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FINANCE: To Liberate Accountants, First Empower the Business

 





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If accountants could choose, most of us would not be bean counters. We’re actually trained as analysts and investigators - not just the ones who compile the spreadsheets, but the ones who consider all that information, understand the lessons it has to teach and apply them to make our organisations better.

In the halcyon days of our education, maybe that’s what we thought we would be doing. Instead, too many of us spend our lives just chasing down the numbers, making one phone call after another to reluctant cost centre managers whose reports are always “nearly done”.

It doesn’t have to be this way. If those cost centre managers and other end users really understood the numbers they were responsible for, and were empowered to work with them in meaningful, non-intimidating ways, our lives would be a lot more pleasant.

The key move is to ditch all those spreadsheets and replace them with real-time systems; integrated with the underlying ERP systems; that make the relevant information quickly accessible to cost centre managers, in a form that’s easy for them to understand.

Note the key words in that sentence: real-time, relevant, quick, accessible and easy to understand. If you really want cost centre managers to engage with the numbers, those are the requirements that need to be met. Fortunately, nowadays it’s not all that hard -- and the rewards are immense.

One area that yields really quick benefits from real-time systems is expense management. Here I’m not talking about the purchasing and approvals process, but about managing the everyday budget expenses incurred in every cost centre. At the moment this quite often happens in hindsight: Finance produces month-end figures and sends the reports to cost centre managers by about the middle of the next month, and then everyone scrambles to explain discrepancies.

This is a worst-case scenario: finding out what I did last month is all very well, but six weeks after the fact it’s extremely hard even to remember or discover what went on, never mind correct a problem.

One step up from the worst case is the scenario where cost centre managers have access to a reporting system, and are theoretically able to go in and check reports for themselves. There are two problems with this: first, it shares all the disadvantages of being an after-the-fact report. Second, it requires cost centre managers -- who, let us remember, will typically tie themselves in knots to avoid having to deal with scary numbers -- to proactively access a system, understand what it’s telling them and act on that information. This is a big assumption - few cost centre managers understand how accruals work, for example, and most of them will put off looking at the reports until month-end anyway.

Cost centre managers have many priorities that will always come ahead of checking the financial reports. New business, sales, account management, people management, stock levels, production, and the like will always come first -- which is entirely correct. But as accountants, we need to help cost centre managers become aware of and understand their broader responsibilities to manage their costs.

There are very simple ways of doing this. For example, instead of expecting the cost centre manager to log onto a system and check financial reports periodically, decide what kinds of exception will typically need action, and then let those exceptions trigger an automated SMS or email to that manager.

One kind of alert could be triggered when an individual transaction exceeds an acceptable level for a given account: if a R 10,000 transaction suddenly appears on my entertainment account, for example, there is some explaining to be done. If it’s something as simple as a misposted entry, the cost centre manager who’s alerted quickly can call someone to correct the problem; if it’s something more serious, they can take appropriate action.

You’ll probably also want alerts to go out when the balance of an account exceeds a certain limit, or when certain budget benchmarks are passed. Have I spent 80% of my budget but only completed 50% of the project? I’ll want to know about that sooner rather than later.

It’s all about empowerment: If we accountants give cost centre managers easy tools to help them do their job of managing their costs, we’re more likely to get end users who understand what’s going on, show an interest and ask sensible questions at the right time. And that’s likely to make our own jobs more interesting; more analysis and less bean counting!!


 
 
 
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