financial analysis – Page 2 – Cooper Mann Consulting

January 29, 2013October 28, 2015

An Educated Guess is Not a Crystal Ball – Forecasting the Future

If every business could peer into the future to see how they will perform, there wouldn’t be a need for historical data and performance benchmarking. Unfortunately, nobody has a crystal ball, so it becomes necessary for business owners to plan for the future. By making educated guesses with valuable information gleaned from the past, companies can establish the path they will take to growth and profitability.

Accounting professionals are great at producing accurate historical financial performance information. The value in this historical data is only partially found in the periodic reports and financial statements generated. The primary value, the insight delivered from this historical data, is the information it reveals about the business operation over time. It is from this historical data that certain trends are identified, providing a basis for making the educated guesses necessary to learn how the business will look in the future.

Forecasting is very important for businesses, as it provides the framework for laying out your expectations for the business. In essence, it is a way to (hopefully) predict what your business finances will look like in the future based on forecasted growth. And, armed with the forecast, you can now more confidently build a reasonable plan to reach your stated business goals. While there are myriad approaches to creating a business forecast, it makes sense to simplify the process and focus on the area you likely spend most of your time attending to: sales. Use your sales goals and projections as the basis for establishing a forecast, setting realistic goals for the current year and for a few years after that. Once you’ve forecast the new sales goals, you can more easily appreciate what it will take in personnel and other costs to support that growth.

Recognizing that the forecast is simply an educated guess, it is important to regularly compare actual performance to the forecast to see if the business is on the right path to reach the established goal. If sales are not growing as projected, then the business may need to make adjustments in terms of personnel hiring and other plans to ensure that costs don’t outpace sales. Without a path to follow, business owners will not necessarily know if the operation is “on track”, as there is no track to be on – there is nothing to measure success against. Certainly, profitability is the goal, but it is a matter of degrees of success, and the business will not know whether it is being as successful and profitable as it might be.

Accounting professionals should help their clients create realistic forecasts, along with organizing the information and formulating a plan for the business owner to follow. On an ongoing basis, the accounting professional’s involvement delivers continued value by helping the business owner recognize and respond to changes in the business, adjusting plans as necessary to keep the business on the right path. And, no crystal ball is required.

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Business Owners to Accountants – Tell Me in Real Time

Business accounting is defined as the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results. It sounds pretty dull, and to most small business owners it is the last thing they want to think about. “Accounting” is what happens at the end of the month, quarter or year – or when any type of taxes are due. What matters to the small business owner is their cash flow and cash availability to meet immediate operational demands, and how they will get past today’s problems to reach their future goal of comfortable retirement, leaving a legacy for the kids, or selling the business at a high value. It may even be that, during periodic visits to deliver the monthly paperwork to the accountant, business owners express interest in discussing their ability to meet future business goals, yet these conversations often take a back-burner to simply getting the work processed and reports and returns completed.

Accounting has traditionally been approached as an after-the-fact activity, recording transactions for things that were already done in the business. While this may be a handy approach to getting an annual tax return completed, it really does nothing for the small business owner in terms of providing them with information to run the business. Further, it does nothing toward helping the business owner get to where they want to go with the business, reaching whatever goals they had in mind when they first got started.

Cloud solutions and Internet-based applications have emerged which provide a high level of capability and information to small business owners, much like the E*Trade tools which enabled any user to “take control of their financial futures by providing the products, tools and services they need to meet their near- and long-term investing goals”. Where E*Trade delivered simplicity, insight, and guidance for investors in real-time, so do many of the new business analysis and financial dashboard solutions, but in a business financial context.

Individuals who are focused on meeting their financial or investment goals are very interested in monitoring their progress toward reaching those goals, and guidance often suggests that making adjustments in strategy or approach at certain points along the way may be required. Similarly, business owners have a great interest in monitoring the progress and status of their businesses, and many are taking steps to gain that insight and obtain guidance through the use of online banking solutions and other real-time reporting tools.

By simply connecting financial systems to some of these online reporting tools, business owners are able to gain a significant level of insight into their business operations, including bank balances, cash coming in and going out, and other information which supports making daily business decisions. Unlike a static financial statement or annual report, these dynamic tools can provide business owners with real-time information about their businesses, which is what the business owner is looking for. But guess what? It’s not happening like it ought to.

Business owners are becoming increasingly impatient with their accounting professionals, and are demanding higher levels of service at more competitive rates than ever. Further, many business clients of accounting professionals are gaining a belief that the value their accountant delivers is diminishing as do-it-yourself tools are gaining in popularity due to ease of use and well-stated value propositions. If accounting professionals would only take a proactive, rather than a reactive, approach to working with their clients, this question of value would be much less of a question.

The biggest problem facing these accounting professionals is that they rely upon the client to deliver the work. Waiting around for clients to bring in information for processing, or traveling around to client offices to pick up materials when they say it’s ready, is creating a divide between the client and the accountant which is difficult to overcome. This divide – the lag in time between when business things happen and when they are accounted for – eliminates any possibility for the business owner to operate with all the information they need.

Accounting professionals must become proactive in their relationships with business clients, establishing the initial groundwork for how each will perform in order to achieve the desired result – real-time information for real time decision support. The accountant has a responsibility to not only ensure that the information is processed appropriately and accurately, but also to ensure that it is obtained and processed in a regular, timely manner. Increasing the frequency of capturing and processing data is necessary in order to provide information when it is most useful. This means that accountants must not only organize their workflows to adjust to the new frequency and timeframe for processing, but that they must also be far more proactive in obtaining the source information from clients on a regular and recurring basis.

It has always been a problem to get information from client businesses so that it can be processed and reported on. Now, with the demand for more timely data and “instant insight”, business owners are expecting faster returns on the processing of accounting information even as they continue to be the bottleneck in providing the source data. Accounting professionals and the tools they use will have to adjust to this reality, creating a stronger focus on the organization of work and turning notification and exception handling processes around so that they drive the workflow rather than simply result from it.

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December 11, 2012June 13, 2017

Being Proactive, Not Reactive – Accountants Need to Increase the Speed of Service Delivery

info Technology models are changing dramatically, with cloud services and mobile computing being the focus of the IT community and the customers they serve, and those technology changes are driving equally dramatic changes in how businesses and the accounting professionals who support them work together.

As the cloud enables an “anytime, anywhere” model for access to business applications and information, it is also driving accounting professionals to embrace those solutions in order to meet the demands of the business client who wants their information anytime, anywhere… accurate and up-to-date. For most accounting professionals, this means being more proactive in working with the client rather than taking the traditionally reactive, after-the-fact approach to providing service. More frequently, accounting professionals will be judged by their prospective (and current) clients as to their ability to meet the demands of these savvy clients who know that having accurate real time information is critical to managing a business.

Cash management is one of the biggest challenges for a business owner, and this is an area where the accountant or bookkeeper is an essential player, making sure that bank accounts are reconciled frequently and reporting accurately on outstanding receivables and payables. Business owners need to know where they stand financially, yet many accounting professionals only provide reconciliation and reporting at period ends. The result is often a client who watches the bank balance and works from that, not realizing that there were outstanding checks or undeposited funds waiting to clear. Clearly, this owner is not working from current and accurate information, and they will eventually realize it if they haven’t already.

The cloud is increasing the speed of business at all levels, and accounting professionals must also increase their speed of service delivery in order to retain relevance in the changing market. While there will be hold-outs and businesses that elect to take the more traditional approaches, those clients will start to become fewer and the opportunities they represent more limited in scope.

For a little while, accounting professionals may rely upon traditional approaches to client service delivery, and continue with their position as the last person to know what’s going on in the client business. But only for a little while.

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October 15, 2012May 23, 2017

Working Online With Clients: How to leverage the internet and cloud computing to work closer with your clients

When it comes to using technology and the Internet to work closer with bookkeeping and consulting clients, it is important to recognize that there is never only one way to accomplish something, and different clients will have equally different ideas on and tolerances for how you work with them. In order to serve each and every client to the best of your ability, you have to carry around a “toolbox” of solutions and services which will assist you in delivering the most effective and efficient service in each situation and under each set of conditions. While you must do what you can to streamline and standardize your processes to be as efficient as possible while delivering a high level of service, but you can only work within the parameters allowed by each client and circumstance.

I think we can all agree that, whenever possible, it is wise to avoid situations where you have to get in the car and drive somewhere just to pick up information or paperwork. These are the activities which are most costly in terms of time and resources. Using file sharing solutions, such as DropBox or ShareFile, is a great way to get documents from clients. That is, if the documents are in electronic form already. If not, then either scanning the files and saving to the Dropbox or web folder, or faxing them to a service such as eFax, is the process.

Sometimes Internet connectivity is the issue. Using a fax-to-email solution like eFax takes that out of the picture, in terms of getting documents and other paperwork from the client. But let’s face it… there is no good way to electronically exchange or share QuickBooks or other computer data files safely and quickly unless the client has broadband Internet access. You can always go back to dialup modems and connect using the old version of PCAnywhere, the way we did it years back, or you can recognize that sometimes you just have to get in the car and bring a USB drive with you.

Internet-based remote control solutions, such as LogMeIn, provide you with the ability to connect your computer directly to the client computer in order to perform tasks on their system and with their data. This is a better approach than going to the client office and doing the work there, but it doesn’t address a situation where both you and the client need to be working at the same time. If you are controlling their computer, you take over the workstation while you are connected, which prevents the client from doing independent work while you are doing your job. The better option is to use a solution that allows you to both work at the same time, even when connecting to the same computer. MyQuickCloud does this. MyQuickCloud is a remote access solution that can be applied as both a remote access and remote working solution. It is better than remote control because it can allow many users at the same time to connect to the computer and run applications.

In some cases, working online with the client may mean working in the same applications and data files by accessing a centralized online solution, such as QuickBooks Online Edition or hosted QuickBooks (QB Online and hosted QuickBooks are not the same thing). When both people (the client and the accountant/bookkeeper) have access to the same programs and data files in real-time, it allows them to work together more closely yet at times and from locations which work for the individuals. This arrangement works quite well when the accounting professional and the client can both serve their requirements with the same software solution. If the client uses QuickBooks to perform their daily tasks, the bookkeeper and accountant are able to simply log in and use the same solution to perform their work.

A model which more people are beginning to recognize as valuable is the model where each user or functional area in the business has the solution which works best for them, and the various solutions in the business each integrate and share data as necessary. For an accountant or bookkeeper working with a small business, this may mean that the software or solution used by the client to handle their daily tasks is different from the solution used by the accounting professional to do their job. Just as a tax preparer will use accounting data to prepare a tax return using a tax preparation solution, accountants may use transactional or financial data from other systems to perform accounting functions in an accounting software solution. As long as the data is easily accessed, via built-in integration or sync tools, it makes a lot of sense to give each user a solution designed to meet their process needs because they will use the solution more effectively. Giving a user way too much functionality can be confusing, and expose them to areas of business activity or information they should not have access to (or which is meaningless to their job) can waste time and introduce risk.

Examples of this approach might be where a small business owner uses FreshBooks accounting to manage their daily invoicing, but the information is then exported to and integrated into QuickBooks financial software, where the accountant or bookkeeper handles the rest of the business accounting functions. Another example may be when services such as Bill.com, TSheets, Expensify, Concur, and other “point” solutions are in use. These web-based solutions provide specific functionality, such as bill payments and approvals, employee timesheet management and reporting, expense management, and more. They make it easier for the client to handle certain functions and address related information management and reporting needs, and facilitate the data integration with core accounting and finance. In many cases, this approach delivers not only more relevant functionality and process support for the business users, and still allows the accounting professional to do their work with the tools which work for them.

Providing a high level of service to your client while embedding as much efficiency in your processes as possible can be a challenge for any outsourced accounting or bookkeeping professional. Your profitability and the goodwill you develop with your client depend on finding the best way to engage and deliver on the promise of great service. Your toolkit – the connected services and solutions you leverage to this task – can positively impact the “degree of success” you experience with each client or project.

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September 27, 2012January 2, 2018

Accounting Professionals: It’s Good To Be Sticky

You’re a professional services provider, perhaps an accountant. Your client is a growing business, and they came to you to prepare the corporate tax return. After several years of faithfully performing this service for your client, you send them the annual email reminding them to bring in the information to get this year’s return completed. When they don’t respond, you call them. And find out that the tax return was completed by another accountant this year, the accountant who took over the bookkeeping. “But we could have done that for you, too”, you say. But now it’s too late, and the client has a different accountant. Consider it an opportunity lost, along with the client.

Is this something you run in to fairly frequently, losing clients to others who provide substantially the same services as you do? It happens to the best of firms, and the secret to keeping it from happening is to be sticky – delivering the services which securely attach the client to your firm – and provide the ongoing value that your business clients can’t do without.

The first place to create stickiness is in your service offering. One-time or annual projects (like tax returns and audits) don’t keep you in front of your client often enough for them to think of you daily, and daily (or at least frequently) is how often you want them to think of you. As the business owner faces daily decisions, do they consider calling you for advice or insight? If not, then you probably aren’t delivering the value, or the sticky service, which will tie your practice to the client for the long-term. Daily bookkeeping, or helping the client keep their books in order, is a valuable service that most small businesses need. While your firm may not be realty interested in performing or supporting the business bookkeeping, it is important to recognize that this level of work allows the firm to be more intimately involved with client business processes, providing a great deal more insight and understanding into client operations than through an annual tax interview. By attaching your firm to the daily activities of helping to account for business activities, you elevate your position from an occasional service provider to a consultant whose advice is sought after on a regular basis. You are now in a position to understand better what areas of business may need focus and attention, and have placed yourself as a trusted advisor who can help determine the best course of action in any given situation.

The other, critical element to being sticky is to make sure your clients know what you can do for them. Don’t assume that each of your clients knows what service or value you can offer them (you know what happens when you assume, right?). You have to tell them; spell it out and thoroughly communicate the variety of ways your firm can help them. Just because you’re an accountant, you should not assume the client will ask you to help them with various business issues. Often, a business owner will face a challenge and not know who to turn to. Seeking out the assistance of specialty consultants is a standard approach, as is turning to IT contractors, software consultants, attorneys, or other service providers. Why not you? Did they know you were available to help with this? If they didn’t call you, then they probably didn’t think this was a service you provide.

Accounting professionals serving business clients must not only make their range of services known, but should also actually ask for the additional business from those clients. Only through consistent exploration and value building, asking the client if services offered might be valuable to them and demonstrating how those services have benefitted others, will the firm begin to make the impact necessary to keep the client coming back, and coming back for more.

When the client comes back for more, you know you’re getting sticky. That’s a good thing.

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September 20, 2012September 11, 2013

Be the McDonald’s of Professional Service

The Progressive Accountant

You run a professional services firm, perhaps an accounting firm. You have a wide variety of clients with a wide variety of needs, but the services you offer are relatively standardized. You provide tax return preparation, bookkeeping and financial statements.

What’s not standardized is how you approach each client need, and how you work with each client. You treat each engagement as a one-off, dealing with the client (and the client information) in a manner that suits the client at that time. While this sounds like a great approach, lending itself to a high level of personalization, the underlying result is inefficiency, lack of standards, and a very limited ability to improve your internal profitability.

What you need is a machine – to be the McDonald’s of professional services – delivering consistent and predictable service to your client community. Your service quality doesn’t have to be in the realm of “fast food”, but the point is that you should be using a standards-based approach and applying the same tools and methods to each engagement in a consistent and repeatable manner. You’ll rapidly find that a great many of your clients will eagerly adapt, and begin to embrace and take advantage of the tools you provide to them. For your firm, the result is more predictable performance and increased profitability.

As an example, let’s say that your firm is “tooled up” to provide services using Internet or cloud services. You have a client portal where you can store and share files with clients, and you have mechanisms for securely emailing files and documents to clients as well. Your goal is to get your clients to use the online portal to exchange information with your firm, enabling somewhat of a “self service” model. But many of your clients won’t log in to the portal, and require you to use email to send/receive files and information.

The right approach here is to use the portal no matter what. This is a key element to the success of your overall approach –the strength of your standardized processes. And it’s important to remember that it isn’t a process if you don’t do it the same way every time. Even if your clients don’t use the portal for data exchange, you should still encourage it and put the documents there. Now, you’ll still likely do the email thing – it’s always a good idea to have at least two paths of communication. But if you consistently use the portal as a standard method of making data available for your clients, many of those non-portal users may become users simply because they find that the convenience of any time/anywhere access really works for them. Sometimes it takes letting folks get used to things, but once they do, it becomes second nature and almost an expectation. Once these clients have adopted your standard portal approach, what else can you introduce to them to improve efficiency and effectiveness of the engagement?

You need to help make your firm as efficient and profitable as possible, and to have a quality product (or service) produced every time. Henry Ford’s assembly line is where you start. Create the machine that is the operational level of your business, and establish the tools and standards that will allow for sustainable growth and success.

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Article originally published via The Progressive Accountant

An Educated Guess is Not a Crystal Ball – Forecasting the Future

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Business Owners to Accountants – Tell Me in Real Time

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Being Proactive, Not Reactive – Accountants Need to Increase the Speed of Service Delivery

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Working Online With Clients: How to leverage the internet and cloud computing to work closer with your clients

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Be the McDonald’s of Professional Service

The Progressive Accountant

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