I am passing on the warnings of Burton Sweet, Insolvency Practioners, in Shrewsbury. It highlights the need for company owners to understand their financial statements and the need for their accountants to explain what their balance sheet means.
“I have found a number of company directors who have little difficulty in understanding a profit and loss account but who clearly have little understanding of a balance sheet. There appears to be an assumption that what appears in the accounts actually exists and at the value shown, examples being leasehold improvements and goodwill, whereas reality is that somehow and for whatever reason the asset no longer exists or has a much lower value.
Directors’ current accounts are rarely understood, with overdrawn accounts being explained to me as being the amount the company owes the director. Getting to the bottom of such accounts can be a lengthy process and sometimes means investigating the account over several years. Often these overdrawn accounts are “corrected” by the declaration of unlawful dividends which a subsequently appointed insolvency practitioner has to pursue.
With most companies not needing to be audited, I wonder if less attention is being paid to balance sheet items with less need to discuss them with the directors. From an insolvency viewpoint, this can affect a company’s solvency with consequences for the director.”
I know some of you will have seen it before.
Our 2 Minute Health Check System is a “tool” to help you consider all aspects of your financial “health”. Please clink on the link below (Word 2003 file)
.The TaxAssist Accountants financial health check.
There are sufficient questions on the forms to cover the main aspects of financial planning, asset protection and profit improvement but it is quite possible that other issues will arise during its completion. At the very least, this exercise will give a colour-coded aide memoire to prioritise needs and wants.
If you need further help, just get in touch and we will be glad to help.
The Independent Network Club (INC) – Shropshire’s independent business referral group are holding a visitors morning at 7.45am at Hawkstone Park Golf and Conference Centre on Wednesday 29 th February. Please e-mail me if you want to attend.
In publicising this, I was reminded of an animated discussion about 9 months ago on LinkedIn (Shropshire Business Group) about the place of networking in today’s social-media connected economy. It started with a provocative (tongue in cheek) view of networking.
“Well, I’ll tell you what I DON’T want… I DON’T want to stand up and do a “sixty-second spiel” (it’s like “creeping death”! Am I REALLY listening to the others in the room or practising what I have to say in my head before the finger points in my direction?!)
I DON’T want to be jammed in a corner with people thrusting their business cards at me.
I DON’T want to be anywhere that’s really “cliquey”
I DON’T want “hidden agendas”. Chat to me because you want to get to know me, “
I have seen this happen. But it is unusual and networking is a fantastic way of building a stable business.
I have been networking in Shropshire for the last 8 years. It is evolving all the time. At the best clubs, you connect with like-minded people who eventually may become clients, suppliers, trusted advisers and friends. It is amazing the impact that twitter, facebook and linkedin are having. There are now far fewer strangers in the room and the inter-action can continue on after the meeting. I am in a very competitive field (accountancy and tax advice) and the more I can do to develop enthusiastic advocates for me and my business the better. Yes, there has to be a format to networking and that can be off-putting. However, it is a small price to pay.
So please don’t be afraid of networking. Come to the INC visitor day and be pleasantly surprised.