10 Reasons Accountants Should Offer Cash Flow Consulting

ccountant offering cash flow consulting

If you’re an accountant who serves small to medium-sized enterprises (SMEs), why should you consider providing cash flow consulting as part of your value-added services?

If like us, you’re dedicated to giving businesses the tools they need to forecast cash flow and strengthen their long-term financial health, here are 10 reasons why you should offer cash flow consulting:

  1. Most businesses are small businesses

Globally, there are more small businesses than any other kind of business. Consider these numbers: 99.9% of all US businesses, 97.9% of Canadian businesses and 99% of all businesses in the world are small businesses.

Most accounting firms are also small businesses. For example, 90% of all accounting firms in the United States have less than 10 partners or owners.

Case Study: Cash Flow Consulting in the Real World 

  1. Accountants are trusted advisors

Like attracts like. If you’re a small business looking for a professional accountant, are you going to go knocking at the door of a major accounting firm with retainer fees as high as the skyscrapers that house their employees?

Or, are you going to look for a small to medium-sized accounting practice (SMP) that’s more reasonably priced and more likely to understand your needs?

The answer is obvious. It is also why most small businesses consider their accountant their most trusted advisor.

  • A majority (92.2%) of accountants provide basic accounting and bookkeeping services.
  • Only 77.7% offer business consulting services, like cash flow analysis and forecasting.

Offering cash flow consulting will give you an edge on the competition. At the same time, it will also help you forge stronger bonds with your clients.

cash flow consulting opportunity

  1. Cash flow is a small business killer

More than half of small businesses never make it past the first five years. The main culprit is cash flow.

  • Studies of the U.S. market conducted by Wasp Barcode have found that 33% of small businesses said cash flow was a top business challenge and 44% found cash flow a top accounting challenge.
  • A similar SCORE study indicated that 22% of small businesses said that cash flow was their main concern.

It’s not that these businesses don’t understand that they need to have the right amount of money to meet their financial obligations. Instead, they just don’t have the correct tools, technologies and processes in place.

By helping your clients master cash flow management, you’ll be teaching them vital survival skills. You’ll also be building mutually respectful long-term relationships.

Forbes Article: How SMEs Can Win the Battle for Positive Cash Flow 

  1. There are intuitive forecasting tools

You don’t have to go and design proprietary systems to create a powerful and meaningful cash flow analysis. Automated tools, like our cash flow forecasting, make it simple to create an informative, intuitive report filled with key ratios, charts and graphs.

All you have to do is connect the business’ QuickBooks Online account with PayPie, then run the report. The forecast is built using near-real-time data from the company’s QBO account. (Integrations with other accounting software and platforms are coming soon.)

PayPie Cash Flow Forecast Example

  1. Technology is changing everything

“CPAs with technology: You have the power to change your customers’ lives.”

Jody Padar, CPA, MST, Accounting Today

With the rise of cloud-based technology, these three trends are changing how small business accountants are interacting with their clients:

  • Digitalization— As more small business data is available digitally, through the use of accounting software and applications, it’s also easier for accountants and bookkeepers to access this information.
  • Virtualization — Because cloud-based technologies can be accessed from any device with an internet connection, it’s no longer necessary for accountants to physically visit clients. Accountants and businesses can work together from virtually anywhere.
  • Transformation — With the greater availability of near-real-time data, accountants are moving from generalized to specialized services.

Read More: How Cash Flow Consulting Helps Businesses 

  1. Cash flow consulting builds value

“The ability to provide business intelligence from a quick analysis of data is a miracle.”

— Geoffrey Moore, technology author and business consultant

Complying with regulations and paying taxes are services that business owners see as have-to-dos. Accountants who take the creation of financial statements one step further by producing cash flow forecasts are transforming routine tasks into recurring, value-added services.

Rather than merely reporting results, cash flow consulting is a key component in business growth. Some advisors even set up monthly consultation calls or video conferences with their clients to discuss goals and objectives — literally becoming voices in the business decision-making process.

Pro Tips: Cash Flow Forecasting — What You Need to Know 

  1. Business financing goes hand-in-hand with cash flow consulting

As you help businesses better understand when, why and how the cash flows in and out of their companies, your clients may also rely on your advice for short-term and alternative lending solutions.

In addition to standard options, like term loans, lines of credit and credit cards, you can also introduce the businesses you serve to innovative financing solutions, like invoice factoring, powered by blockchain technology.

  1. Better cash flow lowers risk

The cash flow forecasts created using PayPie’s insights and analysis also contains a risk score that summarizes and reflects several key variables linked to cash flow. This indicator shows how a business is viewed by lenders, vendors and other third parties wishing to do business with them.

Helping a business improve their cash flow also improves their risk score. With a better risk profile, businesses can access funding more easily and set more favorable terms with vendors.

Cash Flow Basics: How to Read a Cash Flow Statement 

  1. Better cash flow builds confidence

As you work with your clients reviewing cash flow, setting goals, controlling costs and planning for future investments and opportunities —you’re not only improving the business’ financial health, you’re also bolstering the owner’s confidence.

As you go through a cash flow forecast, especially the day-to-day costs involved in operational cash flow, you get a better sense of where the client’s priorities lie, which concepts they understand the most and the areas that need the most improvement.

In a nutshell, you’re able to ask the hard questions and offer informed solutions that truly benefit the bottom line.

5 Reasons to Use PayPie for a Cash Flow Forecast

  1. Cash flow consulting makes you a better advocate

“Running a small business is about the grind, the day-to-day operations and finding a way to keep your head above water. Like the shock of cold water in the ice-bucket challenge, reality can hit you hard and all of those hours picking paint colors for the office suddenly seem wasted. Small businesses inherently overlook the technology platforms that help them manage their day to day — and that’s exactly how cash flow begins to erode.”

— Stacy Gentile, Forbes Communication Council

Managing finances isn’t always the most alluring part of owning a business, but it’s fundamental for success. Cash flow consulting takes the implementation of best practices and better tools to a new level by delivering tangible results in the form of more cash. And no one can dispute the value of money in the bank.

Be a cash flow advocate — try our cash flow forecasting for QBO users today.

PayPie currently integrates with QuickBooks Online. Additional integrations are coming soon.

This article is informational only. It does not replace the expertise that comes from working with an accountant, bookkeeper or financial professional.

Image via Shutterstock

Cash Flow Consulting in the Real World

cash flow stories Lucid and Groove

Technology is transforming the landscape of small business accounting. Empowered by the automation and innovation fueled by artificial intelligence (AI), the cloud and blockchain — now, more than ever, accountants are expanding their roles as business advocates and advisors.

It’s a trend backed by a 2016 study by the International Federation of Accountants (IFAC), which found that 41% of entrepreneurs believed accountants were their most trusted advisor — nearly double that of the 21% for other business consultants.

Many of the accountants advising the small to medium-sized businesses (SMEs) are small to medium-sized practices (SMPs) themselves. What kind of help do SMEs need? One of the main areas driving demand for advisory services is cash flow consulting.

Cash flow consulting in the real world

Here’s a real-world account of how SMP, Lucid Advisory & Finance, helped SaaS help desk software provider Groove find its rhythm with cash flow forecasting, budgeting and everything else.

Lucid Advisory & Finance

Lucid Advisory & Finance founding partner, Nick Bird, has discovered that helping businesses better understand the basics of cash flow and cash flow forecasting (through cash flow consulting) is having a huge impact on the startup, SaaS and crypto companies his firm serves.

“When we first meet with a client, we ask them, ‘Where do you want to be in five years?” he explains. It may seem like a broad question, but the answers are quite telling.

“If you don’t know where you want to go, it’s really hard to make a plan to get you there. Tracking your metrics, including cash flow, isn’t just an abstract chore, it’s a tool for better decision-making.”

In fact, his favorite part of his job is seeing his clients flourish, make well-informed decisions and grow their business.

Nick Bird Lucid Quote

How businesses benefit

According to Bird, once business businesses start looking at their cash flow and financial metrics more carefully, they also gain:

  1. Confidence — Through better, more informed decisions.
  2. Accountability — By comparing performance to projections.
  3. Peace of mind — Knowing that they’ve taken greater control of their financial health.
Read more: Cash flow 101 — the basics

How cash flow consulting works

As part of the cash flow consulting process, financial professionals like the team at Lucid will review a business’ cash flow statement on a routine basis. The time period, like holding monthly recaps, depends on the specific needs of each business.

If a business doesn’t have a cash flow statement, their advisors will either use accounting software to create a basic statement or take advantage of integrated solutions, like PayPie

By reviewing cash flow statements on a regular basis, companies are able to see how the cash flows in and out of their businesses in terms of day-to-day revenue and expenses, as well as capital investments and borrowing activities.

What businesses can learn 

Through this process, a business can pinpoint when most of their regular bills and responsibilities, like payroll, hit the books — in comparison to when the bursts of revenue come in. For example, for an SaaS company, this would be when the subscription fees are processed.

Knowing this cadence helps a business be more precise in knowing when their cash reserves are highest and lowest. Over time, these patterns are used to create cash flow forecasts that serve as performance benchmarks.

3 benefits of cash flow consulting

How cash flow informs decision-making

As metrics change and there’s a drop, the monitoring helps provide insight into where the problems may lie. Conversely, if things hold steady or improve, a business can take confidence in knowing they’re on the right track.

They can also use this information to plan their next steps. Is it time to hire new staff? Develop a new product? Raise prices? All of these decisions are affected by cash flow, which means the more you know, the better decisions you make.

More tips: How to read a cash flow statement 

Case study: helping Groove chart an even course

When Bird first met, Groove founder and CEO, Alex Turnbull in 2016, Turnbull was like most startup CEOs. He was hyper-focused on his product. Yes, he checked the business’ banking account. But, he didn’t track any key performance indicators (KPIs) and he certainly hadn’t been spending the few hours reserved for eating and sleeping for keeping the books.

It’s a scenario that’s all too normal. It’s not a criticism of entrepreneurs. Starting your own business is HARD. Unless you’ve been through it before — most businesses, even the high-tech ones, don’t always realize how vitally important cash flow management and cash flow consulting really are.

A breakthrough in the form of a trusted advisor

Because they’re busy getting their businesses off the ground, concepts like working capital or debt-to-equity ratio aren’t always top of mind for business owners. While everyone wants to avoid a cash flow crisis, no one is building a damn or even watching the water to see if there’s impending doom.

“Alex is a bootstrapper. He’d put a ton of sweat equity into his business. He’s also an amazing marketer and the Groove blog is one of the best SaaS startup blogs I’ve ever read. But, he wasn’t an accountant and there’s nothing wrong with that.” says Bird.

cash flow story Alex Turnbull Groove Quote

Baby steps…

Once Bird and Turnbull discussed Groove’s needs and goals, Lucid got things rolling by creating a one-year budget and, in time, a three-year budget.

In conjunction with the long-term forecasts, Bird and Turnbull meet monthly to go over Groove’s financials. A typical agenda, looks a little something like this, with reviews of:

  • Previous action items
  • Overall performance
  • Trends
  • Variances
  • Projections
  • Staffing

Grown-up questions

By answering questions, like the ones below, Lucid helps Groove make more precise, data-driven decisions.

  • How quickly do you want to reach this goal? (“Now” is an acceptable answer. The question after that is, “Is this realistic?”)
  • What resources do you have right now — and what will you have in a few months?
  • What level of cash in the bank are you comfortable with?
  • How is the business performing compared to this time last year?
  • What options are available if the detestable Mr. Murphy and his famous law make an appearance?

Big picture thinking

“The awesome part of doing this is that we were able to help Groove manage their cash flow so efficiently, they could hire as quickly as needed to get the next update up as quickly as possible,” says Bird, genuinely excited about the results. (There’s really something to be said about having a passion for what you do.)

Turnbull concludes, “I’ll admit. I approached asking for help with cash flow and financial management with about as much enthusiasm as dental work. Thankfully, I met the right team. Now, when Nick gets me to open my mouth, it’s always for the greater good of my business. The only pain is a few really bad jokes now and then.”

“In all seriousness, the process has been transformative. There’s truth to the adage that says it’s better to work smarter than harder. I sleep better at night knowing there are no financial monsters hiding in my closet.”

Real-life cash flow stories matter

At PayPie, we believe that businesses should be empowered with the best tools to give them insights into their cash flow and manage their overall financial health. It’s also why we offer our cash flow forecasting and risk scoring free of charge.

Whether it’s the businesses themselves or the accountants and bookkeepers who serve them, we make it easy to look at your finances, without looking away in frustration.

Want your cash flow story to be told? Tell us here. We’re looking for real-world cash flow management and funding stories from businesses and the professionals who advise them. 

Thank you

In closing, we’d like to personally thank Lucid and Groove for sharing their cash flow consulting story. Their experience truly shows how an openness from both sides yields a much greater good.

Bonus content:
The untold stories of Nick Bird and Alex Turnbull

When everyone has their professional hats on, it’s easy to forget the human side of what we do. Here’s a little about Nick Bird that most people may not know: He’s one of seven children. He lived in Brazil and speaks Portuguese and is a single father to two children.

When Alex Turnbull isn’t building startups, he’s probably on a surfboard somewhere along the coast of Rhode Island. Alex and his wife have a dog named Honey Badger. There’s no word on whether or not the pup can surf.

PayPie currently integrates with QuickBooks Online. Additional integrations are coming soon.

This story is being shared on an informational basis only. Every accounting firm and business has their own unique needs. Be your own success story by taking the time to find the right fit.

Image via Pexels.