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Cashflow forecasting: The Fluidly way

‘Advisory’ is a controversial word in accountancy. But according to cashflow management specialist Fluidly, this friction is mostly due to lack of information rather than outright hostility.

2nd Sep 2019
Commercial Production Editor AccountingWEB.co.uk
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Accountants continue to question the semantic differences between advisory and compliance work, but market research consistently highlights the extent to which business clients are looking for advice. 

According to Sage’s 2018 Practice of Now report, 42% of clients expect their accountant to provide business advice. This is nothing new for many practitioners - a similar percentage of clients voiced the same view five years previously in an IRIS/AccountingWEB study, with a smaller proportion (19%) saying that their accountants provided useful support. 

Anticipating problems and steering clients away from potential problems is a surefire way for practitioners to maintain positive, long-term relationships with their clients. As AccountingWEB member ireallyshouldknowthisbut explained: “I always say that compliance is what clients are willing to pay for, but it’s advice they come to you for and why they stick around.”

However, many other accountants echo the concerns voiced by FirstTab about what advisory services entail and how to move from a “compliance factory approach” to start offering other services.

Identifying SMEs’ concerns

“Advisory services are often spoken about, but it’s not always clear what we mean,” Fluidly said in a recent guide. The company recommends identifying your clients’ pain points as a first step in order to decide what type of guidance you should provide them with.

In its guide, Fluidly suggests looking at cashflow first. With small businesses owed a collective bill of £6.7bn according to Bacs Payment Schemes, this is one of the most pressing issues facing small businesses in the UK.

The idea is supported by QuickBook’s report The State of Small Business Cash Flow, which showed that 61% of small businesses struggle with cashflow and nearly a third (32%) have been unable to pay vendors, loans and even themselves and their employees.

The role of technology

As business advisor and AccountingWEB contributor Della Hudson suggested, new technology can make a big difference in the way practitioners can help their clients: “Business advice has always been around but now we have new tools.

“Some use them to do the compliance a bit more cheaply/efficiently, we used them to spend time looking forwards, sideways and strategically at the business itself which will make those numbers change.”

Cloud accounting is making client data available at all times. Plugging in reporting and forecasting applications from the likes of Fathom, Float, Fluidly, Futrli and Spotlight Reporting can give accountants even more detailed insights into clients’ payments and debtors and cashflow situations.

Fluidly suggested that accountants who want to start offering cashflow advisory services to implement the following steps.

  • Step 1: Use a data capture app - Programs and smartphone apps like Receipt Bank and AutoEntry that standardise data capture and keep transaction records up to date will give accountants the information they need to make accurate forecasts.
     
  • Step 2: Understand the data - If you are going to offer cashflow advisory services, you need to understand which clients are most in need. This means getting to know the rhythm of the client’s business and proactively monitoring their numbers to pick up signs of trouble, for instance in rising debtor ledgers, negative bank balance or unbudgeted loan repayments.
     
  • Step 3: Talk to clients - When issues arise, the adviser needs to raise the topic during regular conversations with clients. “It’s difficult to know how to introduce the topic when your normal interactions with a client are focused around compliance,” according to Fluidly. “By starting a conversation based on data about your client’s cashflow, you offer value and insight upfront. The conversation is no longer a sales conversation, and you move into the advisory space.”

The ultimate guide to cashflow forecasting advisory is available for download from Fluidly's resource page on AccountingWEB. 

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