Cashflow versus Working Capital: The Importance Of Choosing The Right Accountant

Managing income and expenses is essential for the continuous growth and success of any business trading overseas or domestically. It is also equally important to hire a certified professional to do the job more efficiently.

Whether you are a small or medium enterprise (SME), or a growing company trading in multiple markets, accountancy services are important for protecting the financial integrity of the organization, especially when your business involves trading abroad.

Trade Finance Global spoke to Atkinsons Chartered Accountants in Brighton, on what to consider from a financial perspective when setting up, or planning for long term growth at your company.

Why is having the right accountant important?

Keeping a company up and running can be an arduous task, especially when the company is in growth phase, sourcing new business, growing in multiple markets, and hiring overseas to reach other markets. Whether you’re still starting up or aiming to attain stability within international trade, an accountant with expertise in this area is imperative for your business to provide a benchmark of both your past and current financial standing to adapt worldwide.

Trading globally might seem daunting, but with an export plan or strategy, can offer fruitful rewards. Skilful professionals helping you out and having a suitable expert is necessary to manage your company’s finances accordingly.

Hiring the right accountant reduces the risk of overseen expenses and dealings in the international market. An accountancy firm or team of accountants will be those who will be able to provide the correct information that is needed to make management decisions.

What services to accountants provide?

In general, an accountant is a professional who performs accounting functions such as bookkeeping, financial statement analysis and auditing. When opening or retaining a business in the global trade market, an accountant’s sound analysis regarding trade and taxation is mandatory to regulate international businesses by coordinating jurisdictions.

What’s the difference between working capital and cash flow?

One of the basic roles of accountants within a business is to identify the difference between working capital and cash flow. Many companies have been in a situation wherein they generate a significant amount of profit without sufficient cash. After review and analysis of your financial records, an accountant will be able to provide you a solution to balance out your cash flow and working capital.

Working capital refers to assets that can be turned into cash or liabilities that are due in less than a year. Cash flow, however, is the amount of cash the business generates within a specific time period.

Having one of the two insufficient can pose a big problem for the company as this may result in more payables or even bankruptcy.

To alleviate this, accountants can provide an informed management decision to help raise capital, depending on the situation of the company. Raising business finance, whether that’s debt or equity finance, can happen through trade finance, grants, crowdfunding, or commercial loans. Depending on the finances, one of the best solutions an accountant will offer, can be achieved through various ways such as grants, crowdfunding, trade finance, loans, asset finance, etc. This will enable you to balance out your capital income and liabilities that in turn would lead to a more stable company.

Tax and Accountants

When trading in international markets, tax is an important consideration for any business. Where the business operates, the structure of the company, and the holding companies can have implications on the bottom line and tax payable. In an international business setting, accountants play a big part when it comes to taxation and coordination with various jurisdictions.

How to choose the right accountant

Choosing the right accountant for your business has a long term effect and it can be just as important as having a business partner.

Here are some tips:

  • Interview several qualified candidates before you decide as you’ll be able to sift through and compare their skills and knowledge of your company and the field they practice in.
  • Do a thorough background check and contact their references, this will also ensure you that you’ve found a reputable and trustworthy prospective personnel after you have confirmed the information provided.
  • Hearing the work ethics and professionalism first-hand from previous clients and colleagues will enable you to have an insight as to how this person works.
  • Choose a practitioner with the right qualifications and relevant experience in your industry – a Certified Public Accountant or accountants in public practice with qualifications from the Institute of Chartered Accountants in England & Wales (ICAEW) and the Association of Chartered Certified Accountants (ACCA) are your best options as you are assured that they have gone through rigorous studies and extensive training and post-qualification practice to provide quality service.
  • Ask yourself: is the cost reasonable for the services offered? If not, negotiate. There is no set standard for the services accountants offer, so carefully compare your candidate’s fees with their expertise and skills. By then, you’ll be able to decide which one is best suited with your company’s needs.

Conclusion

The importance of choosing the right accountant for your business is unquestionable, especially if you have plans of or are maintaining trade overseas. The services provided by an efficient accountant will enable you to achieve financial growth and success in the global market.

Choosing the right candidate for the position is tasking but financially rewarding long term. An accountant is and should always be an asset, not a liability to your company.

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Summary
Cashflow versus Working Capital: The Importance Of Choosing The Right Accountant
Article Name
Cashflow versus Working Capital: The Importance Of Choosing The Right Accountant
Description
Managing income and expenses is essential for the continuous growth and success of any business trading overseas or domestically. It is also equally important to hire a certified professional to do the job more efficiently.
Author
Trade Finance Global