Your 2006 operating plan is in place and your operating executives are intensely executing. What about your back-office staff, specifically your accountant? Is he or she delivering the value that your business requires?
Let's first define the word "accountant". This article is equally applicable to an in-house accounting staff, a local CPA, or your independent auditors. Your "accountant" is the people you trust to help you make critical financial, operating, compliance, and monitoring & control decisions affecting your business. A solid and trusted relationship with your accountant is a valuable asset that can help your business grow and expand.
As you think about the impact of your accountant on your business in 2005, ask yourself this question, "Is my business better off because of or in spite of my accountant?
If you answered "because of", stop reading. If you answered "in spite of," skip to the last paragraph.
However, if you answered, "I don't know," here are a few metrics to help you decide. Any high-performance accountant should welcome such scrutiny. Responsiveness - Is your accountant easy to reach? How long do you wait for a return phone call? It is your business. If you need a return phone call the same day, make sure that expectation is understood. If you have to wait several hours for a response, your accountant is not accountable! Decision Support - If you typically make critical decisions with little or no information because your accountant works on his or her schedule rather than yours, you are managing your business by intuition. Frankly, managing by intuition instead of by information is a key reason that companies fail. If your accountant does not support your critical decisions with accurate, consistent, and reliable information, he or she is not accountable! Operating Metrics - Are you receiving information on the operating results of your business? Such information should be delivered to you on a daily or weekly basis. Examples include inventory age & quantity, line of business profitability, product profitability, customer profitability, receivable aging, cash needs over the next 60 days, shipments, etc. Every business loses money or earns lower margins on some customer relationships. Who are your least profitable customers, how much profit was generated by each product line and division in your company, how does your company compare to others in your industry, and which products should you stop selling? If you do not know the answers to these questions, your accountant is not accountable! Cost Reduction - When was the last time you received a cost reduction idea from your accountant? In many cases, the reason that high profile layoffs and restructurings are in the news is because so many companies are not controlling costs and expenses on a monthly basis, especially when times are good. If your accountant is not making cost containment and cost reduction recommendations, he or she is not accountable! Financial Statements - Does your accountant deliver financial statements that are more than two weeks old? If so, the information contained in the financial statements is stale and less useful than it should be. You should receive an idea of operating results by no later than the 3rd business day of the following month and a full financial package by no later than the 10th business day of the following month. The full financial package should also include a forecast of income or loss, financial position, and cash needs covering at least the next quarter. If your accountant takes your data and pumps out financial statements in 20 days, they add no value. He or she is not accountable! Technology - Great technology is inexpensive today. Real-time access should be part of your accountant's normal service delivery, not an extra cost. Robust technology is not a luxury. It is a necessity. If he or she is not using robust proprietary software and the Web to automate transaction processing, streamline record keeping, and to deliver information, your accountant is not accountable! Tax Law Changes - Changes to the tax law are made every year. How frequently does your accountant meet with you to discuss these changes and their implications on your business? Did your business receive a large tax refund last year? If so, you paid too much in estimated taxes and lost the opportunity to invest that money in your business. If you can't remember your last tax planning meeting or you received a large tax refund, your accountant is not accountable! Fees & Expenses - Do your accountant's fees or the cost of your in-house accounting department increase every year? If your business is growing, if your needs are changing, and your accountant's impact on your business improves, fees should increase. However, if your fees increase yet your needs are the same and your accountant delivers the same or reduced value, your accountant is not accountable! Turnover - Is the turnover of your in-house accounting staff very high? Does your outside accountant frequently assign new staff to your account? It is impossible for your accountant to add value if he or she doesn't understand your business/industry! If there is high turnover associated with your accountant, he or she is not accountable!
This list is by no means an exhaustive. However, if after considering these metrics you decide that your accountant needs to be more accountable, start by conducting an "Accountability Review" -- the same type of review you'd use to evaluate an employee. An Accountability Review starts with a mutual understanding of how performance will be measured. It allows you to define the relationship expectations, service level, and scope. It then provides a basis for the accountant to mature with your business. Ultimately, an Accountability Review is the best way to build accountability into the relationship with your accountant.
If you'd like a sample Accountability Review . . . simply contact me, Michael Krueger. |
