When you ask most small business owners this question, they usually always give you the name of the CPA Firm that prepares their taxes. While this is certainly not a wrong answer, it makes you wonder who is in charge of the Company’s accounting on a day to day basis. And how much does the business owner value the information provided by his accounting system and / or his accountants?
In May of 2012, I started working with two new clients. In both cases, the first order of business was to close the books at December 2011, and then start working on the 2012 year. So it was safe to say that not a lot of useful financial information had been provided by the accounting department to the owner in 2012. In one case, the owner needed to borrow money quickly but couldn’t, because he had no timely financial statements.
It’s a shame that many business owners view accounting as something that needs to be done just so they can do a tax return. Or that accounting is just a necessary evil and just one of those unpleasant things that every business must do.
Then there are the business owners who see accounting as a valuable strategic resource. Those business owners have developed an annual profit plan and maybe even a 3 – 5 year plan. This business gets timely and accurate monthly financial statements from their accounting staff. The staff compares the actual results against budget and explains variances. The owner receives monthly feedback on gross margin by customer, job, and salesperson.
Cash flow projections are updated and given to the owner weekly. The owner confidently understands both product costs and the overhead cost associated with running the business. Bankers and other third parties enjoy doing business with the Company because there are no financial surprises.
So what is the situation in your Company? When someone asks you, “who is your Accountant?”, can you proudly give them the name of your CFO, Controller, or Accounting Manager? If not, you have some serious upgrading to do. At B2B CFO® we specialize in helping you through the upgrade process.