Freeing up cash flow is a priority for many small business owners, especially when business isn’t quite booming. On one hand, it takes creativity and resourcefulness to do more with less. Then again, it’s risky to focus on the dollar amount saved today instead of considering the long-term consequences. Ann Irons, a CPA in Bellingham, MA, says that several of her clients have tried a similar approach by trying to tackle accounting and bookkeeping services without professional help, hoping to save money. Before you decide to go it alone, ask yourself whether any of these scenarios sound familiar.

Lessons Learned the Hard Way

Over the past three months, Martin’s landscaping company has been so busy that they’ve actually had to turn clients away. He applies for a loan to fund an expansion, which will require investments in equipment, marketing, and workforce. Demand is high and the venture is sure to be profitable, so Martin is dumbfounded when several lenders reject his application.

Ann says: This is a classic example of a business owner whose accounting practices stunt growth. Intense competition for small business loans works in lenders’ favor, allowing them to approve only those applicants whose businesses pose little or no risk of defaulting. If you can’t present a prospective lender with solid evidence to support your expansion plans, your odds of securing a loan are practically nonexistent. Working with a CPA ensures that you have a clear understanding of your business and its finances in the past, present, and future. You must be able to provide details about revenue, market size, accounts payable and receivable, growth, and sales forecasts.

Daniel, a contractor, allows his customers to make monthly payments on remodeling projects that cost $1,000 or more; anything less must be paid upon completion of the work. As his available cash on hand dwindles each month, he incorrectly concludes that his spending must be the problem, then makes drastic cuts. Actually, cash inflows are to blame. Without a system in place for tracking and collecting accounts receivable, he has no idea which customers have made monthly payments and which have not.

Ann Says: Extending credit to customers makes your services more accessible, but it’s somewhat risky. If you don’t send out invoices and establish a collections policy, you aren’t likely to receive 100% of your accounts receivable. This isn’t to say that all customers are dishonest. Many just forget to make payments unless they receive a reminder. Outsourcing your accounts receivable allows you to identify late and missed payments.

Restaurateur Amanda recently hired several chefs and waiters to work at her bistro, which she hopes to open within the next few months. She needs to train her new employees and have them added to the payroll, and she worries that she will not have everything in place by the time of the planned opening date. Amanda wishes she had more time to spend working with her staff, understanding that customer service can make or break her business.

Ann says: Your business is your life, so it’s understandable that you want to personally oversee every aspect of operations. Unfortunately, this isn’t always feasible. Outsourced payroll functions, let you tend to those areas that require your immediate attention, such as training, marketing, and business development. A CPA must undergo rigorous testing and continuing education to maintain certification, so you can feel confident knowing that your payroll is in order.

Can you do it all yourself? Maybe. Should you? Probably not. To learn more about how a certified public accountant in Bellingham, MA benefits your business, or to request a meeting with Ann Irons, CPA, LLC, contact our office at (508) 966-0700. We provide accounting, bookkeeping, and tax preparation for businesses and individuals in Woonsocket, Bellingham, Milford, Medway, Franklin, and the surrounding areas.