Business Health Check Report
Do you need one and who is best placed to do it for you?
The Purpose of a Health Check Report, otherwise known as ‘Forward Planning’ or ‘Road Map’ Report is to ascertain the current fiscal position of your company, its current capacity for projects and production as well as providing options to improve processes and systems, to increase capacity and profitability for the company as well as fulfilling the Directors/Shareholders short term and long term plans.
Since the Lockdowns and other upheavals of the last twelve months many business owners have taken a step back from the day-to-day running of their businesses and asked the questions:-
· What is the purpose of what we are doing?
· Is the company doing what it should be in terms of providing goods or services?
· Should we diversify?
. If so How?
· Also, just as importantly the business owners are asking the question, ‘am I getting what I want from my business?’
The answers to these questions is not always financial, sometime the business can be making plenty of profit, but might not be providing the services it should be, and/or the employees might be unhappy for various reasons, resulting in staff turnover and low morale within the workforce. Sometimes the owner is spending too many hours in their office, when their time is better spent elsewhere and sometimes, the figures just don’t add up to expectations!
Why Your accountant Should be best placed to produce your
BUSINESS HEALTH CHECK REPORT
Whatever the questions being asked, it is often easier for an independent analyst to review the business as a whole to be able to help the business owner with these questions.
In the past the Auditor would do some of this work as part of their business due diligence and a significant part of their Auditors report to the officers and shareholders would be on the systems and processes within the business and where improvements could be made.
Now that the Audit thresholds have been lifted, and because the Audit work involved is so intense as to be restrictive to many businesses, less attention is being paid to the non financial aspects of the year end results reviewed by your accountant each year. As a result many smaller businesses are saving money on their accounts and Audit costs, but losing out on the expertise available to them which could save them much more in processing, software and staffing costs in the long run.
Less Companies are Having Audits, and not getting the feedback they may need.
This does not need to be the case, and you don’t need an Audit to review your business.
A few years ago, I was sent to a new retail client who had repeatedly been disappointed by their financial results each year, despite spending thousands on stock control software and Webstore software. The results at the year end never matched expectations.
On my first day at the clients office, I was told the accounts manager had had a stroke and would be out of work for sometime, the initial task was to pick up what needed doing urgently and to try to carry on the payroll, bookkeeping and credit control processes and to get them up to date.
Next I had to work out where the figures were going wrong. By doing the processes myself, with my knowledge I could see where the figures for sales, stock and purchases started to depart from expectations, I was effectively ‘following through’ the systems by literally doing them myself, and I was able to see in a short space of time which reports were not making sense.
After asking the pertinent questions, from the Directors, staff and software providers, I was able to prove to where the problem was, the answer to this riddle was that the stock control software was not being updated by the Webstore software when online sales were made. Because of this the stock figures were overstated and the profit margin also overstated for sales against purchases. This was only discovered as at the year end when a physical stock take was taken at each depot.
With this information the Directors were able to go back to the software companies and get them to fix the issues, as well as get a large refund on the software development costs due to the amount of disruption caused.
Not all business problems are caused by software issues, but the above example does show that the right use of an experts time can save an awful lot of costs and issues in the long run.
The reason why your accountant, or ‘Business Health Consultant’ is probably best to help in this area is simple, our experience and training in looking for issues in companies processes and figures, also places us in the best position to help resolve them when we find them.
In the above example, the answer was to go back to the software company, but other cases I have handled involved a change in processes, training someone to do things a little differently and saving time, or pointing out where errors are being made.
Hopefully My Clients All Sleep Well At Night!
Whatever you think your issue may be, it is always worth talking to an expert, a friend of mine deals with Insolvency, and he says often he will have a call which will resolve the clients issue, without them having to drastically change their business, or lose it, but more importantly they sleep better at night.
Hopefully my clients all sleep well at night because they know they have me at the end of the phone.
Ella M Doherty FCCA
