For accountants working with jewellery businesses, the financial landscape comes with some serious twists and turns.

From fluctuating gold prices to strict compliance rules, there’s a lot to keep on top of. Understanding the risks these businesses face can help your team to offer stronger financial controls. Across the industry, having the right safety measures in place is critical in protecting accountants.

1. Valuation and inventory headaches

Jewellery businesses rely on accurate valuations for everything from tax returns to securing insurance, but it’s rarely straightforward.

The value of gold, diamonds and other precious stones can change quickly, meaning inventory might be worth more – or less – than the books suggest. Accountants need to track market movements to make sure that all records reflect real-world values.

If mistakes creep in, they can lead to underpaid tax or overstated profits, which both carry serious knock-on effects.

2. Theft, fraud and financial loss

Jewellery businesses are natural targets for thieves but the risks don’t stop at in-store theft. Internal fraud, whether it takes place through manipulated financial records or inventory tampering, is a real worry, while cyberattacks targeting sensitive financial data are increasingly common.

Accountants play a vital role in helping businesses set up strong internal controls and put clear financial safeguards in place to limit losses if something goes wrong. Spotting suspicious activity is the first step.

3. Keeping compliant

The jewellery trade has some complex compliance obligations to keep up with, from VAT reporting to ethical sourcing rules, including the Kimberley Process tackling conflict diamonds.

Accountants need to make sure their clients are ticking every box because even the smallest mistakes here can lead to hefty fines and even legal action, let alone reputational damage.

While you seek to ensure compliance with financial regulations, you may find it valuable to look into accountants’ insurance as an additional safeguard against potential liabilities. It’s a common layer of protection for those working in such a high-risk sector.

4. Market volatility and financial planning

Jewellery businesses live and breathe market volatility. Prices might look healthy when the value of gold increases but a sudden dip can leave inventory stock worth far less than expected.

Accountants need to build this uncertainty into their forecasts and other regular financial planning. Sensible strategies, including hedging or flexible pricing models, can help clients stay resilient when the market shifts unexpectedly.

5. Credit risk and late payments

Finally, jewellery businesses often rely on credit, selling stock to retailers or wholesalers on pre-agreed payment terms.

This comes with its own set of risks, especially if buyers fail to pay on time – or at all. Accountants need to help clients assess just how much they can trust their buyers and encourage them to put processes in place for chasing unpaid invoices.

Protecting cash flow in this way is vital for keeping the business stable, especially if it’s a relatively new company. With the correct support from trusted accountants, jewellery businesses can become resilient and respectable too.