Seize the opportunity and help clients get ahead

Six ways accountants can help clients exploit opportunities

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Does the following resonate with you – ‘I believed that loans were bad, debt was bad, and as an accountant, it was not a route I'd encourage my clients to explore. I personally pay my total credit card balance off before the due date’?

If these views resonate with you, read on. As part of DIT International Trade Week, where ACCA supported DIT, ACCA together with our partner Capitalise looked at the current finance challenges. Glenn Collins, head of technical and strategic engagement, and Paul Surtees, CEO & co-founder of, discussed the current economic climate and the vital role of the ACCA professional accountant.

Good debt, bad debt and credit risk, and the steps businesses can take to de-risk the insular nature of trading just within the UK and seize global opportunities. Here are some insights from that session.

People look at debt as a bad thing.

And debt can be a bad thing. But debt through the right lens, through the right plan used to create a return on investment, is incredible because it establishes that leverage where you can increase annual growth rates.

Why are credit scores important for SMEs, particularly in today's marketplace?

Most people are familiar with their personal credit scores, but a smaller percentage of businesses take the time to check them.

A credit score is essential for accessing supplier credit. A high credit score enables you to borrow free money. For example, 30 days of credit is 30 days of free money. That's called internal capital.

If you go to the market and borrow money, they'll look first at your credit score. High street banks want to lend to businesses with high-quality credit scores. Lending money or raising capital outside the business is called external capital.

A healthy credit score enables a business to access free internal trade credit, thus lowering the overall cost of doing business and reducing the need for external working capital.

With the current economic climate, why is it so important to be future planning, and what should small businesses be considering?

One of the painful realities of today is that we don't have cheap money anymore. We don't have cheap goods from Asia or cheap energy from Russia. So, these are three fundamental drivers we've got to learn to live with. Ultimately, they will translate into a tougher trading environment, a more expensive cost of capital and, of course, increases in the cost of goods.

For businesses trading only within the country where they are based, their trading opportunities are limited, and their addressable market is small. However, for businesses planning to expand globally, their total addressable market becomes the world. This global opportunity provides an element of de-risking the insular nature of trading just within the UK.

Six ways accountants can support their clients and prepare them to seize opportunities.

1. Move data to the cloud

If you're not already in a world where your accounting, data, and key performance indicators (KPIs) are in the cloud, try and get it into that space. This enables businesses to see their KPIs in real-time, enabling you to plug other apps and providers in this space to understand the risks and opportunities in that space. This is fundamental.

2. Balance sheet discipline: know your numbers

Be disciplined with every cost. Make sure that you know your numbers. Now you're in the cloud, spend the money, get a good accountant, know your numbers, and understand your KPIs because it's the only way to be disciplined with your costs. It's the only way that you can understand where you're leaking money and where you can tighten the screws. So, get your defence before you go on the offence.

3. Clean up your debtor book

A key aspect of balance sheet discipline is cleaning up your debtor book. Make sure you're getting paid as fast as possible, don't let due invoices slip. If people aren't paying you and are not good customers, strip them out, or dispute it.

While the pandemic protected so many businesses from moratoriums and from insolvencies etc moving forward both your credit score and that of your customers will be important.

4. Business forecasts must include a plan A, B and C

Get your business plan up to date. And it's not just a single plan: it's a Plan A, a Plan B, and a Plan C. Stay nimble, as it will probably change every week, every month. One of the benefits of being in the cloud is exporting your forecast, playing with it, and putting it back in.

5. Understand your credit risk and your client's risk

Understanding your credit risk is important, as you need it for supply credit and lending limits. But one of the important things is if you're checking your client's credit risk, you're going to be cleaning up your debtor book; you're going to understand who's at risk, you're going to understand who can and can't pay you. Ultimately, that will allow you to ensure that you're the business that comes out stronger and survives in this environment, not those struggling businesses.

6.  Working capital is crucial; make it integral

Working capital is most likely a crucial component of your business, whether internal or external; make it integral, make it part of that conversation, either with your clients or with your accountant, whichever way it is, make sure you're having that.

Take advantage of the opportunity and turn defence into offence.

Over the next few months, ensure everything is tight and there's no leakage. Then, get yourself in a position to go on offence because it's what happens when we bounce; you need to be in a place where you can benefit. Although some businesses will naturally be well-positioned for a tight market, most businesses need an upward trajectory, and the support of an accounting professional to achieve that benefit.

Listen to Capitalise's panel session, 'Do I have the resource to trade?'

Go the extra mile and support your clients with Capitalise. As an ACCA member you can take advantage of free learning modules available to you as part of a partnership with Capitalise.