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How an accountant can help manage your debt

A qualified accountant can do more than handle your books. They could improve your business in several ways.

There are a number of ways in which a qualified accountant can help make your business more efficient, especially when it comes to managing your debt.

Of course, no two businesses are alike, and the information we provide here is only general guidance. If you’re struggling to manage your debts, it’s best to seek professional advice for your particular business.

If you don’t feel comfortable with the financial side of your business and you don’t really understand it, don’t ignore it, get help. - Garry Mumford founder and managing director at specialist accountancy firm Insight Associates

It’s certainly worth taking the time to ask your accountant if they can offer guidance on the areas we discuss below, if you think it might benefit your business.

Or, you can seek advice from a reputable accountancy practice that’s specifically geared towards helping small businesses with issues such as debt.

Better managing your cash

While many small businesses tend to focus on profitability alone, they should keep in mind that cash is what keeps a business moving. A lack of profit won’t necessarily kill a business, but a lack of cash will.

An accountant can help you understand how cash moves in and out of your business (known as the cash flow cycle). “Understanding the cash cycle is vital to predicting the cash flow in your business, and how much cash you need to keep it running smoothly,” says Garry Mumford, managing director at Insight Associates.

By creating a cash flow forecast, an accountant can also help you understand what can delay your cash flow cycle and so prevent your business from being unable to repay its debts.

This should let you spot potential problems early and take action before they become severe.

Dealing with tax debts

If you’re finding it difficult to pay your business taxes, an accountant can help you put together a stronger case for a ‘Time to Pay’ arrangement with HMRC. This is when you work with HM Revenue & Customs (HMRC) to negotiate an affordable monthly payment plan.

If you need to approach HMRC to make one of these arrangements, Garry Mumford has some tips for how to do it.

  • Be prepared for HMRC to challenge you, especially if you’ve gone to them about this before.
  • Tell them the reason you can’t pay, and that you have a clear plan to get through this problem.
  • Tell them you’ve done the financial forecast and how much of your debt you can pay each month.
  • Before you jump into a Time to Pay arrangement, do your homework and be really confident that you’ll be able to meet the payments.

Controlling spending

An experienced accountant may be able to give you some pointers on how to keep your spending under control.

If they’re producing good management accounts for your business each month, they should be highlighting where you’re spending money, and asking probing questions about the reasons for such expenditure.

Good management accounts provide context – enough detail for you to really understand what’s going on, and help you make decisions. It’s management accounts that will give you a true picture of your business. - Garry Mumford

For example, if you find that your expenses are high, you might want to carry out an audit of your recent spending in this area and possibly impose stricter controls.

Ideally, you want to foster a culture where all staff pay close attention to what they spend.

Providing honest feedback

It’s easy to lose perspective when the business in which you’ve invested so much time and effort is having financial difficulties.

Whenever this happens, an experienced accountant should act as a candid friend who looks dispassionately at the business and gives you the hard facts. You need those facts if you’re to understand why your business is struggling to deal with its debt.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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Additional information

How to improve your cash flow cycle – YouTube video

Garry Mumford, managing director at specialist accountancy firm Insight Associates, has produced a video explaining the cash flow cycle in simple terms, and ways for small businesses to better manage the cash they have coming in and going out.

Watch now

Institute of Chartered Accountants in England and Wales – Business Advice Service (BAS)

This connects entrepreneurs, start-ups and small and medium-sized businesses with ICAEW-regulated accountancy firms that will provide a free initial consultation without obligation.

Learn more

Appoint someone to deal with HMRC on your behalf – GOV.UK

You can authorise someone else to deal with HM Revenue & Customs (HMRC) for you, such as an accountant, friend or relative. GOV.UK offers guidance if you want to do this.

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