Accountants Leaving Their Clients High and Dry?
I was recently referred to a sizeable, complex business with several departments. Like so many, the business had been struggling in the recession and both turnover and profitability were much reduced. Luckily the business was long established and had some reserves behind them to ride out the downturn.
The owners felt totally frustrated by the lack of information available with which to make decisions and take the necessary steps to get the business back on track. Although they had spent over $10K on accounting software this still wasn’t giving then the information they needed to manage the business. They had tried their best to get around the problem by designing a series of Excel templates into which they manually keyed data from the accounting system but in the process, because of the shortcomings in the system, some of the information had to be estimated. In particular, they couldn’t determine the profitability of individual departments and had no Key Performance Indicators data. It all got too difficult and the monthly reporting became incomplete, coming in later and later.
This business had used the same accountant for 20 years. As is so typical, despite the huge fee he charged, the accountant hadn’t visited the business for 12 years, was solely focused on the Annual Financials and had given the business owners no help whatsoever. The only thing he did was to include an additional paragraph in the letter enclosing the Annual Financials and Tax Returns (produced so far after the year-end to be useless) saying that both turnover and the gross profit percentage were down – surprise surprise! No advice on systems, on how to prepare monthly departmental interim financials or how to measure the things in the business which were critical to its success or on how to improve things.
Surely they were entitled to some help and advice from their accountants? After all, surveys show that business owners consider accountants to be their most trusted adviser (plus shouldn’t they be familiar with how their clients’ businesses?) And surely the accountant would only be too pleased to offer additional services and charge more fees!
We are now in the process of updating the software in order to produce accurate and timely monthly departmental accounts. In addition, as the software we are installing is top of the range, we are building in the capability to report on the key performance areas specifically requested by each of the departmental managers. Remember: what you can measure, you can manage. You also need to know your starting point to measure your improvement.
This scenario is unfortunately all too common. When things are tough, no matter how good business owners are in their core trade or profession, they need help and guidance in areas they are not familiar with. That is typically systems, finance or wider business issues. Why make business needlessly difficult?
If you need help with your systems contact Nick on 0800 ASK NICK or email firstname.lastname@example.org before it’s too late to make a difference!