How to diversify from tax to management accounting
Doing breakeven analysis for SME clients could enable accountants to operate in management accounting, according to a finance professional.
Ahead of the free SME Bootcamp 2024, Accendo Financial partner and educator John Sgambelluri said the breakeven analysis is pivotal for every business owner, and urged accountants to master it.
“This is your enabler to go into management accounting. Many accountants want to get away from just doing tax. This is a massive chance for them to be able to do that,” Sgambelluri asserted.
“In business, every decision we make has a financial consequence, whether that’s pricing, purchasing, recruitment, or marketing campaigns. The breakeven analysis is an amazing tool for any business owner, and it puts the accountant front and centre.”
At the bootcamp in September, Sgambelluri will detail how accountants can master the breakeven analysis for their SME clients (with a focus on balancing price, volume, and costs), and share tips on how to become a trusted adviser by helping them make key business decisions.
The breakeven analysis specifies the minimum performance standard required from a business to break even on profit and loss, and how many sales a bsiness requires to cover any investments and costs.
“For example, if a business owner is applying for a loan to buy a commercial premises, they may not pay rent anymore, but they’ll need to make loan repayments, and pay rates, taxes, and fees. Breakeven will show them how many sales they need to make to cover all of it,” Sgambelluri said.
“If they want to recruit more employees, the breakeven calculator tells them how many sales and customers they need to pay wages.”
On top of this, while brokers drive the loan application process for SME clients, accountants provide the required documentation to help clients secure finance.
This includes financial statements and forward projections, interim accounts, business activity statements, budgets, and cashflow forecasts.
“SME clients can’t get a commercial loan without the accountant,” Sgambelluri said.
He recommended that accountants meet their SME clients once a month to undertake the breakeven analysis along with business valuations and general business planning, and charge them a monthly fee for these services.
“Mandated fees are about securing the client and ensuring that you don’t do a whole lot of work for nothing,” Sgambelluri stressed.
Some tax accountants may be reluctant to enter management accounting because they fear that they are providing advice but Sgambelluri underscored that that is not their role.
“You’re not giving advice. You’re helping them make plans for the future,” he said.
He continued that the accountant’s function is to use their breakeven analysis to highlight the financial cost of any business decision, and suggest actions SME clients could take.
“We don’t tell them what to do. We give them a range of options to choose from,” Sgambelluri said.
“It’s never up to us whether the business should employ someone or buy a piece of equipment. But we can show them how many sales or clients they would need to make up for the cost. Our job is to show the costs and benefits of their investments. Ultimately, the business owner makes the decision.”
Sgambelluri said that he would like accountants to feel confident enough to approach as many business owners as possible, while remaining agnostic to industry and products.
“We want accountants to take away some valuable tools from the bootcamp and share it with their clients. We want them to feel confident enough to charge a monthly fee for their services,” he concluded.
To hear more from John Sgambelluri about how to master breakeven analysis for SME clients while mitigating risk, come along to the SME Bootcamp 2024.
It will be held on the following dates:
- Tuesday, 3 September at QT Hotel Gold Coast
- Thursday, 5 September at Le Montage Sydney
- Wednesday, 11 September at Grand Hyatt Melbourne.
Click here to register for free and don’t miss out!
For more information, including agenda and speakers, click here.
