Over the years of working with companies as a consultant and running companies, it has amazed me as to how many accounting personnel within companies and, even worse, how many outside accounting professionals just don’t understand how that business is organized to MAKE MONEY. I’ve heard from clients all too often initially, I just can’t get the information that I request, or I just look at the bottom line of my financials.
All too often financial personnel and professionals are not trained in the fundamental profit controls of the company for which they work, don’t ask questions to learn, and simply do what they know how to do, not what the business requires. Except in the larger, more heavily staffed companies, invariably financial presentation in support of banking and bonding requirements and bank covenant analysis is not foundational to the monthly financial information package.
The purpose of an outside accountant is to not only prepare taxes or provide an acceptably formatted financial statement for your bank or bonding company, but to understand and challenge the financial controls and compliance issues of your business. If they don’t understand the nuances of your bidding process, if they’ve never questioned it and requested information to support what has been explained, it’s likely that your internal personnel are preparing financial statements in a format to support whatever your accountant asks. The accountant will often do what’s been done before, utilize a format that supports them in preparing your tax return, but not supporting management needs, presentation needs, and profit control requirements.
A financial statement is simply a control or “sanity check” to determine if what you think has occurred during the last month, quarter, or year is accurate and consistent with the internal information (or gut sense) that you’ve assimilated and with which you’ve managed your company. The purpose of monthly financial statements is to allow more rapid response to issues that arise when the financials don’t match what you think occurred. This can only be effective if the accountant asks questions, verifies responses so he or she truly understands the issues and business.
Question, when was the last time your accountant took the time to conduct an in depth review of your financial processes, procedures, and statement presentation? When was the last time that you had a meeting with your internal or external accountant and learned something new about your business besides tax planning? You are in the business of making money…and in the business of staying in business. Profit and bank/bonding compliance should be the primary topic of every conversation with your accounting or financial professional.
If you don’t take away something that is implementable routinely from these meetings, then you are either perfect (never saw a perfect company) or missing profit and cash flow. The simple purpose of your outside adviser is to increase profit, increase cash flow, maintain compliance needs, and to MAKE YOUR LIFE EASIER. Ask yourself the question of whether all those primary issues are addressed. If not, you’re missing profit and missing the right professional.
Anthony Burruano, owner of Burruano Group, the world’s foremost construction consulting company and firm, combines over 30 years of small to medium sized business experience in both financial and operational areas, mergers and acquisitions (international and domestic), and turnaround planning and consulting for the construction, manufacturing, distribution, service, and retail business.
For more information on Business Advisory and Consulting please visit the Burruano Group website at: http://www.burruanogroup.com
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