It’s easy to overlook and undervalue the importance of your company’s accounting department. Sometimes they are like the Rodney Dangerfield of the business world: They don’t get any respect. We call them “bean counters” and “number crunchers.” They seldom get caught up in the excitement of new ventures. In fact, they often seem to rain on our business growth parades. We tend to view them as a necessary evil when doing business.
Verne Harnish likes to say, “If the #1 weakness of growth firms is marketing, the #2 problem is accounting.” We tend to view our accounting staff with a bit of disdain. Sure, they pay the bills, invoice clients, collect money from clients, and provide monthly statements that show us our current financial situation. But frankly, they’re not very exciting.
The problem is, that if you ignore your accounting department—or relegate it to a lower status and don’t staff it with qualified people (and listen to what they say), you’ll have more excitement than you can handle. You’ll have “Holy-cow-we’re-broke-and-we-have-to-lay-off-half-our-people” excitement.
A good accounting staff provides you with the ability to better understand and manage your cash flow. And if you’re trying to grow your business, you know that cash is king. A good accounting department can provide you with accurate trend analysis and “early-warning-systems” that enable you to better predict spending needs. And a good accounting staff gives you a dispassionate look that some of the numbers that really matter.
Does that mean that they sometimes “rain on your parade” or throw a bit of water on the fires of your creativity? Yes. But sometimes that can be a good thing. Passion doesn’t pay the bills. Cash does.
How important is that? It’s essential. I had a client with a poor accounting department. The people weren’t dishonest; they simply weren’t capable of providing the support that this growth-minded company needed. Because of poor accounting practices, this company really didn’t have a handle on their finances. Yes, they received their P&L statements regularly and reviewed them—but the information was inaccurate. The people in accounting didn’t understand how the business operated.
Not only was the accounting department not providing anything like trend analysis or projected spending models, they weren’t even providing accurate financial information. The company thought they were making a good profit based on the numbers they were seeing. They weren’t, and they ended up laying off key employees.
It’s easy to treat accounting people as a necessary evil and to devalue their contribution to the company. Don’t make that mistake. A good accounting department can be worth its weight in gold. They are an essential element to your success.
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