What’s the difference between a High Street Practice Accountant and a Smart Finance Director?

In a recent network event, I was able to clear the fog around the differences between a small practice accountant and a Smart Finance Director. How they complement each other and also where there is some overlap with our Virtual Finance Team.

In short, you get a very different result with an accountant brought up in practice and an accountant brought up in business.

They speak the same language (mostly); they typically study for the same exams (although a practice accountant is more likely to study additional tax exams); but their practical experience is very different and subsequently, you get a very different focus.

In a small practice, the experience they typically gain relates to HMRC compliance and reviewing historical financial information. There is also a focus on tax planning both for individuals and businesses.

Those accountants who have grown up in business have had the opportunity to work alongside and learn from very experienced CEO’s and senior leaders from other functions. They have first-hand experience of supporting decision-making at the sharp end and really understand the impact those decisions will have on future financial performance. Their focus tends to be on current financial performance, as opposed to historical performance, understanding the key drivers behind that, and is more forward-looking than an accountant from a small practice.

Do you need a Finance Director in your business if you already have a Practice Accountant? Yes!

That’s if you have a proven business model and are ready to scale, and you want to make proactive rather than reactive decisions based on sound data to support your future growth.

The roles of a practice accountant and a finance director are often misunderstood. However, for small businesses aiming for sustainable growth and financial success, understanding the unique contributions of each is crucial. 

We’ll explain how you need both to scale-up your business.

So, what does a finance director do to support a scale-up business, and how would a practice accountant complement this? 

How a Finance Director supports a scale-up business

Firstly, they are responsible for making sure that there is enough cash available to support the scale up in a managed way along its growth journey. This will ensure its long-term sustainability.

They will also ensure that there are strong financial control processes in place, and that all governance and compliance is being managed effectively. That’s the bread and butter.

As well as driving financial performance, they will also have a close eye on risk and encourage the CEO and leadership team to be aware of operational and financial risk. Importantly they will ensure there are plans and actions to mitigate those risks.

In their role as the financial wingman to the CEO, they will interpret financial and management reports and recommend actions which can be taken to improve performance, thereby supporting decision making.

Combine for maximum impact

A practice accountant will support your business with HMRC compliance, statutory accounts and tax planning, and some are also keen to offer advisory.

For our larger clients, I sometimes recommend that they use statutory accountants as well as The Smart Team. It’s always good to have a second pair of eyes on things, and the added tax planning is often worthwhile.

I would however guard against “letting the tax tail wag the business dog!”. By that I mean, make the right decisions for your business to maximise profits, cash and sustainable growth. THEN deal with tax in the best way.

 If you are planning any major changes in your company structure and ownership, then that is always a good time to get tax planning advice. We help our clients get exit ready, and if you are planning to exit the business, a practice accountant will help you to manage that in the best way possible from a tax perspective.

Paying tax isn’t such a bad thing you know…it means you have a profitable business!

A typical practice accountant and The Smart Team

This table compares the services of a typical practice accountant with those The Smart Team can provide. This covers both our virtual finance team and our outsourced Finance Director strategic support.

The best of both worlds

In the changing landscape that small businesses operate, both practice accountants and finance directors play indispensable roles. While practice accountants tend to focus on HMRC compliance and tax planning, finance directors bring a strategic perspective, helping you to make better decisions and shape the financial future of the business. Together, they form a powerful team, ensuring financial health, compliance, and strategic growth – a winning combination for small businesses aspiring to achieve long-term success.

You could work with a Smart Part-Time Finance Director and our Fully Managed Virtual Finance Team or continue to use the services of your practice accountant supplemented with the commercial skills our team will bring to your leadership table. We work however you wish to work!

Are you ready to scale-up your business?

Scaling up your business requires working dynamically and the flexibility of a Smart Finance Director gives you that.

We can work virtually and at your premises as much or as little as your business needs. Our part-time finance directors help our clients from 2-3 days each month up to a few days a week for higher revenue more complicated businesses.

The Smart Team like to work with businesses between £1m and £10m turnover and between 8 to 25 employees We have expertise in technology, pharmaceutical and science businesses as well as construction and charities but whichever industry our sweet spot is with ambitious businesses looking to scale, arrange a confidential no-obligation chat with me.