“Financial” or “Management” Accounting, what is it YOU need?

“Finance ‘Business Partnering’ is driving positive and tangible results in Progressive, Innovative and Successful Organizations”

 

by Steen Nielsen – Associate | Finance & Business Operations Management – July 2017

 

In most organizations Finance & Accounting teams sit on a mountain of ‘mega-data’ and information that is derived from expensive ERP systems and presented in a raft of daily, weekly, and monthly reports. They receive and book expense vouchers, get to see more HR data then one can imagine, they know a company’s customers, certainly the ones that fail to pay on time, they know that there is product in the supply chain that is not moving and they understand the interdependencies between systems and reports….

 

So, why is it then that they fail to communicate all this information in a succinct, simple, impactful manner?

 

Finance Staff are typically dedicated and loyal to their cause and from my experience they are often in the team that works the longest hours. No matter in what company I served during my career I see the same pattern. This is not to say other teams do not put serious work into their jobs. It is just that somehow a Finance person’s profile is one of love for details and an inability to stop before they are 101% certain numbers are correct. The oddity is that, despite what one has learned in school accounting is not a science where one can simply draw a line under a number following a long and protracted mathematical calculation and then claim that this number is the one to be cast in stone and ‘bet the farm on’… there are always ‘ifs’ and ‘buts’.

Add to this that stereotypical Finance Department employees tend to be introverted and they often struggle to communicate their findings, let alone their feelings – they focus on Financial Accounting (hard facts) activities as opposed to Management Accounting (scenario playing, forecasting, risk management). In summary they do not bounce off well with ‘loud’ (or more extroverted) people in ‘The Business’ who tend to communicate and interact based on ‘feelings’ and ’emotions’ (often as opposed to ‘facts’ and ‘data’).

Perhaps then now you can begin to see the frustration a General Manager responsible for a business or a business unit often faces when dealing with the Accounts Department and the information provided by ‘Finance’.

Here are some frustrations I have seen expressed from the General Manager’s perspective:

I can’t get my numbers on time, give it to me now! HELP!

We finished the year with record sales and then one months afterwards – before our bonus payout – the finance team knocks on my door and reports serious challenges in Accounts Receivables, unexpected new Accruals or other contingencies. Why did I not know before now? HELP!

I don’t see anything from the numbers I get, all these mambo jambo reports don’t tell me where I am doing well and what areas we struggle. I get to know more from my talks with Sales teams but why can’t finance tell me – with all this data they should tell me before bad stuff happens! I need trend reports and someone who I can have a dialogue with and do scenario planning. HELP!

We are on a negative growth pattern currently. Head office tells me to cut down. I know it must be done but I need alternatives, I need to know now how bad things stand. I need a someone who thinks with me as opposed to a ‘bookkeeper’. HELP!

We are growing very fast. I need my finance team to help me prioritise and select the right projects. When finally I get something it is half baked and usually they just prepare reports proving that I should stop all activity. This is not helpful. HELP!

VAT is coming. We are not ready in our ERP system. Our finance team looks increasingly stressed out and seem to have no solution for us. HELP!

Finance Departments more often than not have the information that ‘The Business’ needs but the people in the department, more often than not ‘Accountants’ as opposed to ‘Business Analysts and Partners’, are working day and night producing mandatory, and often not value-adding, reports for ‘Head Office’, ‘Regulators’ and other stakeholders in need of information for ‘Accounting’ purposes as opposed to ‘Management’ purposes.

At the same time, as explained before, often due to the inability of a stereotypical ‘Accountant’ to convert numbers into ‘Business Speak’ they often struggle to explain to you where your business is heading. Hardcore Accounting staff are either inherently pessimistic in their view of the business or even worse will just agree to anything you propose and just ‘Crunch the numbers as requested’, i.e. they focus on keeping the score only as opposed to thinking with you as to how to avoid a poor performance…

This is where we can help. It is not rocket science really as to why there is a need, so why then is it so difficult to fulfill the need? Whether General Management is focused on scaling down or expanding the business the challenge is the same – Finance Expertise and Analytical Business Support is required to make the right decisions to steer away from bad scores and instead improve the overall performance of the business.

Accelerate Evolution is well-positioned to help you get organised by providing ongoing operational Finance Business Partnering support on an interim basis or indeed by working with you and your teams to build Finance Business Partnering expertise in-house through our Management Advisory solutions. In the coming series we will further elaborate on the challenges as highlighted above.

In any case – the reports can wait if you need help now…. Contact us right away: finance.grc@accelerateevolution.ae