Accountants and Business Owners work hand-in-hand more often than not, or they should anyway, when understanding how each role functions. This doesn’t mean the accountant is on hand every day within the business, but does play a vital role. Here we explore why this relationship is such an important one.
When does a Customer become an Accounts Receivable, or a Supplier become an Accounts Payable? What is Reconciliation exactly, and what does Inventory have to with not inventing anything? It’s no wonder that business owners who make exceptional products, dislike the accounting side of their own business. It’s also justifiable for business accountants to get frustrated when looking through the various business details and getting confused. A coffee roasting business will use different words than a plastic manufacturing plant, and somehow in all of this the accountant has to work out which term relates to which figure. A general meeting before any work commences, and a little bit of research from either side on the opposite role, will enable quicker understanding and a better result.
Who is responsible for what task, and how much information is required? It can be a daunting task to navigate through facts and figures and try to ascertain the meaning of the results. During the initial consultation phase, it’s good to work out what is expected of each party during the process, and when task are due to occur. It will only be a waste of time if one party thinks the responsibility is on someone else, and it never gets done. The business will suffer, people will stress and workplace relationships can breakdown due to simple misunderstandings. Work out what each party is good at, and utilise those skills in the correct manner for the best results.
- Time Frames:
When making a cup of coffee only takes 2 minutes, but a financial year is 12-15months and not even on a calendar year, the difference in expected time frames can be a nightmare. Some business calendars move with customer expectations on service levels during busy periods, which can be daily, weekly, and monthly, whereas others are navigated on when sales are made, monthly deadlines or in-line with calendar year or financial year. It’s important to understand that some dates are flexible, whereas others must be set in stone and adhered to, ensuring a smooth process from both parties.
- Recording Information:
Accounting can be very much like programming. Where programming is all 0’s and 1’s and either works or it doesn’t, accounting either adds up and balances, or it doesn’t, and accountants want to know why. Many business owners might not understand where they are losing their money until it has pointed out to them in black and white in a report. Accountants also need to know where to look to find the discrepancies, and business owners need to know how to record them. Wastage can be a huge business loss if not managed correctly, and many businesses fail at even recording where their waste product goes, essentially pouring money into the bin.
- Work Flow Processes:
It’s all well and good to have everything else sorted out, but if you are not cohesive on the work flow of the business, and how each area of the business works, trying to account for it all is going to be a nightmare. A well-run business is like a well-oiled machine and should be able to run somewhat autonomously. This comes down to processes being in place to ensure that information is shared as required, and there are no kinks in the system holding anyone back. As soon as an issue arises with either party, it should be bought to the attention of others so that the day to day running of the business is not affected. Although an accountant might not work for you directly, they are a big part of your business, and therefore a huge part of your work flow management.