Insights, Finance Software, Technology, small business

Cashflow is king: Accountants must act as strategic advisors

By Modulr on 17 April 2020   •   5 mins read

As businesses navigate this time of uncertainty, cashflow visibility and management is more critical than ever. Accountants are under pressure to act as business advisors to their clients, by helping them to leverage data, accurately forecast cashflow and optimise their payments processes.

New technologies can support accountants as they step into this more strategic role.

Why cashflow is king, now more than ever

Cashflow is the lifeblood of every business. But maintaining healthy cashflow can be an ongoing struggle for any company, particularly those that have seasonal operations, peaks and troughs in business, or long-term projects with big overheads that can’t be billed until completion.

And it can be a relentless headache for small business owners, especially if they’re forced to invest capital in operations before their hard work pays off. A recent study found that two-thirds of small businesses have had cashflow issues. As a result, nearly a third have at one time been unable to pay themselves or employees.1 

And the pressure is ramping up in 2020. As the COVID-19 crisis unfolds, all sectors are now grappling with unprecedented economic uncertainty in the months ahead. More than ever, cashflow is going to play a critical role in business survival.

The rise of accountants as advisors

Meanwhile, the role of accountants is changing. Once they relied on painstaking manual data input and spreadsheets. Now everything is cloud-based and digitalised, and traditional accounting tasks are increasingly automated. This means accountants need to find new ways to add value to their clients.

The rising criticality of cashflow presents not only a challenge, but also an opportunity. Many accountants are pivoting their services to act as business advisors for their clients, providing them with cashflow forecasting and more in-depth strategic advice.

By transitioning to a consulting role, accountants can ensure their future relevance while also providing the best service to their clients. They can help businesses to navigate the uncertain times ahead. And new technologies will be key to success as they pivot their services.

Cashflow forecasting is only half the picture

Cashflow forecasting apps like Fluidly and Futrli are increasingly critical tools for modern accountants. These apps integrate with your accounting software and use artificial intelligence to analyse data, providing automated cashflow forecasting within minutes. Some tools allow you to model the impact of specific scenarios, such as business loans or changes in overhead costs.

Equipped with these smart forecasting tools, accountants can advise clients about key actions they can take to improve their finances, both in the short and long-term. They can consult with clients before they make critical decisions and advise them on what impact they’ll have.

But it’s not enough for accountants to provide these insights. Predicting peaks and troughs in cashflow and the impact of financial decisions is only the first step. You also want to help your clients act on these insights. And that means using technology to deliver better cashflow management.

Improving your clients’ cashflow management

To improve your clients’ cashflow management you need the right payments infrastructure. There are hidden inefficiencies in traditional payment methods. For example, many businesses are reliant on Bacs to pay employees and suppliers – but these payments take three days to clear. That’s three extra days without those funds in the business account. Bacs payment runs are also rigid, there’s no flexibility to make adjustments once they’re initiated.

By transitioning to Faster Payments, which are processed within 90 seconds, this cash can remain in the business for longer, leading to healthier cashflow. And you can make payroll adjustments right up until the extended payment deadline, giving you greater control and reducing administrative stress. Modulr’s platform provides access to UK payment schemes including Faster Payments, helping accountants to support and manage their clients’ cashflow more effectively.

Accountants can also take advantage of Sage Salary and Supplier Payments, powered by Modulr. This provides direct access through Sage products to Modulr’s 24/7 payment accounts and services. It means accountants can automate reconciliation, eliminate manual payment processes and reduce the risk of errors. Not only does it provide greater visibility and control of cashflow, it provides payments reliability when businesses need it most.

These solutions are also built with security and resilience in mind, which is increasingly important as remote working is now a necessity for many businesses and accounting practices. With Modulr’s secure data transfer and approval processes, accountants and their clients can authorise, manage and automate payments with confidence, wherever they’re working from.

The growing ecosystem giving accountants an edge

There’s no silver bullet for accountants, no single technology that takes care of every aspect of cashflow. But there is a healthy and growing ecosystem of powerful apps at your disposal. This ecosystem can be broken into three components:

  • Bookkeeping apps like Sage, Xero or Quickbooks
  • Forecasting apps like Fluidly and Futurly
  • Digital payments infrastructure like Modulr

All three parts of this ecosystem are essential. When used together, these tools work in harmony to help accountants both advise their clients on the future and manage their cashflow more effectively.

Optimising cashflow for your clients’ success

For businesses across the UK, cashflow visibility and management is more critical than ever, especially as they navigate the uncertain economic environment. We know that accountants are urgently seeking ways to support their clients in this difficult time.

Fortunately, the ecosystem of tools available can help accountants deliver accurate cashflow forecasting to their clients. By combining these solutions with Modulr’s payment infrastructure, accountants can help businesses get paid faster and manage their cashflow more effectively.

This will be increasingly important as accountants strive to add greater strategic value, support their clients’ growth and help them tackle the changing business landscape.

Want to learn more? Watch our discussion with expert speakers from iwocaPay and Acumen Accountants and Advisors – ‘Cashflow is critical. How can technology support this customer demand?’

[1] Intuit Quickbooks, Small business cashflow: The state of payroll, 2019.