4 good questions to ask your accountant

19/05/2015

It's good to check in with your accountant from time to time to see if they have any insights they can impart to you about your finances. Of course, getting the right answers is often dependent on asking the right questions in the first place.

To get the information you need, here are four possible questions you might want to put to your accountant - and they're not all about tax planning.

1. What's behind my profit or revenue?

If your business is performing well, you'll probably want to know why. What's the service or product that provides the greatest return for your business? Alternatively, which ones are lagging behind? In addition to this, it's a good idea to ask your accountant on what part of your business you should focus on to keep revenue strong - perhaps you need to reconsider your pricing, or maybe you need to do better to turn promising leads into customers.

2. What is my break even point?

Your break even point is where the number of sales you're making is balancing out the other costs of doing business, putting you in profit territory. Once you know what level of sales you need to aim for, you'll likely be able to better tailor your business strategy. For instance, you'll know how low you can reduce your prices.

3. Can my business survive a downturn?

The market goes in cycles - fat years will be followed by lean years, ad infinitum. Some of the low points in the cycle are worse than others however, as we all collectively learned when the global financial crisis struck. Your accountant should be familiar enough with your finances to tell you if you'll be able to weather the storm, by looking at profit trends or level of debt, for instance, as well as advise you on risk management.

4. Why are your other clients successful?

It's unlikely you are your accountant's only client. They'll deal with a variety of others, and have an intimate knowledge of what makes them tick. Ask them what their most well-performing clients are doing right and see if it's something you can adopt, too.