Episode 7: Big Questions for Accounting - with Zoe Gibbons of Perrys Chartered Accountants

In this episode, Zoe Gibbons of Perrys Chartered Accountants gives her answers to some Big Questions for Accounting, with me, Kirsten Gibbs.

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Transcript

Kirsten Gibbs: [00:00:00] Welcome to the Pioneer Accountants Podcast, where pioneering, accountants answer big questions about accounting, and I occasionally introduce them to people you should know. I'm Kirsten Gibbs, and I help accountants to build an autonomous practice they can step up with or away from whenever they want without killing themselves or their business in the process.

Today, I'm talking to Zoe Gibbons from Perrys Chartered Accountants. Zoe became a partner in Perrys last summer- congratulations! - after being with them for three years and runs the Orpington office. Before that she worked with a firm in Tunbridge Wells, she's dual qualified, which means ACCA and ACA, which is good.

Zoe was due to be married next month. That isn't looking too likely at the moment, but we're all keeping our fingers crossed for September. Hopefully it's going to be a really big party. So let's hope that comes true Zoe. Hi, welcome. I'm really pleased to have you on this podcast. 

Zoe Gibbons: [00:01:05] Well, thankyou for having me Kirsten, I'm really pleased to be here.

Kirsten Gibbs: [00:01:08] Brilliant. So I think we should dive straight in and go for the big question, which is what is accounting for? 

Zoe Gibbons: [00:01:19] Oh, wow. That is, yeah, that is a big question. You're right. I mean, if we strip it back to it's very, very base level, accounts are to calculate tax. and, and that is the, the fundamental, I suppose, reason you would prepare a set of accounts, and to fulfill your statutory duties, but I think they can be used for so much more than that. Accounts are such a valuable tool for a business. you know, they can be used as an early warning system. You see one number slip, and you can just have massive ripples. And, you know, if you pick that up early enough, you can almost, you know, nip something in the bud before it creates a bigger problem.

I mean, accounts are just a great way to know your business. If you, if you know your numbers. You just really know what's going on and you can a bit like what I just said, you know, you see something, it just doesn't, it doesn't ring quite true. It can sometimes be a massive sort of problem on the horizon that you just haven't even factored in or considered.

and I just find that you can learn so much about a business. Just by looking at its accounts. 

Kirsten Gibbs: [00:02:26] Yeah. Yeah. That's yeah. That's interesting because I think a lot of business owners, you know, we're put off by the fact that it's numbers. 

Zoe Gibbons: [00:02:34] Yes, definitely. 

Kirsten Gibbs: [00:02:36] And we really shouldn't be. 

Zoe Gibbons: [00:02:38] No, I mean, accounts can be your best friend, 

I think if, if you know what you're looking at, and I think that's probably part of the battle is people see it more as a, you know, I have to do this because the law says I do, rather than I'm doing this because it can benefit me. 

Kirsten Gibbs: [00:02:53] Yeah. Yeah. So is, is that what you, do you think that's what it should be for?

Zoe Gibbons: [00:03:02] Yeah, definitely. I think that accounts should be used to, you should almost live your numbers really. You know, you should know them just well enough and you should, they just have great way to know your business. And they're just so fluid. so for example, we always do annually with our clients variance analysis.

So we focus on the, the key financial sort of, indicators in, in a company, gross profit, et cetera. And we, we sort of discuss any big changes with the clients. And a lot of the time it just helps you give such a good feel of the business because. You can almost, you feel like you've been there with them and fascinating to see how, how everything interconnects and then, so I think sometimes the clients don't have that extra step that they, they, they, they want to take, cause they, they like say see the numbers and they don't think, Oh, well, if I do this, it will have an effect elsewhere, but it really does. It's all just very fluid.

Kirsten Gibbs: [00:03:54] Yes. It's. I mean, we, I think we do tend to think of accounts as being pretty static things, but of course, a business isn't static. It's always moving. And if you look at it that way, your accounts are a really good tool for seeing how it's doing. I mean, I'm getting a picture in my mind's eye of, of, you know, somebody driving a steam train and they look at all these valves and levels of things and that's telling them.

Something about, a lot about what's going on inside the engine. And that's the way to look at them. I think we, you know, they're not just levels that you want to monitor. They're telling you something about the processes that are going on and you need to look at the flows in and the flows out because your level might be changing because some more's going in, but it might also be changing because you've got a hole somewhere, and somethings draining out.

So you need to work out. The numbers start are the start of it. 

Zoe Gibbons: [00:04:57] Yeah. 

Kirsten Gibbs: [00:04:57] But yeah, I don't know really where I'm going with that, but, you know, I think that we don't look at a business as a, as a system enough. 

Zoe Gibbons: [00:05:07] No, no. And I think what you're trying to almost, will, you're trying to get at there is, you know, like you almost want to see like, okay, this has started to happen. This, this gauge is starting to go down. Why is that? And then, and then you can start looking into that focus on sort of that area. And then that's where you can develop advice and planning around that area of the accounts and to almost either get it back to where you want it to be or do, or just see what actually made that happen.

And, and yeah, the numbers are just a great place to start. It's not, not just about improving numbers, but it is business process as well. You know, you might have, a fall in, in a certain number or, you know, for example, an overhead might go up and it might be just down to pure inefficiency, you know, and, and that process can, can just fix that. I think, yeah, process and accounts are always hand in hand. 

Kirsten Gibbs: [00:05:55] That's probably why I like accountants then, 'cos I'm completely a process geek. I know that. Okay. So what we're really saying here is accounting kind of which starts as compliance - something you have to do - can very quickly become a very, very useful tool for measuring performance.

And then for helping you to plan based on that performance. And that's really what accounting should be for. 

Zoe Gibbons: [00:06:21] Yes, definitely. Yeah. 

Kirsten Gibbs: [00:06:23] Rather than, you know, yeah. We should stop thinking about it as just a statutory requirement and really look at what it can do for us. 

Zoe Gibbons: [00:06:32] Yeah, definitely. I mean, you know, accounts prepared nine months after the event are never going to be overly helpful, you know, but accounts prepared couple of months after the event are gonna really be quite valuable for business and management accounts even more so.

Kirsten Gibbs: [00:06:47] And actually nowadays with all that technology, We can, it doesn't have to be two months. It can be the next day. 

Zoe Gibbons: [00:06:54] Yeah. I mean, you get some clients are so up to date with their figures. I get emails on the 1st of April saying my accounts are ready for you to look at for 31st of March. You know, people just, it's just such a, it's just simplified the system so much and you can just get so much functionality out of some of these products. It's fascinating. 

Kirsten Gibbs: [00:07:11] Wow. Okay, brilliant. So next big question. Can accounting help to solve some of the really big problems that humanity faces today? Things like inequality or climate crisis. And can it, for example, help us come out of Coronavirus in good shape ?

Zoe Gibbons: [00:07:31] yeah, I think accountancy can help with, big problems and I think it will actually play quite a big role. Definitely if you look at any sort of, magazines or any sort of content from, from the institutes, they definitely think that this is something we can definitely get involved in and make a difference with. the issue we find is that often the institute don't actually tell you how to do it, and it sort of left for us to, to work our way through it.

But, you know, I think it's just, it's more of an idea at this stage. But yeah, I think we can have far reaching impacts on, on everything. But I don't think that's just accountancy as a profession. I think it's, it just seems like everyone's becoming a little bit more aware of the issues facing such as you know, you've mentioned inequality, so modern slavery, et cetera.

And I think people just want to do something about it. We just actually want to make changes that will be good. 

Kirsten Gibbs: [00:08:24] Yeah. And I think people are beginning to realize that they can do something about it. It's not something you have to so leave to government or big corporations. Even a small company. 

Zoe Gibbons: [00:08:36] Yeah. Yeah. 

Kirsten Gibbs: [00:08:37] Can make a difference. Even an individual can make a difference and it might not feel like much, but if enough of us do it, then actually, 

Zoe Gibbons: [00:08:46] yeah. Oh, 100% , in, in particular, obviously coming out of the coronavirus in good shape, I think. Yes, definitely. accountancy can help you get out if you're doing it properly.

I mean, if you've got forecasts, you've got cash projections, you've got, you know, you've, you've assessed what grants you can use and what's available to you. You've considered your loans. I think that, you know, looking ahead now, businesses should be looking, you know, more than sort of six months to a year ahead and actually looking, you know, what happens next.

and I think a lot of businesses can use this as an opportunity to just sort of step back and really think about what they want to do with their business and where they want to go next. cause you don't often end up where you kind of. Is that where you intended to when you set out? 

Kirsten Gibbs: [00:09:33] No, no, that's very true. Yes. So people and I think it's natural. I mean, I think when you're a young business, you're just exploring, you've got something that you can offer and you think people want it. And there are people who want it, they buy from you. So, you know, there is a market, but you don't exactly know right at the beginning.

Zoe Gibbons: [00:09:57] Yeah. 

Kirsten Gibbs: [00:09:57] What that wants, and like you say, you do kind of evolve your way into something. 

Zoe Gibbons: [00:10:02] Exactly that, and, and businesses will evolve and, you know, and this is a, this is a great evolutionary moment really for businesses. and I think, you know, if they've got the up to date information, you've got a business plan. I think we can make some quite big changes to businesses for, for people.

it's quite an interesting sort of, Psychological thing with, with, with, with accounts and when with clients where you'll say like, you know, we're going to focus on turnover this year and lo and behold turnover increases, and it is totally psychological. Cause as soon as you focus on that number, you have a plan and you think, right, this is what we're going to do. You're more likely to achieve it. 

Kirsten Gibbs: [00:10:38] Yeah. 

Zoe Gibbons: [00:10:39] And I think the issue is where we've got a fantastic opportunity right now, where a lot of businesses aren't able to trade. it's a great time for them to sit and think about actually, what do they want to do? You know, is, is, is what they are doing now, what they wanted to do. Is there something else they could now evolve into? cause the problem is most business owners don't have any time to focus on these sort of things. valuable. 

Kirsten Gibbs: [00:11:01] Yes if you look at it the right way, Yeah, this is actually an awesome opportunity. 

Zoe Gibbons: [00:11:07] Oh, exactly yeah.

Kirsten Gibbs: [00:11:08] You can't trade, but neither can your competitors. So you're not going to fall behind by doing this thinking, which you might be, you might be worried about in normal times.

Zoe Gibbons: [00:11:19] Yes, exactly. So, whereas before you're normally so busy, just trying to chase the next lead or, you know, get on top of your employees or whatever it is, it's a great time. And actually, you know, a bit of downtime and a bit of separation sometimes is all you need just to have a bit of a step back and go, you know, what? I'm going to do this now, or this is the next move for my business. It's a great, great opportunity there for a lot of businesses. 

Kirsten Gibbs: [00:11:41] Yeah. Yeah. And then, you know, so the, the way accounting helps with all of this is accounting is about measuring. Yeah. And it's about then choosing what you measure and making sure that you measure what is actually really important to you.

Not just the things that you think you should measure. 

Zoe Gibbons: [00:12:03] Yes. No, exactly. I mean, yeah, I mean, you look at some KPIs, there'll be the standard things won't there, for a lot of businesses, you know, in gross profit, my turnover, my net profit and all that sort of thing. But actually, is that what the business wants to, you know, be, be achieving? and is that actually something that business should be focusing on? and I think, you know, if we. If businesses, you know, start making small changes. So for example, instead of using, you know, this supplier that's cheaper, so their profit's a little bit higher, but you're not really sure, you know, on the ethics of that company or you're pretty certain that they're not the ethical company you want to be dealing with making the decision to use the company that's doing it properly is a very small change.

It will affect your profit of course, but if everyone makes small changes, it will add up to big changes in the long run. 

Kirsten Gibbs: [00:12:52] Yeah. And also the other, the other thing with that is that will have a massively positive effect on how you feel about your business and how the other people working in your business will feel about your business and probably how your clients will feel about your business.

Zoe Gibbons: [00:13:09] Definitely. I think people are very self aware and very aware of their footprint on the rest of the world. people want to make, you know, consciously want to make better decisions. 

Kirsten Gibbs: [00:13:21] And actually one of the few positives to come out of all, this is that we've all seen just how big, an impact we can make, doing a relatively small thing, which is, staying at home.

Zoe Gibbons: [00:13:34] Yeah. I it's been phenomenal to see, you know, the, the effect it's had on climate change. and it's just, it just goes to show doesn't it. If it's small, small little increments, it just have a massive, massive impact. And globally. 

Kirsten Gibbs: [00:13:49] Yeah. So actually it's really, the trick is to do that intentionally instead of by accident and accounting really is the thing that helps you do it intentionally.

Zoe Gibbons: [00:14:02] Yes. It's just about having the plan and having, you know, an almost saying, right, this is, laser-focused what we're going to do this year, you know, and you know, business plans do do evolve. And they do, they are very fluid. and you know, maybe if you have intended to do one thing, you might not necessarily end up there, but it's a good, it's good to have something to aim for, I think. A lot of businesses do just have their heads down just constantly just churning, churning, churning, and actually having your head up and actually thinking, making conscious decisions. Will really actually make life a lot better. 

Kirsten Gibbs: [00:14:35] Yeah. Oh, that's brilliant. So, so that leads very nicely to the last question, which is can Accounting help make the world a better place? 

Zoe Gibbons: [00:14:45] I definitely believe it can. but I don't think it's, it's accounting alone. I think every business and every profession can help. And I think it is, it's just about everyone having the right mindset and not just being too focused on selfish sort of things. So for example, profits and profit for its own sake, you know, or even for vanity, and just making the right decisions, everyone making the right decisions. And I think, you know, small changes, do have massive rippling impacts? 

Kirsten Gibbs: [00:15:12] Brilliant. Brilliant. I think that's a very nice place to end. Thank you so much. That was really interesting and hopeful. I love it. Thank you. 

Zoe Gibbons: [00:15:23] That's okay. You're welcome.

Kirsten Gibbs: [00:15:24] Thank you for listening to the pioneer accountants podcast. Where pioneering accountants answer big questions about accounting with me, Kirsten Gibbs. If you're a pioneering accountant and you'd like to be part of this podcast, just head over to my website, www.gibbsandpartners.com and send me a message. I look forward to hearing from you.