CPAs think their important job is to complete and file clients’ taxes during tax season.
If you’re a CPA or bookkeeper, the most important job is to help your clients build profitability, cash flow and terminal value.
Most small businesses never get there. They sell a new client, do some work, get paid for it then they panic until the cycle can repeat.
Growing a loyal client base will drive growing profits, cash flow.
Three things are holding them back:
- DIY bookkeeping is a disaster.
- Shame; business owner’s lack of understanding.
- CPAs blindness to the biggest opportunity ever.
DIY bookkeeping is a disaster. According to an Intuit Company survey in 2015, 87% of business owners are doing their own books and half claim financial illiteracy.
You’ve seen all the problems:
- Double accounting of revenues
- Accounting on a cash and not accrual basis
- Expenses are allocated to the wrong budget lines so gross margins are overstated, especially with service businesses.
- No monthly reconciliation
Shame. I used to think it was fear of the numbers, but it’s not. It’s shame, which is a far more powerful de-motivator. Business owners are too ashamed to tell you that when you use words like “gross margin” or “working capital,” you might as well be speaking Urdu.
CPA blindness. That’s not a typo. The whole industry does an amazing job of keeping their client’s from getting audited, but a terrible job of preparing them for the future. “Clients need to pay me!” you say. They will if they understand the return on investment for their business.
The first step is for your client to learn how to read their financial dashboard; their Net Income Statement, Cash Flow Statement and Balance Sheet- what they are, how they work and how to improve them.
My book Accounting for the Numberphobic; A Survival Guide for Small Business Owners takes them through it step by step. It won Best Business Book from Small Business Trends for 2015.
Illustrated by Disney artist Ron Bucalo, it’s the only book on accounting that will make you laugh. It is designed to break through the shame and phobia of numbers. It will make your job a whole lot easier.
Your real job is to educate your clients. Numberphobic will help you do that.
Once you speak the same language, now you can get to step two; fix the books.