Why cashflow advisory is your firm’s biggest opportunity

It’s no secret that cashflow is crucial to every business. Cash is a business’ lifeblood, its driving force and the key to its survival. Get it right, and a business will thrive. Get it wrong, and it can be fatal.

The state of a business’ cashflow doesn’t just shape its financial performance, it’s a hugely emotive issue too. Cashflow issues extend well beyond the workplace, impacting business owners’ well-being and keeping two-thirds of them up at night with worry.

By honing in on their clients’ cashflow, accountants can demonstrate true consultative value. But it’s not always easy – clients often wait until a moment of desperation to pick up the phone to their accountant, by which point problems can be deeply entrenched and solutions more expensive to implement.

The tell-tale signs of cashflow distress will be all too familiar. Countless business owners grapple with making payroll, paying rent and finding the money for tax bills. They struggle to overcome universal issues like overtrading, disorganised books and late payments. Far too many find themselves with damaged supplier relationships, lost customers and orders left unfulfilled.

The role of the accountant

Yet when it comes to their finances, business owners often struggle to see the wood for the trees. Accountants, on the other hand, can bring the numbers to life and provide the advice to lift a client out of a cashflow crisis. Equipped with the skills to diagnose issues and prescribe solutions, accounting professionals can offer a vital lifeline.

Cashflow-related services present a huge commercial opportunity for accounting firms here, especially in an age when 42% of clients expect their accountant to provide business advice.

But cashflow support isn’t just for those on the edge of disaster, it’s essential for flourishing businesses too. Cashflow management goes hand in hand with forward planning, and can be instrumental as a company experiences success, invests in new assets and sets up shop in new locations.

Whether a business owner is lacking in financial literacy, floundering in dire cash straits or enjoying growth, their accountant has a huge part to play in helping them manage their cash.

Leveraging emerging technology

There’s a bigger picture to consider too. As the accounting industry continues to shift from pure compliance to more valuable business advisory services, technology is transforming how businesses and their advisors approach cashflow management.

With the combination of cloud accounting software and the emergence of data-driven technologies such as artificial intelligence (AI), automation is able to pick up a lot of the heavy lifting of traditional cashflow forecasting services.

The days of building a cashflow forecast manually, using theoretical, time-consuming and expensive methods are fast becoming a thing of the past. Instead of taking hours, an accurate baseline forecast can now be generated in minutes, with the help of AI.

Seamless access to financial data

What’s more, new initiatives like Open Banking make it easier for SMEs to get access to their transaction data, create accounts and access new financial products.

Overall, access to financial data is becoming increasingly seamless. And as more accurate, up-to-date data becomes available, the support that automation can provide will become even more sophisticated.

Ultimately, cashflow goes back to clients’ needs – and with only 52% of UK small businesses cashflow positive at any given time, it’s abundantly clear a new solution is required.

With a range of new tools in their arsenal, business advisors are now empowered to monitor cash in a smarter, more preemptive way. The result? The capacity to not only provide better advice, but also kick-start conversations around additional services like credit control and business finance.