Many costs of doing business in today’s competitive environment are driven by the belief that advanced technology is always better. To be fair, this is often true. But in some cases, the answer may lie in a more insightful and strategic use of existing resources. I believe this was most certainly the case for a company we began working with a couple of months ago.
Month after month, the company’s president and COO were becoming increasingly frustrated. They had been faced with several critical business decisions, but their responses had been hindered by a lack of reliable and accurate financial information. They suspected their accounting system and processes weren’t up to par. One solution they had considered: scrap their existing system, which had been used for many years, and upgrade to a significantly more complex system. The price tag for this solution was upwards of $200,000.
The president and COO asked for our assistance in identifying and implementing the right system, which, of course, would further add to the expense of addressing the issue. Although happy to offer our expertise, we recommended first taking a step back. It was important to evaluate what was really going on, and dig deeper into what management hoped to gain from the new system.
Not only was $200,000 a major purchase for a growing small business, but the time needed for implementation would have been lengthy and full of potential pitfalls. Our primary concern was for the business owners and employees—we needed to assure them that the expense would be worth it. To get a complete picture of the company’s internal controls and processes, as well as how staff interacted with the existing accounting system, we conducted a series of interviews. We started at the top with the president and COO, and then worked our way through the accounting staff.
- The company’s general ledger framework was not optimally configured, which significantly complicated the accounting process, and
- The staff members managing the accounting function were lacking the skills and expertise necessary to do so.
Combined, these two issues were preventing the company’s accounting system from functioning at its true capacity, and causing significant delays in financial reporting.
With the accounting function running smoothly, management had the freedom to focus on identifying the perfect candidate without having to rush the process. They relied on our knowledge of the market and industry, and together we identified a salary range that would attract talented, committed professionals. We also worked with them to identify a package of salary and benefits that would set them apart from competitors. We made sure they weren’t overpaying for the resources they needed, and we gave them honest feedback on candidates.
In the end, the president and COO were thrilled with the new and improved performance of their existing accounting system, as well as the support of streamlined processes and qualified staff members. As you might imagine, they were also relieved to avoid an unnecessary $200,000 purchase.
Make the most of your accounting system.
If you’re worried that your accounting system isn’t serving your business, think twice before you upgrade. All too often, existing systems are not configured in a way that fulfills their potential; many simply need additional expertise to make the most of it. A fresh set of eyes helps, too. Bringing in an outside perspective is also invaluable for evaluating your internal processes and staffing.
If you have questions or concerns about your accounting system or process performance, please don’t hesitate to contact me.