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Key Questions to Ask Your Small Business Accountant


As a small business owner, you have more important tasks to deal with than develop a strong relationship with your accountant. You’re busy running your business and letting your accountant do their thing. It’s their job to dive into your profit and loss statements, cash flow reporting and your balance sheet, isn’t it? While you may think a quick monthly accounting conversation and high-level browse of the numbers is enough to ‘tick the boxes,’ you may be unintentionally holding your business back. 


Truly understanding your financial position and the underlying metrics that drive your business’s success is paramount to running a small business effectively. This idea is particularly relevant when times are difficult. It doesn’t matter how well your strategy looks if the numbers don’t stack up. Make it a priority to really understand your numbers (if you don’t already) by setting up time with your small business accountant. Ask them the following key questions to improve your financial understanding and gain a valuable, different perspective on your current operations and future strategy: 

What are my profit margins?

You’re probably already highly attuned to how much money you’re making at the end of each week. After all, we’re all in commercial business to make a profit. However, are you aware of what contributes to your final figure? The more you understand what drives your business’s profit, the more you can do to improve it.


Your gross profit margin is one of the most critical metrics you need visibility on. Subtracting the cost of goods sold from your topline sales number gives you gross profit. Then, dividing gross profit by sales returns the margin. If your gross profit margin is low, it will be harder to make money in the long run once other costs (operating expenses) are taken into account. Managing your gross margin is a useful way to assess and improve the economic viability of your products and services.


“Your business needs to eventually make a net profit to be sustainable in the long run.”


Net profit dives deeper, taking into account all other costs associated with running your business. Your business needs to eventually make a net profit to be sustainable in the long run. If your gross profit margins are high, yet you struggle to maintain a net profit at the end of each period, it’s a clear sign that you’re carrying excessive operating expenses. Diagnosing your profit margins helps you best prioritise your management efforts and capital investments. 


What expenses can we consider cutting?

Whether your net profit figures aren’t looking as good as you’d like or you simply know that more cash will be going out than coming in, you’ll need to cut operating expenses. Without the insights of a professional, it can be incredibly challenging to make these decisions. Every part of your costs are important, after all, why would you be paying them to begin with?


Your small business accountant can give you valuable insights about where you can save the most cash, with the smallest impact on your operations. By benchmarking your costs to competitors or where they feel your business should be based on industry experience, they can aid you in identifying relevant opportunities. Perhaps you can get by with less staff – the only way to effectively make these hard decisions is to arm yourself with the applicable data.

Which areas of the business are most profitable?

Identifying your overall profit margins and expenses is a great start, but we can drill deeper. If your business has a range of products or services, you’ll probably have a hunch about which areas are performing better than others. It’s important to remember that areas with the most sales are not always the most profitable. 


It’s also critical to understand that certain products and services ‘scale’ better than others. You might be able to sell a small number of widgets exceptionally profitably. After investing in an expensive marketing campaign and dropping prices to drive volume, your widgets may struggle to break even. Understanding the metrics of each of your business areas helps you identify opportunities and make the best management decisions.

How do we compare to our competitors?

As a business leader, you may be too focussed on your own performance to care about others. However, to compete effectively and keep up with (or front-run) your competitors, you’ll need to understand your relative performance. Your accountant will be able to assess your metrics relative to industry standards, as well as other general trends they are seeing in the market. 

Best options to boost cashflow

Discuss your cash flow position with your accountant! Even if you are profitable, it’s cash that dictates the health and success of your business. If you lack sufficient working capital to pay your bills and staff on time alongside investing in potential growth opportunities, your business will struggle to reach the highest level. Cash flow also provides a buffer if things go wrong. How long would your small business last if things go bad again?


“Your accountant may point you towards an experienced business finance broker.”


Your accountant may point you towards an experienced business finance broker to help you identify the best financing solution for your unique situation and goals. They may recommend a range of useful funding models, including debtor finance small business loans, and equipment finance. No matter what avenue you choose to boost your cash flow, ensure you have visibility on your working capital position and outlook at all times. 


Capital Plus Finance is an experienced business finance broker that has your best interests at heart. The team at Capital Plus Finance will do everything we can to help you secure a suitable finance solution for your small business. Please give us a call anytime to find out more or to have an obligation-free chat about your business’s funding situation.