From Historian to Strategic Adviser: Why the Best Accountants Help Shape the Future

For generations, accountancy has largely been about looking backwards.

• What happened last year?

• What did the business earn?

• What does it owe?

• How much tax is due?

Those questions still matter, good financial records and accurate accounts are the foundation of any well-run business, but they only tell you where you have been

The real value of an accountant comes when they can use that information to help you decide where you are going next.

As futurist Daniel Burrus puts it, there is a difference between looking at the past and using what you know to shape the future. In accountancy, that means moving from simply reporting what has happened to helping business owners understand what could happen and what they can do about it.

At Forth Accountancy we believe that good accounts explain yesterday whereas great advisers, help you build tomorrow.

From reporting to decision-making

The financial information sitting in your accounts contains much more than a figure for profit or a tax calculation. It can help you understand how your business works, where the opportunities are, where the risks sit and what might happen if you make a particular decision.

That is where strategic accountancy comes in. At Forth Accountancy, we work with business owners to turn financial information into something they can actually use. For example, rather than simply reporting on cashflow, we have helped numerous clients build robust cashflow forecasts to support applications for funding and grant finance.

Rather than waiting to see what happens after a major decision, we have modelled different scenarios so business owners can understand the potential financial consequences before committing. And rather than looking at tax as something that simply needs to be calculated at the end of the year, we have helped businesses restructure for greater long-term tax efficiency.

Looking beyond the numbers

Strategic advice isn't about predicting the future perfectly, no one can do that. It is about being better prepared for the possibilities ahead and that might mean asking:

• What happens to cashflow if sales increase by 20%?

• Can the business afford to take on another member of staff?

• What would happen if costs increased?

• Is the current pricing model generating enough profit?

• What are the tax implications of restructuring?

• Is the business financially ready for an owner's retirement?

• What would happen if one of the owners wanted to leave?

• Where could profitability be improved?

• How much money does the business actually need to achieve its next stage of growth?

These aren't questions that can be answered by looking solely at last year's accounts. They require forward thinking, financial modelling and, importantly, a conversation about the business itself.

Real-world strategic advice

This is already a big part of the work we do with our clients. We've supported and continue to support businesses with:

• Succession planning, helping owners think ahead about how the business can transition successfully rather than leaving those decisions until they become urgent.

• Reviewing pricing and profitability, looking beyond turnover to understand whether the business is actually making enough money from the work it does.

• Introducing management reporting that gives business owners regular, useful financial information rather than making them wait until their year-end accounts to understand how things are going.

• Building cashflow forecasts to help businesses understand their financial position and demonstrate their viability when seeking funding or grant finance.

• Using scenario modelling to help clients explore different options before making significant business decisions.

In each case, the numbers are only the starting point. The real question is: 

what are you going to do with them?

Your accountant should understand your business

Strategic accountancy also requires something that can't be found in a spreadsheet...

understanding.

• Understanding how the business makes money.

• Understanding the challenges the owner is facing.

• Understanding their ambitions.

• Understanding what keeps them awake at night and what they want their business to look like in five or ten years.

Because the same set of financial figures could lead two businesses to completely different decisions.

A business considering expansion needs different advice from one preparing for succession. A business looking for funding has different priorities from one trying to improve profitability. And a business owner approaching retirement needs to think about their finances differently from someone in the early stages of building their company

That is why good advice starts with questions, not answers.

The future starts with the numbers you have today

Looking backwards will always be an important part of accountancy.

Your accounts provide the evidence, they show trends, highlight changes and give you a reliable financial picture of the business but they shouldn't be the end of the conversation. They should be the starting point.

When financial information is combined with forward planning, scenario modelling and commercial understanding, it becomes a powerful decision-making tool and sometimes, the most valuable thing your accountant can do isn't tell you what happened it's help you understand what could happen next.

At Forth Accountancy, we believe accountancy should be about more than producing accurate accounts. It should give business owners the clarity and confidence to make informed decisions about the future.

If you're facing a significant business decision, don't wait until the numbers are in the accounts to talk to your accountant. Talk to them before you make the decision.

A conversation early enough can help you understand the options, the financial implications and the most appropriate approach before you've committed to a particular path.