In an ideal world, the handing over of a family business can be planned for, however in the real-world life is rarely that simple. Sometimes unexpected events or a disagreement amongst family members means a quick handover is essential. Running a business which may have been started from scratch by family members who know every transaction is a very different proposition to running a large organisation, where it’s essential to delegate many of the functions which previous generations did themselves. This is particularly true of finance. In many early stage businesses, a family member will take responsibility for the money, and trust isn’t an issue. Then the business grows, and the next generation is faced with a different scenario. With finances so critical to the long-term survival of any business, a good finance team, which should include your external accountant, can make the difference between success and failure. So, what are the important things any next generation business owner needs to consider when selecting their accountant? • Do they understand the key drivers to the profitability of the business operations and can they advise on key performance indicators (KPIs)? • Do they understand the working capital cycle and cash needs of your particular business? • Have you discussed with them what information you need to run the business and at what intervals? For some businesses such as transport, a weekly profitability report by unit is key. For others a quarterly statement with costs by income stream reconciled to the overall profit is a more accurate measure. • Do they focus on key controls, including the balance sheet, to ensure all costs are captured and reported results are accurate? • Will they help you to regularly review key aspects of the profit statement and balance sheet with your accounts team, such as aged debtor listings and profit by units / income streams? • Do you meet before the year end on tax issues for the business? • Do you get together to discuss the interaction of personal and business finances and proper remuneration of family and key management? Nothing splits a business more quickly than unfairness on such issues. • Do they discuss and review key threats to the business such as fraud, cyber security and retained key personnel? • Have they brought you up to date with latest issues such as the requirements for Making Tax Digital or insurance on cyber fraud and key person policies? Above all, don’t underestimate the value of an external adviser who is not afraid to challenge and advise, even when the messages are difficult. Not only can their external experience be invaluable, but for family members they can be a source of support and perspective. For find out more about the professional advisory services available to support family bushinesses contact Sue Gull , Corporate Services Partner at sue.gull@scruttonbland.co.uk
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