Information and support

Time to change your accountant?

Clive Lewis, Head of Enterprise, ICAEW

Meet with accountants Accountants are great for business. In fact they are vital. Not just for making sure business owners understand and fulfil their legal obligations, but to help businesses grow, especially during the challenging early years.

The reality is that accountants will see, speak to, and look in detail at the finances of many, many start ups and small businesses. They are a great source of information and advice.

Yet according to the annual SME monitor only 8% of businesses looking for an overdraft, and 18% of businesses seeking a loan, will speak to their accountant.

clive Lewis - Advice on accountants According to Clive Lewis, Head of Enterprise at ICAEW, small business owners are often very short-term in their outlook. Clive has worked with accountants, dealing with businesses of all sizes, for more than 25 years. According to Clive, this short-termism may go some way to explaining why accountants are not always the first port of call for advice and support that they should be.

Perhaps this is one reason why the statistics for start up businesses are not great. 40% cease trading within 3 years, and a further 20% will have ceased trading within 5 years.

So, how can small businesses use their accountants to help them achieve more?

Here are Clive’s 6 top tips for business owners:

  1. When starting out, don’t pick an accountant at random. Many specialise in a particular sector, or type of business. Take the time to speak with a few, to see which will suit your needs best. Specifically ask what experience they have with businesses in your sector (e.g. retail, consultancy, plumbing). The Business Advice Service from ICAEW may be able to help.
  2. Make time to see your accountant regularly. Ask your accountant what additional services they are able to offer. Share your future plans, and ask your accountant how they can help you on your business journey, such as how they can help with plans to grow, take on staff, or expand overseas.
  3. Review the suitability of your accountant at least every 5 years. As your business needs change, you may find that your accountant is no longer a good fit for the business. There are many accountants that are perfect for a start up or small, traditional business, but that do not have the skills or knowledge needed to support a high growth company. A regular review will ensure that you have access to the best possible advice.
  4.  Ask the right questions. Accountants can advise on a range of topics from raising finance, to tax, employment, contracts and pensions, for example. Business owners that ask accountants for advice are believed to be much more likely to survive the challenging early years.
  5.  Submit information to accountants promptly. If bookkeeping is done 3-6 months after the event, sometimes the accountant will only become aware of a problem after the damage has been done. Your accountant cannot act proactively if you keep them in the dark.
  6. Take advantage of modern accounting systems such as online accounting software, which can link your accountant to your accounts system, your bank, credit card and finance accounts, HMRC, and other services.

Raising finance

Achieving the appropriate balance of debt vs equity in a business is vital, especially when your business is susceptible to seasonal changes, reliant on a small number of large clients, or is vulnerable to changes in the market.

A good accountant will advise business owners on how to manage this balance effectively.

Meeting with accountantsThis can be critical, especially when businesses require money to invest in equipment (capital expenditure). It is much easier for businesses to access finance than perhaps it was 5 years ago. And with this comes an element of risk. A business owner with £20,000 on a company credit card, leased equipment, and a bond or secured loan, for example, may find that they have borrowed too much in relation to their equity base (the amount contributed by the owners).

This imbalance may even cause a business to go under if creditors decide to call in debts unexpectedly. If your accounts are kept up-to-date, your accountants should be the first to recognise the early warning signs. So, if you have borrowed too much for your equity base, they can help you to rebalance your finances accordingly.

As the recent story of the Carillion collapse illustrates, when big businesses hold off paying small contractors for sometimes as long as 120 days, this can cause huge problems. An accountant can advise you on cashflow finance solutions, such as factoring, invoice discounting, and supply chain finance. The availability of cash is one of the primary reasons why many early-stage businesses falter, despite making a profit on paper, so use your accountant to help reduce the risk of this happening to you.

Have you outgrown your accountant

accountants - concerned business ownerIn most instances business owners will decide that they need a new accountant at the point when they become frustrated, perhaps feeling that they have been given poor advice, or that they are not properly looked after.

Two clear signals that your accountant may no longer be a good fit for your business are:

  1. If they are unable to answer your questions; or
  2. If the answers they give are woolly, or you feel that they are not up-to-speed on a particular topic.

Rather than being reactive, business owners are able to get ahead of the game by asking their accountants the following questions, tailored to their specific circumstances:

  1. What is the best way to finance … (specific need in the business e.g. taking on new staff, finding new premises, export, improving relationships with key suppliers)”
  2. What are the tax implications of … (specific action, or the finance type being recommended by the accountant)”
  3. What are the pitfalls of … (specific action or finance type)”
  4. Would debt or equity be best for us to finance … (specific need, challenge or opportunity)”

Book a free consultation with a firm of chartered accountants

accountants - Business Advice Service The Business Advice Service (BAS) was established in 2011, based on one simple idea. BAS’s website has a filter built in to help business owners find an accountancy firm based on their location. BAS registered accountants also offer a free initial consultation for business owners, which can be a great way for both new start ups and established businesses to find the best fit for their organisation.

There is no limit to the number of free consultations a business can request. So if one accountant is not a good fit, they can keep looking until they find one that’s right for them.

Visit The Business Advice Service to find an accountant today.


To assess the equity and debt financing options suited to your business’ needs, visit our interactive Journey tool. In less than a minute the tool will narrow down the options available to you, giving you clarity on your business finance journey.

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