<i>Illustration Karl Hilzinger</i>

Illustration: Karl Hilzinger

In my experience, there are two kinds of people in the world: those who understand their accountants – and those who don't. If you're in the former category, move along. There isn't a whole lot else for you to see here. But if you're in the latter category – and I know there are a lot of you out there – read on.

If I had a dollar for every time someone told me how much they wanted to change their accountant, I'd be super rich. And, surprisingly often, the conversation always seems to go like this …

All these numbers may seen daunting to to begin with. But when you read the statement it really is like reading a story. The story of your business. 

Them: "I'm looking for a new accountant. Do you know one?"
Me: "What's wrong with the one you've got?"
Them: "Oh, you know, there's nothing really wrong with them. But they're not really proactive."
Me: "What do you want them to do?"
Them: "Well, they just give me these reports every month and I don't understand them. I just want them to tell me what to do. Not just give me a bunch of options."

This is a classic case of abdication. And it drives me freaking nuts.

Excuses, excuses

I can hear thousands of people say: "I don't have time to get into the nuts and bolts of accounting. That's not my core strength, that's why I outsource to an accountant!"

Fair enough. We're all busy business owners. Of course, you should delegate functions like this to the experts. But there is a HUGE difference between delegation and abdication. When you offload your accounting functions, you still need a strong understanding of how to read financial statements, analyse your cash-flow and create budgets.

If your eyes are already glazing over at that last statement, then I'm sorry to say that your business is only going to go so far. Sure, you can still generate a decent income, but getting a handle on your financial reports is the cornerstone to much bigger and faster business growth.

I'm sure I don't need to convince you that understanding your finances is important in the world of small business. Very few people would argue with this.

Instead, I'm constantly hearing statements like this:

"But I just don't get it. Maths isn't my strong point."
"I just don't have a head for numbers."
"My accountants sends me those spreadsheets and they mean nothing to me."
"I've tried to learn this stuff, but it makes no sense."

Why do smart people say this?

Here's the most frustrating thing. These statements come from intelligent people. And I find it utterly confounding. Because guess what? Understanding your finances is not rocket science. In fact, it's not even close. If you can count the dollars in your wallet, you can understand your financial statements.

When I start talking to some business owners about tax, I can actually see their eyes drift off into another direction and their body language shut down. And that's the crux of the issue. It's not that these people aren't smart enough to understand. They just THINK they won't understand – and so they don't even try.

These are the same people who will then blame their accountant for not being proactive with advice on where to spend their money, what to invest in, or how to steer the business.

While I will happily admit that there are accountants out there who do little more than submit BAS statements and don't take enough of an interest in their clients' businesses, there are those who do. But, even then, it's not their job to make your business successful. It's yours.

They are not at the coalface involved in the day-to-day workings of your business. They aren't privy to the nuances of your business relationships or the interpersonal dynamics that may affect your business direction. The buck stops with you.

It's really a simple two-step process:

1. Get over the fear. The only person who can do that is you. Your accountant isn't responsible for this.

2. Equip yourself with basic accounting knowledge. You don't need a degree. Personally, my recommendation would be to get one-on-one tutoring from an experienced bookkeeper. Ask them to cover the issues that are particularly specific to small business owners.

If you find yourself saying any of the above statements, remember this: understanding finances is easy.

Seriously, go into it with an open mind. Do a simple course like "Accounting for non-accountants" or "Accounting for small business". There are many courses like this available at most evening colleges.

If you're not the "classroom" type, invest in some one-on-one tutoring from a bookkeeper or accountant who can show you the fundamentals.

This is a good time to make a confession. I'm a former accountant. And while that statement might sound like an introduction to a Monty Python sketch, I just want to be upfront about it. However, while I may have done accounting at uni, let me assure you that I've forgotten most of it. It was a lifetime ago.

I could not tell you how to calculate fringe benefits tax on a recent meal I had with a client or when to modify my cost base for capital gains tax purposes if my life depended on it. Hell, I sometimes have trouble filling in my BAS statement.

So I'll admit, there isn't a great deal left in my knowledge bank on accounting methodologies. And clearly, accounting wasn't my forte either, which I why I became a writer. However, the gift that background gave me was that I know I have no fear when faced with a balance sheet or financial report.

All these numbers may seen daunting to to begin with. But when you read the statement it really is like reading a story. The story of your business.

If you find yourself procrastinating over reviewing the reports your accountant sends you, or if your eyes glaze over whenever the topics of accounting comes up, then GET OVER IT or you will never reach the  potential of your business.

twitter Follow Valerie Khoo on Twitter @valeriekhoo