3 Additional Areas to Consider Before Outsourcing Accounting
Posted by: Brookside Admin
Last week, we shared with you three areas to discuss with CPAs before outsourcing your accounting to their firm. If you missed that post, you can catch up here.
Here we have three additional areas to ask questions about before starting a new relationship with a third party accountant.
Assessing the value of the business
When you're working with an accountant, they should be intimately familiar with financial details of your business, including cash flow, revenue, and the value of your assets. That means they can use that knowledge to make an intelligent estimate of your business's fair market value. In addition to a knowledge of your books, an accountant will learn about your business and how you fit and compare to the rest of your industry. This knowledge not only helps to improve a value estimate, but also helps you to maximize areas of the business that will most benefit your value.
Identifying a break even point
Is your business making money, or losing money? That, of course, is a vital question that a business owner should be able to answer at any given time. To do that, you need to have a specific break even point, which your accountant can help you determine. Once a break even point is known, you'll know if you need to charge more for goods and services, and how many sales you'll need to cover costs. That knowledge is invaluable when determining budgets and forecasting for the year.
Creating cash flow projections
At all times, your business needs enough available cash to pay your bills and other expenses. To start, you'll need a cash flow projection, which can be tedious and complicated to formulate correctly. Thankfully, your accountant can handle this task for you. This projection will help guide your operations in order to avoid any shortfalls. It can also help to improve your accounts receivable department.
The absolute worst thing you can do when working with an accountant is to lie to them. It makes it impossible for them to help you, and can doom your business financially in the long run. Being completely honest and upfront with your CPA is the only way to receive the full benefits of working with them.
For help improving and managing your business's bottom line, contact us at Brown Kinion and Company at our offices in South Tulsa / Bixby, and Broken Arrow.