A modern, cloud-based accountant is no longer just a number cruncher: they’re a business adviser and technology specialist who can add a whole lot more value for your construction business than just dealing with tax returns and accounts.
So if your technology business wants to get real value for money from its accountant, what are the important questions to be asking?
We’ve highlighted 10 core questions to ask your adviser, all of which will help you build a stronger, more productive and more insightful relationship with your accountant and their team.
1. How do I improve cash flow?
Without the right balance of money coming in and cash going out, you don’t have the funds to take on new jobs or expand the business – and that can really hold back your growth plans.
So, sit down with your accountant and talk them through where the main revenue streams come from and where your key overheads and costs are incurred. With that information, and a proper understanding of your business goals, your accountant can start looking for the opportunities to improve the overall cash flow situation. (We’ll give you some fundamental tips on improving cash flow in our next blog).
2. How do I stay on top of record keeping and spending?
When you’re working across a number of different sites, projects and locations it can be tricky to maintain record keeping and paperwork in any kind of sensible order. And when your records aren’t organised and systematic, neither are your accounts and financial reporting.
Your accountant will help you look at your record-keeping procedures and find a way to streamline the whole process of recording your income and spending. In 2017, the easiest way to do this is by using a cloud accounting platform, such as Xero online accounting and pairing it with a smart-scanning app like Receipt Bank.
With a smart-scanning app on your phone, bookkeeping is as easy as snapping the receipts and letting the technology do the data-entry work – with the additional bonus that transactions are automatically pulled into your accounts and cost reporting.
3. Do I need to register for VAT?
As a business, you’ll be paying value-added tax (VAT) at 20% on most of your purchases. But, as a construction business, there are elements of your building costs and expenses that can be either zero-rated (where you pay no VAT) or can be reclaimed as legitimate business costs.
Once your turnover exceeds £83,000 in the year, you must register for VAT purposes with HMRC. But there can be occasions where registering earlier makes sense for construction businesses which are trading mainly with other businesses.
A VAT specialist will help you understand which business costs are (and aren’t) VAT chargeable and where there are opportunities to reclaim the VAT element of your business costs and expenses.
4. Can I reduce my tax costs?
Business taxes will make up a large part of your tax spending over the course of the year. So looking for ways to make your construction business more tax-efficient will have a significant effect on your cash flow and your year-end profits.
A tax accountant will work with you to understand the business taxes you’re liable for and to then draw up a tax plan for the year that minimises the tax you spend and maximises the reliefs and exemptions you can use to reduce your tax bill.
5. How do I get paid on time?
With cash flow being such a critical area for construction, it’s important to make sure your invoices are paid on time and that your income streams are stable.
If you’ve made the switch to cloud accounting, ask your accountant to train you up on Xero’s online invoicing function. With online invoicing, your bills are sent directly to customers by email, so there’s no need for hard-copy paper invoices, no delays with invoices getting lost in the post and no postage costs to incur. Your bill just goes straight to the customer’s accounts payable team, with options to pay you online through solutions such as PayPal, GoCardless or Stripe etc.
6. How do I improve my construction project management?
Keeping in control of multiple building projects, in multiple locations, with a changing team of workers and subcontractors can be extremely difficult. But if you’re going to get the job done well, you need accurate and efficient project management in place.
Talk to your accountant about the kinds of issues you face when managing workflows and project deliverables, and work with them to come up with clearer, more systematic processes to keep you on track.
There are a number of construction/specific project management tools that will integrate seamlessly with your main Xero system. Tools like ServiceM8, Tradify and SimPRO all offer clear, helpful apps that make your project management easier and more joined up with the other processes in the business.
7. How do I make my quotes more accurate?
When you’re working out estimates and quotes for the next job, it can be tricky to get your margins, costs and cash-flow forecasts spot on.
Working with an experienced accountant, and making use of the forecasting and quotation tools within the Xero ecosystem, will help you to improve your accuracy and deliver more precise quotes.
That keeps the client happy, reduces the chances of job going over budget and helps you to increase your margin and improve cash flow.
8. How do I manage my payroll efficiently?
With an ever-changing mix of employees, workers and subcontractors, running a construction business payroll becomes highly complex – and potentially confusing.
Xero includes its own payroll function as standard, so talk to your accountant about setting up your payroll run in Xero and reducing the complexity of the task. Opting to outsource your payroll service means you spend your time running the business and can let the payroll experts take care of your salaries, wages, CIS and income tax.
9. How do I improve my financial management?
The better control you have over your finances, the easier it is to make informed decisions about the future of the business.
Talk to your accountant and see how a Xero-based online accounting system can improve the oversight and transparency of your technology business finances. With reporting and forecasting tools, like Futrli, integrated with Xero, you can track, monitor and review your performance across the whole business – and that’s good for revenues, good for cash flow and good for the growth of the company.
Get in touch with us to arrange an informal chat with a Square Mile adviser – we’d be happy to answer your questions and help you get more from your technology business.
In our next blog, we’ll be looking at the key ways to improve cash flow in your technology business.