Business Support

Over the last couple of years I have been involved in a number of companies, from diversified economic groups with hundreds of employees through quoted start-ups to owner-operated small businesses. The accounting function in these companies can be classified in one of three ways:

• business support function, providing timely, relevant information to managers to help them run the business;
• irrelevant back-office legal necessity with no management reporting;
• obstacle to business development, distracting management from strategic matters due to mis-handling and misinterpretation of information.

Unfortunately, none of the companies could boast systems that produced business support information, at least on a timely basis. Most companies fall into the second category. As for the third category, I am quite embarrassed as an accountant that accounting issues can be so complex and devoid of business relevance that this business support function can end up distracting management from strategic issues.

More worrying still, none of the companies had any cash-flow information built into their financial reporting. Now some years into the recession, companies still have not grasped that cash is king.

Who is to blame for this accounting disfunction? In the first place, management, many of whom have no formal training and have to rely on their accounting function.

In the second place, the finance directors and accountants who often see themselves as a necessary evil rather than a function that can add value. Too often I hear them say, "Nobody asked us for any management information." To me, such a statement is grounds for dismissal. Even when the accounting is outsourced, the service provider should send management information, even if the client does not ask for it. That's what I do for my clients - no complaints yet...