Your company probably uses a bookkeeper to keep your records on Quickbooks or something similar. They are pretty good, not great, and get your taxes filed on time. Big deal. They work all 12 months for the once a year tax game.
But do they give you information to let you know how you're doing? That's something you need at least 12 times per year. And most don't do anything except publish an Income & Expense report. What about sales, comparing this year to last year, by product line or for your top 10 customers? What about looking at costs. Are they rising faster or slower than sales revenue? What about comparing your expenses to your budget. Are you spending too fast?
And my biggest complaint is that they group expenses for tax reporting, not for management information. I want them to break their sacred "Insurance" account out and include auto insurance with auto expenses, health insurance with people costs, and liability insurance with SG&A. And what about grouping all the 'executive compensation' together (salary, your wife's car, you kids' cellphones, your country club expenses, etc etc) so you can see what the business is really doing for you. They can put the expenses back into the 'proper' categories for tax reporting in March. But for the 12 months you look at informational reports, lets make them meaningful and clear.
You may not have this problem. You may not care. What do you think?
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As a small business owner on Cape Cod, and as a person who networks with other small business owners, I certainly agree that not enough time is dedicated to the analysis of the bookkeeping data they already have.
ReplyDeleteIn a desire to keep bookkeeping costs low, it seems that many business owners are satisfied with the "bulk grouping" of profit and expense categories. This may save a few dollars in bookkeeping costs, but it makes the manager/owner blind to costs that could readily be reduced, or profit centers that could easily be increased.
I'm a fan of reviewing my bookkeeping software as a weekly exercise...both as a method of following up on my bookkeeper, and as an exercise in taking immediate action to increase revenue and decrease cost.
Your comments are right on target.