Instead of using accountants, four in five SMEs trust unqualified staff with calculations, compliance and tax returns, according to the research.

SMEs can begin to improve their financial management and growth prospects with a few simple steps, such as setting up a reserve bank account for a ‘rainy day’ fund, ring-fencing a percentage of regular income to pay for tax and VAT, and marking key tax dates on a calendar to plan ahead.

AAT also recommends finding the ‘hidden accountant’ in the business and providing them with additional training.

“People think all an accountant does is compliance and annual tax returns,” says Mark Russell, client manager at accountancy firm Aston Shaw. But SMEs shouldn’t ignore the power of professional accounting expertise. Accountants can carry out the ‘bread and butter’ of accounting, prevent financial leaks and help companies develop a business growth strategy.

“We have a spectrum of knowledge across a range of sectors and can use templates from other clients to explain to SMEs how their strategy going forward can succeed,” says Russell.

Nick Levine, head of enterprise at accountancy body ICAEW, agrees that accountants can play a fundamental part in business growth. “The role of an accountant is increasingly becoming more advisory led,” he says. “Historically it centred around compliance, bookkeeping, VAT returns and annual accounts, but now it’s also about value-added services.

“Some SME owners are unaware of how tech-savvy we are and that we offer such a wide range of advisory services. There needs to be more education around the role of the 21st-century accountant,” says Levine.

Cloud-based accounting software and support applications, such as Sage One, Worldpay or QuickBooks, can help business owners manage their invoices, electric point of sale and payroll processes. Choosing the right package for your business can be stress-free with the help of an accountant.

“This software means an accountant gets access to close to real-time financial data to analyse and understand where clients can make efficiency gains. It can also help to produce more accurate forward forecasts and advise on strategy,” Levine says.

“We have a clearer picture on profitability and how different revenue lines are impacting cash flow. We can tweak strategy to help maintain and grow profits and set out and meet KPIs. We can also use the data to set out different scenarios about the impact a new product or service could have.”

Accountants can guide you on the best approach to raising finance, too.

“There are so many financing products on the market and we can inform owners on the pros and cons of each one,” says Levine. “That could be invoice discounting or asset finance.”

Russell says: “We get a feel for what owners want to achieve when it comes to financing and growth. Sometimes a lot of that is reaffirming what they already believe, or we can also tell them whether something is going to be a terrible idea.

“I took a call recently from an owner who was thinking about buying a business. Two years ago he would have made the acquisition without talking to me; now I can advise on how to do it the most tax-efficient way.”

Not all accountants are the same, as Katrina Cliffe, MD of marketing firm KC Communications, has found. “When I set up the business in 2014, I continued using the accountant who had previously looked after my self-assessments,” she says. “I didn’t appreciate the difference that a good accountant can make to your business. I thought it would be a case of adding up the numbers and seeing how much tax I owed; I didn’t realise the business insights and analysis they could bring.”

She says the first accountant she used failed to provide advice on areas such as the VAT flat-rate scheme, which led to the firm “wasting too much money” in its early years. “We’re a company growing at 47% turnover year on year, but we didn’t have a clear picture of our cash flow, how the next 12 months might look, or how much we owed in advance on VAT bills or tax returns.

“We switched accountants and they’ve been invaluable in getting both historic and current accounts to give me a clear picture of my business. They found that I had underpaid a VAT bill by almost £2,000.”

With her accounts now in order, Cliffe sees the benefits throughout her business. “It helps me make better decisions on cost savings, what I can pay for day rates, employment, staff training, development and perks,” she says. “Our accountant also provides quarterly peer-development training sessions where its clients come together and we discuss with other business owners issues such as planning for the future and personal development. It’s really useful.”

KC Communications has also been steered towards local grants, which have helped it recruit staff and develop a new website. “Another thing they [our accountants] helped with is implementing a new staff health-insurance scheme. They showed us how big employees’ tax contributions would be,” Cliffe says. “We then communicated that to staff.”

Metric Accountants, which specialises in accounts for tech and high-growth companies, advises on the Enterprise Management Incentive (EMI) scheme, which allows employees to obtain shares in a business without incurring income tax or National Insurance when EMI options are granted. It also advises clients of funding opportunities such as R&D tax credits and video-games tax relief.

“Growing companies don’t want to look behind them; they want cash-flow projections and future financial forecasts,” says director James Richardson. “We can analyse their data to see if we need to raise money, spend on headcount or machinery, or cut back costs over the next 12 to 36 months.

“They may have IP [intellectual property], tend to be cash hungry and suffer the growing pains of having lots of staff. We find that many are unaware of transformative grants or specialist tax schemes. They need strategic financial advice.

“We can also help firms whose VC [venture capital] investors want the accounts report done in a certain way,” he says. “Accountants who just do bookkeeping won’t survive. We need to be more face-to-face and strategically minded.”

• What are the tax dates I need to be aware of?
• What rebates can I claim on my tax return?
• How can I improve my cash flow through measures such as invoice discounting?
• What grants and tax credits are available to me?
• What tax-efficient perks can I offer my employees?
• How can I acquire in the most tax-effective way?
• What technology can I use to get real-time data to use for future forecasts?