HAVE you ever had one of those moments when you think, “No, that’s just not true”?

I did recently when I heard someone on the TV say that a recent business failure was all the fault of the accountants “who just want to cut costs”.

I have been in practice for 35 years and while part of my advice to business clients is inevitably to suggest that they look at their costs, I spend far more time concentrating on their income.

It is good business discipline to see if you can reduce any costs without impacting on service, but once you get beyond the basics, the decisions become more difficult. Cutting the wrong costs can actually drive profit down rather than up.

One of the first costs that people consider cutting when times are tough is marketing. If your marketing and advertising is effective, a reduction risks hitting your sales.

If other people are marketing the same product or service more effectively, their sales will increase and your sales and profit will fall. Obvious? Yes, but I have lost count of the number of times I have seen it happen.

And what about wages? Accountants are often blamed when there are lay-offs, but again I think I have spent far more time over my career talking about investing in staff and training than in suggesting staff cuts. The important word is investing.

If you are in the hospitality business for example, reducing headcount will almost inevitably reduce the service customers perceive they are getting.

Business follows good service and customers will change their allegiances. Sales will fall and so will profit.

Much is being made at present of low productivity in the UK economy. One of the best ways to increase it is to invest in training. Better products, better service, belter profits.

Over the years I have seen hundreds of business start up, grow, sometimes struggle and (sadly in a few cases) fail.

Knowing what the warning signs are, knowing what works and what doesn’t has made me see things differently.

My job isn’t just a question of producing a set of accounts for the bank or the taxman but of offering an informed and supportive, but independent view of what is happening in someone’s business.

Unlike the person on TV I don’t see my job as being about cutting – it is about building. That, in my experience, is what good accountants actually do.

*Paul Aplin OBE is a tax partner with A C Mole & Sons and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty; you can follow him on Twitter @PaulAplinOnTax. He and fellow tax partner Amanda Gunter can be contacted on 01823-624450.