We have a client that has been coming out of a revenue decline induced in part by COVID 19, and they’re now in the black and growing nicely. But their accounting team has consistently been below an acceptable standard for performance. So when we started working together we connected them with an outsourced accounting firm that takes our client’s data entry information and produces financial statements, tax returns, etc. The client also moved an additional employee from Operations into Accounting to help fix the holes. Much improvement resulted for the client and for our ability to help them understand their financial condition and prospects.
But some things didn’t improve enough. The data entry has consistently had flaws that required back and forth Q&A, delaying reporting and related analysis and decision making. Despite developing a checklist of all the things that should be reviewed before sending data off to the accounting firm, the quality of the data entry didn’t improve enough to enable us to review financials in a reasonable timeframe. (Note: a reasonable timeframe can be defined as: soon enough to avoid making the same mistakes this month that we made last month.) As the company grows and does more business, accounting accuracy and timeliness become more important, and the CEO recognized that and wanted to make changes to fix Accounting, get the loaner employee back into Operations, and be able to capitalize on their renewed energy. Here are the steps we recommended to make the transition:
- Upgrade the company organization chart to ensure the overall company structure supports the growth expectations, so that a restructure covers all the bases. The alternative is a rolling restructure that disrupts everyone’s concentration on doing the business of the company.
- Develop job descriptions for the restructured jobs to ensure that all needs are identified in Operations and Accounting, both to inform the new people about their responsibilities and enable ongoing performance reviews.
- For Accounting, hire a strong accountant to lead the effort to remove bookkeeping flaws, starting with a job description that will serve both to define the search criteria for the new employee and inform candidates what will be expected of them once hired. This does not need to be a controller level person at this point, but ideally the new hire could potentially grow into that role as the company’s needs grow – a win-win for both.
- Finally, actively use the information they’ve created: Hold employees to the job descriptions in performance evaluations, rewarding good performance and guiding correction of not-so-good performance. Let everyone know what the organization structure looks like, and when reporting responsibilities have changed, and keep everyone on track and in tune with the new relationships.
For most companies their people are their most valuable resource – where have you heard that before? Treat them fairly and they will treat you with strong loyalty. Our client is on the Inc. 500 list of best companies in America to work for. There’s a reason for that. How do we know?
We are Your CFO for Rent.