The cost of late accounts

When it comes to the cost of accounts, you probably focus on the expense of having them produced. However, there’s another cost: the cost of getting them late.

Speed matters. If you don’t get them promptly, they give you very out-of-date information to work with when they do limp in. Additionally, you miss out on benefits that can significantly impact you and your business.

Here are just five key benefits of receiving your accounts promptly.

1. You save tax – or at least pay the minimum tax necessary

You can’t work out your tax until you know your profit. And if you don’t know what your tax will be, you can’t look at how you can minimise your liability.

It’s not rocket science, but it is important. Because your tax bill is one of your biggest overheads, the sooner you know how much it will be, the better.

2. You can improve your results

You don’t know where you stand until you receive your financial results. And until you know where you stand, you can’t take action to ensure the coming year is better – not least because if you get your results late, there may only be a few months left in the ‘coming year’!

The sooner you have a clear picture, the sooner you can start taking targeted strategic action.

3. You have greater financial control

You will have drawn up financial projections and budgets, which might need to be revised once you get clarity on your situation. The sooner you can do that, the better.

Also, once you know what your tax bill will be after preparing your accounts, you can begin to plan your payments to minimise cash flow challenges when that tax falls due.

4. You can improve your net profits

If you receive your accounts promptly, you can start making decisions on essential numbers like pricing, gross margin and net profit.

If you have to wait until later in the year for them, you can waste months with less profitable performance.

5. You can make better decisions

It sounds obvious, but you can update your reports and projections once you have your accounts.

That matters because it means the information in your management accounts is more accurate, and you can make better-informed decisions with correct information.

Not just at year-end

Now, let’s add another layer: financial information should be updated throughout the year, not just once when the year-end accounts are delivered. There’s more to this than filing accounts to keep HMRC happy! Technology makes real-time accounting possible.

The benefits are huge: as a business owner, you can see projected profits and cash flow, and spot potential roadblocks sufficiently far ahead to be able to do something about them. You can adjust, pivot when needed, and see off threats before they take hold.

Up-to-date information can also help you to identify opportunities, spot things that are costing money and shut them down, or find out which services are higher profit, so sales activity is focused.

Your accountant should be an asset

When investing in accountancy services, you should get prompt, proactive information and advice, not just help to file accounts.

At Mullen Stoker, we pride ourselves on: Creating Time, Money and Headspace for Business Owners. Put us to the test – call and ask us how we would help you get on top of your numbers, and stay that way. Call now on 0191 374 0300

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