As we head into a recession on the back of the COVID-19 crisis, many businesses are worried about staying afloat during this difficult time. For those business owners wondering what to do next, a good place to turn to is your accountant.

An accountant is a great source of information and financial advice who will be able to help steer your business the right way. Here are just some of the ways an accountant can help businesses during a recession.

Identify unnecessary expenses

In times of crisis, a good practice for businesses is to reduce expenditure where possible. With profits sinking for many, cutting back on unnecessary expenses is important to maintain a healthy level of cash flow. This could mean reducing services/products, cutting back on staff or reducing the cost of office supplies.

Accountants are in a great position to help you identify unnecessary expenses. As the person in charge of managing your books, an accountant has a clear window into your incomings and outgoings. If your cash flow is starting to look unhealthy, it’s worth speaking with your accountant about where you could make cutbacks.

Identify issues with cash flow

An accountant can also see where your cash flow issues are stemming from, whether it’s too much expenditure or late payments from clients. If you have issues with late-paying clients, an accountant can advise you on some of the best ways to address this.

This could involve a more hands-on approach to chasing late-paying clients or it could be a more software-based approach. Modern accounting software makes it easier to chase clients automatically with features such as automated payment reminders.

While this type of feature won’t solve all of your cash flow problems, it’s a simple measure to try and reduce late payments.

Identify revenue-drivers

Making cutbacks is just one element of getting through a recession. The other side is to try and increase profits as much as possible. An accountant can also see which elements of your business are doing well and are contributing the most to your profits.

Sitting down with your accountant to discuss where you’re going right is just as important so you can make plans to focus on the revenue-drivers.

Create financial forecasts

Another thing an accountant can help you with is creating a financial forecast. While it is hard to predict where the economy will be in six months or a year's time, a financial forecast is still useful.

A financial forecast predicts what your business will look like in the future. Accountants will put together a forecast that usually consists of an income statement, a cash flow statement and a balance sheet.

These are key pieces of information which will give you an indication of how your business will look in a few months or years so you can prepare. For example, if you are predicted to make a loss in six months, you can take steps today to try and avoid that.

Ease tax burden

One of the main responsibilities of an accountant is to ensure you are paying the correct amount of tax. It also means they ensure you aren’t paying more tax than you need to by reducing your tax burden.

A common way to reduce your tax burden could mean taking a smaller salary and rest out as dividends. If you don’t already have an accountant, this is a simple tactic that an accountant can set you up with.

Schemes such as the Research and Development (R&D) tax relief scheme can also help you save money on your Corporation Tax bills. An accountant will check which schemes you are eligible for and help you apply.

While some businesses may be tempted to make cutbacks on staff and services such as accounting, now is a crucial time to have an accountant on board. Accountants can offer much more than simple tax-filing.

An accountancy firm such as BrooksCity which offers a bespoke, personalised service means you can get solid financial advice from someone who knows your business inside and out.