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The Chequebook

2/20/2023

The relationship between the CEO and their FD/CFO needs to be strong.

The relationship between the CEO and their FD/CFO needs to be strong.

I always aim to have mutually beneficial relationships with my clients. Not only do we need to be a good fit for each other, but they also have to trust me and I have to trust them.

For example, when clients are pitching to investors, I've got to give them some credible numbers, but also make them credible. Sure, projections are just projections, but they need to be realistic. 

It’s the same with all stakeholders - an investor, a board member, a shareholder and even the taxman. 

I’ve become quite obsessed about this. It’s massively influenced by a story an old boss told me more than 25 years ago, when I worked at an accountancy practice in Dublin, back in the late 1990s. 

At the time when tax audits were completed by The Revenue Commissioners, the Irish equivalent of HMRC, there was normally an exit meeting between the taxman, the client and their accountant. Where they reviewed and agreed on any unpaid taxes.

The Revenue Commissioners wanted to see everything. They wanted to see all your income and all bank accounts disclosed. During this era the accountant might have also discovered that some accounts were previously hidden by the client. A bit awkward, right? Times have changed but back then the system wasn't as easy to check. It wasn’t digital.

The, now famous, story comes from a meeting between the taxman, a client and their accountant. Following an audit, a number of secret bank accounts were discovered … with undeclared income.                           

The taxman presented his findings, the unpaid tax, penalties and interest. The accountant went through the list, challenged a few items and reduced the liability to an agreed amount. 

The client took out his chequebook and wrote and signed the cheque, handing it to the taxman.

The taxman was about to conclude the meeting when he looked at the cheque to note the sort code and account number on the bottom of it. He compared these to the list of bank accounts that he had reviewed and discovered this cheque was written from a bank account not on his list.

"I don't have this bank account on my list." 

The most awkward of silences between accountant and client. Not an ideal or acceptable position to find yourself in.

As an advisor, I can’t imagine being in that position or what I would say to the client. If you were the client, what would you say to your advisor? 

Relationships need openness, trust, honesty, full disclosure and credibility. Even though we don't write cheques, and hopefully declare all our income so everything is above board, it's so important to have a mutual level of respect. This applies to all aspects of trying to build and grow your business.

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