Accounting is important!

Accountants know accounting is important.  But how important do YOU think it is?

Often small business owners are so busy doing stuff and running the business that they don’t take enough time to work with their accounting department and make sure they have good numbers, and to study them.

The numbers tell you what results you are getting from doing what you are doing.  If they aren’t coming out well, you need to do things differently or better.

I have been inside many companies.  I can tell you that some accountants are better than others.  Get a good one.  

It’s a good idea to SIT DOWN with your accountant and review the financials together.  Ask questions.  

The “Chart of accounts” in simply the categories your Balance Sheet and Income Statement (Profit and Loss Statement) is broken into.  You can simplify it when you don’t need that much detail, or you can ask them to break categories out more to see particular numbers you are interested in each month.

For example if selling Pepperoni is important and something you were pushing your salespeople to sell, then you could ask your accountant to show pepperoni sales separately under the revenue category.  You could also ask them to assemble on ongoing chart of pepperoni sales each month.

I like charts.  I take key numbers from our financials (I look at financials from 35 companies each month) and have them put on charts.  One chart for example has sales (revenue), receivables, payables, cash and the “Spread” on it. (The “Spread” is cash + receivables – payables).  This way I can see these numbers compared to what they have been historically over the last three or four years and see the trend.

Make friends with your accountant and the Balance Sheet, Income Statement (P&L), and Receivables Aging report they are producing.  

They help you be a better leader.  Besides, if not you, then who?