Finance March 16, 2010 Last updated September 18th, 2018 1,268 Reads share

This lent: repent your messing with accounts and get sorted

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There is a lot to be said for an owner manager who has the courage of conviction of setting up their own business. A lot of business owners will describe the initial sense of excitement as they work on implementing their usually long held dream of working for themselves.

As the potential financial rewards accrue to the owner the long hours that may be required don’t deter. Quite quickly it can become a non-stop whirlwind where you are trying to generate sales, meet new potential customers, write proposals, deliver products or a service and issue invoices. And let’s not forget – get paid for your endeavours.

You will definitely be busy and have a feel good factor from that sense of importance as you make executive decisions and sort out problems all in the name of your business. At the end of each day and each month you will testify on the hours that you have put in and how busy you have been.

However how have you actually performed in terms of earnings? For all the running and racing has it been worth it and have you actually made any money? Are you better off now than when you were on PAYE?  That’s where your accounts come in. Accounts show your results in black and white in a cold, unemotional way.

Benefits for a non-accountant owner in understanding your accounts:

  • Better and quicker decisions can be made in the operation of the business
  • You know which product or service is making you money
  • You can make more informed decisions when it comes to doing deals
  • Operating with certainty as to whether you are getting close to your goals
  • Confident and professional approach should permeate your business
  • You will have better cash management
  • You are not operating in a haze of delusion
  • You don’t look like an imbecile in front of your bank manager a la Dragons Den

Problems where the owner manager doesn’t understand accounts so well can lead to:

  • Poor business decisions made on the hoof
  • Operating blind on no more then a wing and a prayer
  • Loss making products or services  not identified in time
  • Business will appear to staff and customers unprofessional
  • Cashflow problems

Unnecessary stress which feeds into performance of business and in some cases personal relationships which can lead into a black vortex of personal pain and misery (in some cases)

The Beauty of Accounts

Accounts should represent your intuitive expectation of the performance of the business. If they do that’s great as they show that the owner manger understands his income and associated costs.

If they don’t, then the accounts once understood can show the owner manager the true picture and where the discrepancy in understanding arises. If an owner expected a larger profit then that shown or just a profit instead of the actual loss the expenses the accounts show may not have been fully taken into account when it came to pricing product.

If the owner waits a full year before becoming aware of this they may be in a very serious negative situation whereas the quicker they become aware of this and make the appropriate actions they can change things for the better.

With the required skills however they can operate in the confidence and knowledge that the figures are adding up which gives certainty to decision making process and at least a semblance of structure to the business which will remove one less worry. Time to get sorted.

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Patrick Devaney

Patrick Devaney

Patrick is a qualified Chartered Accountant and a qualified Financial Advisor, he is also a member of the Institute of Taxation Ireland.

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