 5 years. This lets you act as the “Financial Storyteller” for your clients, so you can show them how the results of decisions that they are making today will affect the future financial position of the business, including the valuation of goodwill.
The “Financial Forecasts” product package offered by ESS BIZTOOLS includes a subscription to PlanGuru – a full suite of affordable budgeting/ forecasting software that gives advisers the optimal approach to build three-way forecasts for their simplest to their most complex clients. With QuickBooks, Xero and Excel imports available, a fully-structured three-way model (with KPIs) can be set up in a matter of minutes. Then with 20+ pre-built forecasting methods, debt modelling tools, and KPI predictors, you’ll be able to create multiple scenarios that will help your clients make better, more informed decisions.
We’ve negotiated a special deal from PlanGuru.
Subscribers who take on the “Financial Forecasting” package will be licensed to provide unlimited information to up to 10 clients, rather the standard 3 that comes with the normal package. If you want to add more than 10 clients to the package, you’ll have to pay an additional fee for each.
The “Financial Forecasting Package” also includes special training and support services being provided by Beyond Accounting Technologies.
In this week’s ESS BIZTOOLS Podcast, Peter Towers delves deep into the PlanGuru software and the Australian training package with Beyond Accounting Technologies, Paul Barnaby FCA. If you’d like to access that podcast, click here.
To find out more about the product packages available to help your accountancy firm to introduce a broader range of professional services to your SME clients, you’re invited to visit www.essbiztools.com.au and to register for the Free Education Event (webinar) “Offering Virtual CFO’s Services” on Wednesday 5 October at 11:30 AM AEST/12:30 PM AEDT – to register, click here.
Would you like to win a holiday?
To go into a draw for a complimentary holiday package, click here to enter.
The winner will be drawn on Wednesday, 5th October 2022 via live broadcast on LinkedIn, Facebook and Youtube (look up “ESS BIZTOOLS”) Good luck!
Grand Final Promotion
For a limited time, ESS BIZTOOLS is offering you a complimentary holiday accommodation package to new subscribers.
You can enjoy a 4-day/3-night stay in a wide range of idyllic destinations throughout Australia. Simply subscribe to one of our packages (paid 12 months upfront or in 4 equal monthly installments) to claim.
Every new subscriber to one of our product packages receives a complimentary holiday accommodation package:
- Starter Package
- Advanced Package
- Financial Forecasting Package
Click here to find out more.
Accounting News
COSBOA: Not in bed with the devil
The Council of Small Business Organisations (COSBOA) is fighting back against the flak-attack it received after its joint announcement with the union movement prior to the Jobs and Skills Summit.
COSBOA’s Matthew Addison says it wasn’t a sell-out.
When COSBOA made a joint announcement on industrial relations standing shoulder-to-shoulder with ACTU President, Sally McManus, many of the Association’s small business members saw red.
They believed the peak body had undermined their interests for the sake of political expediency and a photo op.
COSBOA Chair, Matthew Addison, refutes this.
Mr Addison says the discussions with the ACTU were in the best interests of the sector.
He says small business is the backbone of the economy, but it needs flexibility in the industrial relations area and most of their members are too small to easily navigate complex employment agreements, like EBAs.
Mr Addison believes small business needs a simpler industrial relations system with agreements that meet the unique needs of both small business owners and their employees.
He says COSBOA has not committed to any specific agreements.
Look who’s dipping their hands in the till!
If you think all company accountants are squeaky clean….think again.
Unfortunately, investigations show it only takes a few bad apples to sully our profession’s reputation.
Company accountants and finance staff operate in positions of trust. That’s the job they’ve signed up do.
In many companies, they’ll see large amounts of money moving through their employer’s accounts each day, and for more than a few, it seems, the temptation to help themselves to a share is just too great.
Last year, more than $130-million was stolen from employers by their most trusted staff – the people handling the accounts.
Forty-three of the recorded thefts were in excess of $1-million.
So, what motivated them to breach their trust and defraud their employers, who had placed them in highly responsible jobs?
Twenty-one of those charged said they wanted a luxury lifestyle, and 14 were gamblers.
Most of the criminal activity ran for more than 5 years before being detected.
But the biggest and longest fraud rolled on without being noticed for 17 years. It involved a manufacturing company from which employees happily siphoned off $3.7-million before they were caught.
Aussie SMSF have fallen in love with Crypto
One of the most speculative investments in the world has become the favourite of many of Australia’s self-managed super funds.
Perhaps, hoping to accelerate the growth of their retirement nest-eggs, many trustees are turning to cryptocurrencies as part of their investment strategy.
More SMSFs than ever are investing in Cryptocurrencies in Australian and self-managed funds now hold more than $1-billion in digital assets.
According to the ATO, many of them have seen a five-fold increase in the value of their digital currency investments over the past two years, but crypto is volatile, and in recent months, many of those gains have been pared back or turned to losses.
Trustees for SMSFs and their financial advisors are being warned to undertake extensive research before investing.
Shane Brunette from Crypto Tax Calculator says the crypto space can be risky.
One coin, Terra Luna, offered a risk-free investment with a 20-percent yield only to collapse from a high $US80 to a few cents back in May.
However, as yet, overall cryptocurrency holdings account for a very small proportion of the $837B currently held as SMSF investments.
PlanGuru creates “rock star” virtual CFOs
Make better decisions, increase profit and accomplish your goals.
PlanGuru helps thousands of businesses, non-profits and their advisors drive better decision making through these time-tested processes.
To find out more, click here.
Interested in assisting SMEs with R&D capital raising for hydrogen and ammonia projects?
Queensland will export more than one million tonnes of green ammonia to South Korea annually by 2032 as three of the country’s largest conglomerates and Queensland-based Ark Energy embark on a $20B hydrogen and ammonia supply chain development project.
Click here to read the full article by Innovation Australia.
Inquiry to probe NDIA’s “capability and culture”
A parliamentary inquiry will examine the capability and culture of the agency that oversees the $30B National Disability Insurance Scheme (NDIS) after a series of recent decisions that participants say have eroded trust.
Do you have clients that are part of the NDIA framework? This article might assist in understanding what is happening. Click here to read the full article by Innovation Australia.
Next-generation maker’s nano approach to big picture R&D
The team at the Australian National Fabrication Facility (ANFF) consider themselves a next-generation maker space. Simply put, “we provide a service,” says ANFF CEO Dr Jane Fitzpatrick.
Do you have clients undertaking R&D who need access to high-end expertise and tooling? This article might give you a great introduction. Click here to read the full article by Innovation Australia.
Grants are great for clients!
There are a number of grants for which your SME clients might be eligible.
Want to know what they are? Click here for a list of current grants, prepared by ESS BIZTOOLS.
Learn from Uncle Sam
“We have no trouble finding clients, getting paid – average CFO fee is US$80,000 – and we get paid weekly by a direct drawdown” – Adam Hale, Partner of Summit CPA USA.
Click here to watch the full webinar recording.
Pitch to win $1M in Venture Capital
Does your SME client have an innovation that's ideal for Australia's Northern Territory?
Join a stellar list of businesses who have won big with Darwin Innovation Hub’s Croc Pitch. Up to $1 million in Venture Capital is up for grabs for those who dare to face their Croc Pitch Panel!
Croc Pitch has a virtual presence, so you can pitch from anywhere in the world! The event has a global reach which draws co-investors and fosters potential innovation partnerships. Participant registrations close on the 10th October 2022 - so don't delay.
This event isn’t only for participants, come Darwin Innovation Hub to watch some exciting pitching, see what ideas are taking shape in the Territory, be inspired by their guest speakers and most importantly… to NETWORK!
Click here to find out more and to sign up.
Smithink’s Young Guns Workshop
A reminder that Young Guns Workshop, presented by Smithink, will be held on 10-11 October 2022 at Hilton Surfers Paradise in Gold Coast. This workshop is designed for emerging managers, supervisors, and accounting team members to develop their knowledge of the business of accounting firms.
Click here to find out more and to register.
Business Plus – Self-Rating for Commencing a Business
ESS BIZTOOLS has prepared an article on the September 2022 edition of Business Plus+ newsletter, “Self-rating for Commencing a Business”. Click here to download the article. You’re most welcome to use it to communicate to your SME clients.
The ESS BIZTOOLS’ Business Plus+ newsletter, prepared monthly except January, helps our accounting subscribers communicate with their clients and prospects.
ESS BIZTOOLS – Podcast
Peter Towers, Managing Director of ESS BIZTOOLS and Paul Barnaby, Regional Integration Consultant for PlanGuru and Managing Director of Beyond Accounting Technologies, discuss using PlanGuru software to enhance Financial Forecasting. Click here to listen to the podcast.
Latest Social Media Posts
ESS BIZTOOLS has presented a series of posts over the last week. Click on your preferred topic to access:
"Survival" is a new issue for accountants!
Is your accounting firm different?
Accountants, are your services meeting client’s expectations?
How well do you know your client's business?
Financial Forecasting – vital when SMEs and Accountants need to know the truth!
Free Education Events
You are invited to participate in the following education events, free of charge. Click on your preferred event to register your attendance.
Previous Education Event
Financial Forecasting – Package of Services – click here to watch the recording.
Want to know more?
Visit www.essbiztools.com.au. You are also welcome to visit www.essbizgrants.com.au, a website that can assist in the identification of government grant(s) suitable for your clients.
If you would like to have a discussion about how this concept of virtual CFO services can be supplied by Australian accounting firms please ring our Managing Director, Peter Towers, on 1800 232 088 and we will arrange a complimentary 45 minute Zoom meeting to discuss your firm’s position and to give you our advice.
We believe that this is the blueprint for the delivery of an enhanced range of services by Australian accounting firms to assist SME businesses to add value to their businesses and to assist accountants not only to attract but to retain outstanding talent who want to be involved in the delivery of “real accounting services”.
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