Accounting and Finance

5 Minute Finance – why this book is needed

Writing a book is a challenge.  Writing a short book is a bigger challenge than a long one – and it took a lot of effort to make this book so focused.  So why write it in the first place questions author and business mentor, Christine Nicholson?

When you have been driving a car for a while, you forget your first driving lesson and how nervous you were. As a qualified accountant, I quickly forgot what it was like before I started studying and had this knowledge AND the experience to apply it all without thinking too hard about it. Most people do not have the level of knowledge that accountants do. And this is a real problem because it means you are not having meaningful conversations with your clients. They do not understand how you can help them, which means everyone is missing out.

For many of the 5.4m UK business owners who cannot get their heads around their company finances, the challenge is finding the time to learn. It is one of the most crucial elements of running a successful business, no matter what size or shape. Especially if you are involved in the day to day running of the organisation too. Every day there are the distractions; firefighting problems and keeping the operations going. It’s easier to stay in the comfort zone of what you know. I wrote 5-Minute finance for one client to help him get to grips with his numbers AND have a better relationship with his accountant.

Key elements I focused on were being time-friendly and accessible to people who do not have a background in accountancy or an MBA. I wanted to translate the language of finance and take my client through some of the basic elements of business accounting, explaining what the words mean and how to use them – from profit margins to cash flow and how to understand financial reports. Mostly, my aim was to give my client more confidence with their numbers. And it worked – he tripled his turnover in 3 years, focused on margin rather than revenue and mastered cashflow management. He also has a new accountant who he can have meaningful conversations with about all aspects of his business.

The main gain is that he now has meaningful understanding of numbers and data, enabling him to be able to make more effective and timely decisions. This is where many accountants, no matter what size their practice, miss out on the opportunity to engage with clients in value added services rather than just compliance requirements. The big barrier is usually something referred to as “the curse of knowledge”. As an expert in your field, you score 10/10 – your clients operate at 0/10 up to about 4 or 5/10. Bringing yourself to the appropriate level is hard – but the most successful accountants do this without appearing condescending or patronising.

The first step is finding out just where on the knowledge scale your client is. How do you know if you don’t ask them? And isn’t that a great conversation opener? “How well do you understand the numbers in your business?” because it doesn’t matter what the answer is, you can help them from wherever they are to gain a better understanding.

When I talk to my clients, I always ask about their accountant using the following checklist. How well would your practice score on this?

10 questions your accountant should be asking you

1.    Are you paying too much tax?  If yes, how much and why?
2.    Can you get a refund of any of the tax you've overpaid?
3.    Are you up to date with legal compliance?  If not, how can you get up to date?
4.    How are your profit levels compared to other businesses your size?
5.    How's your cashflow going? (How do you know?)
6.    Tell me about your business numbers – and what they mean?
7.    What is your business worth?
8.    How do you pay yourself?
9.    Are you on track to achieve your business and personal goals? (And what are these?)
10.    If your accountant isn't delivering, then your next question is: What's involved in changing accountants and moving to one who is going to give me the support and answers I need?

Are you are engaging with all your clients at this level? When was the last time you asked any of these questions? Could you start tomorrow (or today)?

Christine Nicholson
Author and business mentor

I am Christine Nicholson, an author, speaker, and multi-award-winning Professional Business Mentor. I was named as one of the global Top 50 Women in Accounting for 2020 for my work with finance teams. I've appeared on BBC programmes talking about business!

I've been helping businesses for over 30 years – along the way I’ve worked with every type of business from software companies to taking over the running of a zoo.