1 Key Advisory Service That 95%* Of Accounting Professionals Are Not Providing
A landmark gathering spot, near and dear to many people, myself included, burned down on Saturday July 30, 2022.
Accounting professionals are uniquely positioned to offer their clients business devastation insurance advice.
To mitigate the total loss of not just their livelihood but also to protect them personally.
I bet you thinking, “Wait, what… isn’t that the role of insurance brokers?”
Yes, but… you should be a partner in this because insurance is based on business valuations and income. But, by and large, insurance brokers don’t follow up enough on the health of a business and owners rarely take the consequences of misinformation seriously enough.
Unlike personal property insurance, which is largely based on assets, business insurance is based on all aspects of the Balance Sheet and the Income Statement. Assets, liabilities, net profit (loss), revenue - these all come into play when insuring a business. Business insurance covers human liability, physical losses, business interruption, and income replacement.
And if the information is incorrect, there are hefty payout penalties within a very small window of financial inaccuracy when a claim is made. These are called co-insurance clauses. Essentially - and you can google this of course - a business claim must be within let’s say ~90% co-insurance of the reported financials - or the benefits are clawed back on correlating scale. This is very complicated stuff. You don’t need to know all the details, but you do need to collaborate with your clients and possibly even engage with their insurance providers on this.
Here’s a quick summary of how you, my accounting/bookkeeping friend, can provide immeasurable client advisory work on insurance.
Review your client’s business insurance policy financial reporting vs actuals when you take them on and at least annually
Create a series of previous quarter custom reports
Make them comparables - this is key
Review them for major changes
Many of us are doing this anywho - put it to action
If there are major changes have your clients contact their insurer immediately
Substantial revenue changes
Substantial COGS and expense changes
New loans taken out
Loans to others
Changes to lease agreements if they don’t own the building
Changes to lease agreements if they do own the building and have tenants
New ways of managing inventory, new inventory loads
Payroll liabilities**
Deposits on future product and service delivery
You get the idea…
This is where you come in as a standout advisor.
You already know this stuff, this is already part of your deliverables - the only missing piece is adding your knowledge to your client offerings in a visible manner.
If you are wondering why I am writing to you on this, it’s for a few reasons.
This Old Marina was my family’s business for 27 years and was sold to the new owner (who worked for my parents for over 10 years before buying it) 4 years ago
We had a fire of our own of the original restaurant building 17 years ago and learned everything you would ever need to know about business insurance
I am reminding myself, that like a cardiac surgeon’s star patient, I have grown complacent, slacked off on this very work and had not set this up with 2 of my newer clients (but I most certainly did today)
Don’t be me - keep up all your unique and oft under-thought advisory work
A second thought on valuable advisory services, I recommend you add data location redundancy and security to your offerings.***
This was the building before the fire.
You never know when a business can be struck with devastation.
The evening before there was a Celebration of Life - for two of my cousins, it was not a good week for the family... 😢
On the day of the fire there was to be a wedding.
It was just a regular ole beauty of a day when the fire broke out.
Yours, Kellie :-}
*I totally made the 95% stat up, but I bet it’s pretty close. I do not know a single accounting professional who does this advisory work and I bet you don’t either.
**If you have any sway, and mostly you do, have your clients pay out hourly employee vacation pay rather than accrue it.
***There is a ton of learning here on moving to the cloud, backing up data correctly, and data location redundancy. If your clients (or yourself) are still stuck on reasons to move to the cloud and hanging onto paper I hope this serves as a reminder of the magic of cloud technology.
