If your car’s broken, it doesn’t run or it makes a funny noise. If your computer’s broken, well, you know it … usually in under 20 seconds. But if you’re running a business, and your accounting department is “broken” and not performing as it should, you could go for month or even years without knowing it, and it could cost your business thousands or even hundreds of thousands of dollars.
Here are 5 indicators that your accounting department is broken, and that you need to fix it.
1. Your company is not paying its bills on time. This is crucial. It upsets your suppliers, it hurts your credit rating, and it can increase the interest amount you pay lenders when you borrow money. Even if you have a cash flow problem, you CAN address it and fix this first!
2. Receipts aren’t getting logged expediently. This is almost as crucial as #1. Your customers are paying you, but in some cases the checks aren’t even put in the bank until 2 or 3 days (or more) after you’ve received them. This delay (and the mindset behind it) brings positive financial growth to a standstill. Correct this immediately to strengthen proper accounting discipline.
3. Your accounting department does not provide you with useful reporting. This function is what really separates the men and the women accountants from the boys and the girls. It’s not easy. But it is essential. Any accounting staff can be trained or supplemented to provide timely and vital financial reporting to the CEO. There isn’t a CEO alive without a few “If I’d only know about that …” stories of vital financial information that they DIDN’T RECEIVE IN TIME from their accounting department that cost the company and its employees a great deal of money and opportunity.
4. You feel you’re losing control of the financial side of your business. This is not your fault. This is your accounting department’s fault (but your responsibility.) It is their job to keep you in control of the financial side of your business. They need to proactively supply you with facts, figures, and opportunities so that you understand the “big picture” and can make decisions that are right for your business. If they are not doing this now, they need to start right away. Proper training can put them on the right path.
5. Your business fails to meet bank/stakeholder deadlines and requirements. This one can really hurt you. Late reports, flawed reports, and missing information create a perfect storm that makes the lender look foolish in front of his/her management … and they take out their frustrations on you! But you can flip that around; timely and complete reports to your bank or stakeholder will make you a “star” and attract better treatment, more generous terms, and forgiveness and support during times of financial stress.
A broken accounting department can be fixed. No accounting department should fall short in the 5 areas described above. If ANY of those 5 areas is a problem in your business, then you have a broken accounting department. But unlike other areas in most businesses, such as Innovation, Customer Service, and Product Development, there is a recipe for fixing broken accounting departments that is CONCRETE. Accounting is a nuts-and-bolts, by-the-book science; so fixing it is easier than you think. And the results? Enormous. And attainable by you.