client operations – Cooper Mann Consulting

May 19, 2015November 15, 2019

Accounting for Custom Manufacturing

Accounting and bookkeeping is a part of every business large and small, yet there are myriad details to work with and a multitude of possible approaches to addressing the requirement. From a summary perspective, there are standards which are fairly easily met, providing the basics of sales and expense tracking and income reporting sufficient for basic tax and compliance work to be performed. Yet accounting may go much deeper into the operational processes of the business, delving into the details of productivity and profitability in order to find and expose areas where the business might improve both.

mfg Manufacturing, particularly custom manufacturing or ETO (engineering to order) is among those industry types that could benefit tremendously from a more intimate and detailed approach to accounting. Unfortunately, it is often difficult to find experienced professionals with not simply a competence in working with manufacturing industry sector clients, but specifically with ETO process. Building to order is one thing, but finding the way to improve efficiency and profitability when every job is a custom encounter takes additional skills and a lot of data. Accounting professionals with these skills are needed to help these custom manufacturers grow, transform their businesses and make the overall operations more efficient and sustainable.

It seems logical that manufacturing and ETO space businesses are ripe for the same bridging of technology and analysis that the accounting industry started broadly approaching some years back. With bookkeeping processes being more frequently outsourced to non-accountants, the accounting professionals saw increased pressure to find more efficient ways of doing things and had to find new value to deliver to clients. Technology, data collection and analysis became the foundations for delivering on that new requirement. With the established model and philosophy, bringing more operational aspects of client systems into the mix and extending the model end-to-end just makes sense.

It takes a combination of systems – from the core accounting solution to the manufacturing control or other operational systems, through to the analytical tools. Leveraging hosting technologies and cloud service, businesses are finally able to bring the multiple work locations – shops, warehouses and business offices – together in a single software and technology platform, and collect the level of detail necessary to provide a comprehensive and true picture of the business. The analytical tools then provide the means to explore the details and identify where improvements might be made or where previously unrecognized risk exists.

QuickBooks desktop editions remain among the most popular financial systems used by manufacturing and job shop applications, largely due to the effectiveness of connecting the operational applications to an accounting solution which proves highly workable and which has strong industry support. Even with the emergence of QuickBooks Online (and the push by Intuit to get customers to adopt this web-based alternative to desktop-based software) the QuickBooks desktop edition products continue to provide more functionality and application support for these working models, as the ability to fully manage the information in the solution exists more in the disk based products than it does in a multitenant web-based application. Accounting “mechanics” are able to see, access and work with all the data rather than simply view reports where only half of the transaction is visible – making detailed accounting and data analysis more readily available.

The key is to leverage the accounting professional, the right software tools, and the platform and delivery environment that allows it all to work in concert for the entire organization. Add the QuickBooks hosting service so the participants can work more closely together. Enabling the accounting professional and bringing them closer to their clients (and client systems) allows the deeper move into operational issues, creating the basis for both to receive new and more value from the relationship.

jmbunnyfeet Make Sense?

March 18, 2013

Philosophy of Process Improvement: Today’s CFO Focusing on Operations

There are a great many methodologies and approaches to “making businesses better” through process improvement. From SixSigma to Continuous Process Improvement to Total Quality Management – all describe methods of measuring performance and outcomes to return intelligence oriented towards improvement. Many of these approaches are generally applied in manufacturing businesses, because in manufacturing it’s easier to see where processes may be flawed because the process works with tangible elements. Making corrections in a process can improve the performance of that process by reducing errors or increasing efficiency. The truth of the matter is that every business is like a manufacturing business, and applying measurements to the various processes the business performs can reveal the secrets to improving not only process performance and product quality, but resultant profitability.

A recent article on CFO.com titled Operations Take Center Stage, author David McCann discusses how some CFOs are improving business profitability and performance by delving deeper into operational areas of the business, and not remaining focused squarely on accounting and finance issues.

“Operations is the key to everything,” says Larry Litowitz, finance chief at SECNAP Network Security, a secure Internet-services provider. “That orientation is found most at manufacturers, but it should be at every company.”

Fiscal and financial matters are important to every business, but focusing on accounting for the end-result of business activities assumes that the work leading to the result is useful and effective. As more attention is paid to conservation of cash, reduction of expenses, and overall profit improvement, CFOs are necessarily moving deeper into the operational aspects of the business to uncover potential not previously addressed. In some cases, the move is more a function of self-defense and necessity than desire, as businesses increasingly compress spending on management, merging the functional roles of CIO, COO and CFO.

Increasingly, CFOs may find themselves taking on operational tasks whether they want to or not. At larger companies, the steady waning of the chief operating officer position has resulted in more operational responsibility for CFOs, recruiters say. In 2000, 47% of the 669 companies included in either the Fortune 500 or S&P 500 had COOs; in 2012, only 35% did, according to executive-recruiting firm Crist Kolder’s 2012 “Volatility Report of America’s Leading Companies.”

Some accounting professionals may believe that they don’t have the skills and experience to suggest changes in operational areas of their client businesses. I would suggest that logic and reason are generally the prevailing factors supporting process improvement – reasoning that is often developed through simple observation. Taking the time to understand what the business is doing at each level, and then actually observing those activities and accounting for their effectiveness and error rate, is how professionals can spend quality time in the business and uncover hidden profit potential.

Litowitz says CFOs can influence operations at a range of companies, including service-oriented businesses. “It’s really no different. The work is a set of activities,” he insists… “All these activities can be analyzed, controlled, and measured against a predetermined standard,” says Litowitz. And just as on a manufacturing floor, efficiency generates profit, justifying the CFO’s involvement.

Make Sense?

Joanie Mann Bunny Feet J

Read more about how Global CFOs are Returning to Fundamentals

March 7, 2013

Global CFOs returning to fundamentals

Accounting professionals in the United States have recognized for some time the value of offering what many refer to as “high level” services to their clients. For the accounting professional and the client business, consulting regarding strategy and growth represented value for both parties – guidance for the business client and profitable service for the accountant. However, as the economy began to decline and businesses tightened their belts, accounting professionals around the world recognized the opportunity and the need to return to focusing more on client operations and not simply on strategy and growth.

A recent article on CFO.com discusses the results of a survey performed by the ACCA (the Association of Chartered Certified Accountants), discussing how accounting professionals around the world are adjusting their approaches to accounting – adjustments at least partially fueled by global economic difficulties.

“There has been a little bit of a shift following the economic crisis. Pre-crisis there was a lot more focus around growth,” says Lyon. As the recession hit, Lyon says, global CFOs began to immediately question “What’s my cash position from day to day? What’s happening to my costs? What’s happening with my controls?”

Such anxieties may have triggered a shift back to the basics. “The CFO is a key adviser to the strategic (decision makers); that’s not in question. But there is a balance to be had in these times. That balance is around cost management and certainly managing risks,” says Lyon. “Finance as a function has been slightly brought back into focus.”

I would suggest that shifts in the approaches by accounting professionals are (at least in part) due to the various impacts of economy, technology, and globalization. There have always been different types of accounting professionals, with some focusing on management issues and others on strategy. Today’s accounting professionals must find a way to find a balance while addressing holistically the needs of the business client. This belief is also in line with the findings of the survey:

The complete finance professional 2013 summarises our thinking on why businesses need finance skills and capabilities across the entire finance value chain. We also recognise that this new environment requires finance professionals to bring a much broader range of finance skills to the table. The challenges faced by finance functions in supporting businesses are not constrained to a particular accounting or finance discipline. To strive to become world class, finance functions must excel in a broad range of capabilities, from supporting businesses to manage risk, developing effective strategies for growth, driving financial insight, continuing to maintain appropriate levels of control across the organisation as well as ensuring its statutory and regulatory responsibilities are met.

There are a lot of US accounting professionals out there who once approached their clients with a “holistic” service offering, focusing both ON and IN the business. Today, competitive pressures are driving professionals to re-engage with their clients in deeper operational roles, combining cost and cash management with guidance on growth and sustainability. It’s kind of like going back to the good old days of the full-service accounting office, and that’s a good thing for businesses.

Make Sense?

Joanie Mann Bunny Feet J