What should you cover in a financial checkup?

After working with accountants for years, a best practice that we have seen is for accountants to meet with business clients for an annual, 30-minute checkup. This meeting shouldn’t require more than half an hour and isn’t meant to be exhaustive. Instead it opens the door for more consistent communication and gives your client an “executive summary”–enough financial understanding of the business to be helpful but not overwhelming. It could lead to additional engagements, but at a minimum it enriches your relationship with business clients.

What should you cover during these sessions?

1. Explain the financial statements using understandable language. Financial statements, on their own, oftentimes mean very little to intelligent but non-financial people, including some of your talented business clients. Take the time to highlight the most important metrics from the income statement and balance sheet, and use plain, easy-to-understand language to explain the impact those metrics have on business operations.

2. Explain the concept of margin management. Even though net and gross margins are critical to the longevity of a business, business owners may not give them due attention. If business owners are too focused on increasing sales, the company could experience problems with cash flow or even profitability and catch the business owners by surprise. Explain how, in some cases, an increase in sales could decrease cash or profits. Margin management will help prevent such cases.

3. Give your business clients some homework but not too much. In the financial statements, there are probably a few metrics unique to the business that are KPIs: real measures of success or warnings if things are going south. Highlight these KPIs during the financial checkup and then encourage your business clients to measure them even between meetings with you. If the business clients notice a change, it could be time to schedule an appointment with you, their accountant, to evaluate solutions.

An annual financial checkup may be the only time you meet with these clients, or it could be one of several strategic meetings throughout the year. However close the relationship, these sessions should be kept informal. Your biggest objective should be to come across as approachable during and after this meeting because clients will be more likely to view you as a strategic partner or ally. Even if the financial checkup is less than perfect, it demonstrates to clients that you care about their financial well-being beyond their tax returns.