As an accountant, you are almost certain to recognise the importance of sound planning for the future and for making the best possible use of the working capital available to your partners and the firm.
It is also within your professional remit to understand the importance that effective, efficient and price-competitive borrowing may play in the commercial success and development of any enterprise – including your own.
This is the background against which you might want to consider:
- why borrowing may be necessary to keeping your place in the financial services market; and
- the borrowing options you may have.
Why borrow?
Graduate employment specialists, Prospects, recognise that negotiations over Brexit may have raised questions about the way VAT and corporate tax may be resolved in future, the accountancy profession in the UK is still demanding skilled and qualified employees.
The demand points to a strong and healthy demand for accountancy services and a generally positive indication of the opportunities for the growth and financial success of individual firms of accountants. In short, accountancy faces the opportunities and challenges of a competitive market.
To forge a strong and successful position in any competitive market requires a careful management of working capital, which needs to be bolstered as the occasion demands by access to additional funding.
That additional funding may be essential to such business developments as:
- the acquisition of office space or the improvement and extension of the firm’s existing premises;
- bids to acquire or takeover other firms of accountants in the locality;
- funds for the acquisition, installation and commissioning of new IT systems, designed to maximise the speed with which your firm may react to market developments and new opportunities that may arise;
- ensuring sufficient flexibility in the management of the firm’s cashflow to meet tax and VAT liabilities; and
- ensuring that essential overheads – such as maintaining the professional liability indemnity insurance of the firm’s partners (as required by the Institute of Chartered Accountants of England and Wales, ICAEW).
Borrowing options
As an accountant, you are of course aware of the two principal forms of borrowing:
Secured loans
- traditionally, businesses of every type and hue – including firms of accountants – have looked to various forms of long-term borrowing, secured against the personal assets of individual partners or owners or of the business itself;
- one of the prime examples of such secured borrowing may be found in the property mortgage used to acquire business premises from which the business operates or to acquire other property for investment purposes;
- an alternative type of borrowing is also likely to have been the long-term, secured bank loan;
- not only does a secured loan require owners of the assets offered as security to risk those assets (against the possible failure of the business, for example), but it also represents a long-term commitment (typically lasting tens of years) during which interest charges assume a significant proportion of the repayment costs;
Unsecured loans
- unsecured loans, on the hand, involve no such risk of security against practice or personal assets and may be repaid over a significantly shorter period of time – typically, between three and twelve months – thus significantly reducing the period over which interest accumulates;
- an unsecured loan for a professional accountancy practice such as your own, from us here at Professional Loans, may be tailored to suit your precise needs in terms of both the amount of the loan and the period of repayment;
- cashflow management – something dear to the heart of any accountant – is also made more certain because our interest rates are fixed for the duration of your loan and repayments are for the same amount each month;
- our unsecured fixed rate loans for professionals such as yourselves are also extremely flexible with regard to the amount you borrow – from as little as £5,000 up to as much as £1 million, or even more, depending of course on your status.
- how you use the funds and additional working capital raised in this way is, of course, a matter for you and your firm to decide.
- our professional loans may be applied in the acquisition of new offices or other property, for acquisitions of other firms, the commissioning of new IT systems, the purchase or lease of other assets, solutions for meeting tax and VAT liabilities and as a way of ensuring that the cost of the professional indemnity insurance premiums required by your professional body, the ICAEW, is met for all the accountants in your firm.
An unsecured fixed rate practice loan, therefore, may help you to meet some of the pressing needs for increased working capital for your firm.