One of the top frustrations that company owners and senior executives have is communication with their accounting/finance department. Consequently, the accounting department is sometimes viewed as a necessary evil rather than an asset.
Common complaints about the accounting department include:
- Information is not delivered on a timely basis.
- Information is not relevant.
- Reports are not understandable.
- The other departments do not understand where they are strong and what they need to improve on.
Often this can be tied to one issue: Lack of communication between the accounting department and the senior management of the company.
For example, on April 25th your accounting department delivers the financial statement package for the quarter ended March 31st. You receive an Income Statement, a Balance Sheet, and a Cash Flow statement. Glancing over it you see that for the quarter, sales were up $50,000 but net income only increased by $10,000 and your cash went down by $30,000. But nothing within the statements can tell you why.
For your department heads the situation is just as frustrating. Looking at consolidated numbers does not provide them with insight into what is going on in their section. Or, technical accounting language can make the analysis confusing or so buried in disclaimers that it is hard to determine the changes needed. Instead they are relying on their staff to keep them informed on workload, costs, and trends.
This is not an uncommon circumstance in companies. Many have weekly sales and production meetings, but only meet with the accounting department on a monthly or even quarterly basis. This can be exacerbated by the accounting staff, who are often comfortable with staying in their offices and keeping their heads buried in the books (and as a cost center with no revenue, accounting departments often feel understaffed for their workload, so they feel obligated to focus only on their duties).
Building a consistent, open, discussion channel will bring benefits including:
- Better understanding within the accounting department of the needs of the other areas.
- Better understanding among other departments of what they need to provide to the accounting department in order to get the information they want.
- Analytical reporting – allowing senior management to see trends in the business, and having that information presented clearly and concisely.
- Departmental reporting – allowing each department to see the income and costs associated with their operations, and the impact of changes on the company’s financial health.
- Better planning through a collaborative process.
- Better reporting leading to better results and more business opportunities.
As a former Chief Financial Officer, I have an extensive background in both financial and operational problem solving. I can help your accounting department develop the right relationships and implement the improvements in information that will allow you and your department leaders to have the right information on a timely basis.
Randy Miller
As an Outsourced CFO, Randy brings over 35 years of experience to his work with privately held companies; building better organizations for growth; and maximizing value for a sale or re-capitalization. He specializes in strategic planning, organizational development, and accounting and finance management services for businesses. His passion is working with Owners/ CEOs/Presidents to maximize enterprise value by sharing his knowledge gained from working with start-ups, growth companies, and turnarounds for over thirty-five years. His role is to build the accounting and support functions to allow the owner to focus on the business, not the back office. Visit RMM Accounting.