One of the most valuable learnings.

The most valuable thing I learned in my time in finance wasn't how to build a forecast, close a month-end, or survive an audit. It was to read and understand contracts.

Many treat a contract as something a lawyer drafts, reworks and files away until there's a dispute. In reality it's the document that has driven some of my biggest judgement calls (often in the millions) and defended financial statements with external auditors.

Accounting should never dictate the commercials. But before you put an offer in front of a customer, you need to know the financial implications. There's almost always more than one way to structure the same outcome, and one is usually materially better for both P&L and cash flow.

Here's three things I've helped navigate:

1. Equipment thrown in with a supply deal. You install $200k of equipment for free, recovered through a three-year monthly fee. Service contract with deferred revenue, or have you effectively sold or leased it? One keeps the asset on your balance sheet depreciating, the other takes it off on day one with revenue recognised up front. Same cash outcome but very different revenue, margin and EBITDA.

2. Make-good on a lease. Committing to strip out the fit-out and return the premises to their original state is a financial obligation you take on at the front of the lease — not when the lease is nearly up and it's time to do something about it.

3. Software licences. Are you paying for the right to access a subscription, leasing the software, or have you bought a copy outright? Expensed over the term, or capitalised and amortised. Implementation and configuration costs are a separate question again. So much has shifted to SaaS that your next business case could look very different to your last.

This isn't confined to businesses applying full accounting standards. If anything, the smaller you are the more it comes down to judgement. To add another layer, tax can land differently again, whatever framework you report under.

And if you're planning to raise or sell, these decisions can get revisited under a stricter framework retrospectively. Positions taken casually years ago become someone else's due diligence findings. I'm not raising this to scare anyone. It's so you're not caught out by an unwelcome adjustment when it matters the most.

You don't need to be an expert on this. But you do need to be across the risks and obligations your business signs up to. If it isn't your forte, it's certainly ours. O&U Group works with owners and founders who need sound commercial decisions without a full-time hire. Happy to have a free, confidential chat.

Information only, not advice. Every contract and business is different so please get advice specific to your situation before acting.