Is your Chart of Accounts set up in a way to provide relevant and actionable information for you to analyze performance?
You’ve heard it a lot; that you should be reviewing your financial reports to make strong strategical decisions for your business. But, the problem is you do not see your financial statements as being relevant to you. They do not present information that speaks to you or is in a format that readily provides valuable information you can use. The Chart of Accounts is the first step in getting financial fluency for your business.
Many business owners do not realize that you can edit your chart of accounts so that they create reports that provide information you can understand and act upon. Fine print: within reason, of course. There are some basic rules that need to be followed. Your accounting firm should be assisting you with this and if not, find an accounting firm that cares about how your financial reports are being used by you.
Here are some questions you should ask yourself to see how you can redesign your chart of accounts and get reports that communicate what you need to know to act.
- Is the chart of accounts structured in a way that would make it easy to determine the revenues and expenses specific to various products and services?
- Is your balance sheet organized so that you know the value of your company? Is the information segregated so that KPIs (key performance indicators) can be used to measure metrics that are important to success and business health?
- Based on how the chart of accounts is structured, could you develop a simple flash report that represents the various activity and profit centers of the business?
- Is the information structured in such a way as to provide “line of sight” feedback to the team about their performance?
- How do the controller and/or bookkeeper feel about how the accounts are structured? Do they have any suggestions for improvement or areas of resistance that should be taken into consideration?
- Does the current structure provide indicators of progress toward goals?
- How proficient are the users of the general ledger software? Is there a need for further training?
- Who has access to the information from the general ledger?
- Is the client’s general ledger software adequate to accomplish the development of reports such as the following?
- Product or Service Mix Analysis
- Gross Profit per Products and Services
- Activity Center P & L
- Job Costing
- Have you asked your accountant to create any customized reports beyond the packaged reports the software provides?
Do your financial statements readily tell you how your revenue centers are doing? Which ones are more profitable than others? Do you use classes or departments to monitor performance by distinguishable segments of your business? Are you using job costing to know if and how profitable your jobs are? Are you using budgets or forecasts based on your capacity to see if you are using it well and performing based on capacity available?
The frontier of offering business accounting services is changing and CPA firms are realizing that our business clients need more from us than reconciled bank accounts and annual tax returns. As accountants and having access to your financial information, we are in the best position to offer business advisory services that:
- Help your business operate at its highest efficiency for scalable growth
- Develop standardized, streamlined and automated processes for consistently excellent results for internal processes and tasks, the soup to nuts customer experience, any repeating action, process, task, project can be improved through process mapping
- Identify the Critical Success Factors specific to your business that guarantee your businesses success with related action inputs, process mapping and performance measurements to build repeatable success.
O’Connor CPA Firm, LLC works under the Business Advisory umbrella to offer the really relevant services, information and strategies that businesses need today to create success, improve profits and build the best business model for efficiency, effectiveness, and ease of operations.
It really is about building a better mousetrap; one that is unique to your business and built with you and your team so that everyone knows what the goal is and how their participation and contributions generate results.
Rethink the monthly “bookkeeping” you are getting now and invest in a partnership with a CPA firm that can provide services that will actually have an impact on how you operate your business, what information you need to affect change and make strong strategical decisions, and build processes that can be used to drive results.