Steven Mugglestone

The more I learn, the less I know

Finally, a relevant business audit that helps a business and owner survive and prosper:

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Audits are sometimes considered to be nothing more than a signature on carefully worded statement, which may or may not mean the accounts are seen to be true and fair. McGregors Corporate, an Independent Entrepreneurial Firm of Chartered Accountants and Business Advisers, based in the Midlands are trying to address this negative and have developed and launched a business audit service, which can be adopted either as part of their normal audit service or can be taken up by non-audit businesses wishing to review their business in order to grow.

The innovative and very pro-active service has been developed from the approach that larger businesses’ finance directors would adopt to seek to manage, control and grow an organisation.  It has also been developed by a team of finance and business professionals with relevant and real business experience, rather than from an accountant or auditor.  McGregors see it as a valuable tool that will seek to differentiate them from other accountancy businesses and allow them to compete with the national firms.

Either as part of an audit or as a two day review of a business, the approach and report seeks to cover the following areas of practical business and finance advice for growing SMEs:

The Personal Position and Future

As part of the review, the personal position of the business owners are put into context as a personal balance sheet of assets and liabilities and after understanding and discussing future aspirations, a relevant plan of protection, wealth management and growth is proposed, with a keen eye also kept on family matters and wealth as well as either succession or future exit and sale issues for any business.

Seeking relevant business support

As well as ensuring the relevant financial statements are compliant with laws and financial reporting standards, a review and plan of all tax and financial compliance will suggest efficient ways to ensure that neither filing deadlines are missed, but also that financial statements give the right message to all stakeholders, including shareholders, bankers and finance companies, customers and suppliers.  In a world that is allowing larger businesses to avoid the necessity of a formal audit, the financial statements are still the most publicly available and used document that a business provides about itself and who they are drawn up and what they include and say is still very relevant to the success of the business.

A review and suggestions of even the most basic of tax plans will provide valuable year on year tax planning advice, which will provide significant savings to any business.  This will ensure that you address all relevant tax releifs available to a business including pension contributions, R&D tax relief, use of limited liability partnerships for growth as well use of business cars, to note a few key savings.

A review of either other compliance issues may suggest outsourcing of HR, health and safety and legal areas would mean that the business can ensure that it complies and deals with all relevant laws, at a manageable cost.  Without this, the business may be facing significant risks that may prove to be too costly for the business to deal with, if left not dealt with.

A basic review of terms of business, contracts and credit control procedures may bring to light a number of issues, that again may prove costly to a business.  Positive, but firm credit control processes and documentation will improve cash flow, which is the life blood to all businesses.

Relevant and real improvements to operations

Sometimes a business owner cannot see the wood from the trees as they are entrenched into working in rather than on the business.  An independent view and suggestion of some relevant controls which provides controlled delegation, will free up key individuals to concentrate on what they do best.  It is often noted in the press that police need to be freed up to deal with crime directly and not get sucked into administration.  The same issues arise in businesses as well.

Does your financial reporting provide relevant information, in order to manage and grow your business?  With relevant key performance indicators and summary information of what matters, this can be achieved.  Benchmarking tools are also available to help a business understand what areas need to be addressed, working on improvement on poorer performing areas while maintaining what is good.

Form benchmarking to a relevant tendering of new suppliers, profit improvement can be started and maintained.  Many businesses do not choose with most cost effective supplier as they never spent time understanding their usage of the supply, both products and timing issues, and so selected the best headline prices.

Increased debtors, increased stock and other working capital areas mean reduction in cash and cash flow.  With relevant and firm credit procedures and understanding of stock and delivery requirements, this can be improved providing much need cash and improved cash flow to a business.

Where is it all going?

Businesses do have a strategy, but some forget and get caught up in just surviving.  An opportunity to stand back and consider what the end game is, will reveal issues on current and future investments in capital and people.  As part of this longer term tax planning can be considered, again utilising limited liability partnerships for growth and seeking the sue pension scheme routes for property and major capital expenditure.

After tackling the day to day risk issues arising from employment, health safety and other compliance areas, businesses need to look at other risk areas around what they do and supply and look to adopt appropriate plans to control and mitigate those risks.  In the extreme many businesses have failed following the aftermath of a major problem or disaster rather than the issue alone and this needs managing.

What is the timetable for all of the strategic activity?  A little understanding of this will have major implications as to the development of the business, its capital expenditure and its funding.  These areas should be appropriately considered and a third party view will provide some light and observations on this and provide some solutions as well.  Funding issues can again be raised and addressed, with appropriate funding obtained for relevant areas over appropriate timescales.

Finally either succession or exit issues need to be considered and managed appropriately.  Succession requires appropriate training, experience and hand-over and exit also required appropriate consideration (How to maximise the value of your business, the good, the bad and the downright ugly).  These areas need time and consideration and many of the issues will ensure that the business will improve anyway, irrespective of any future succession or sale.

The key points about a relevant business audit is that it seeks to put a business into context of what issues and improvements can be achieved and following only it provides goal posts to that improvement and achievement.  Some observers have openly questioned the benefits of an audit, other than a signature at the end of a carefully worded audit report.   McGregors have provided a very positive, real and pro-active answer that will seek to add real help and support to SME businesses in order for them to survive and prosper.

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Developing business people

T: 0845 519 5659                T: 0121 236 3317      T: 0115 9415193

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.


Written by Steven Mugglestone

October 9, 2012 at 9:01 am

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