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Hurtling downhill, brakes failed, trouble ahead……..must think about changing the mechanic

Imagine you are driving down a steep hill, the brakes fail, the only thing that will stop the car is the lake at the bottom! You never really knew what the mechanic did when the car was serviced, you just paid him and drove away. All well. Till now. Ooops!

Car mechanic, accountant – much the same thing.

They do an important job, they’re the expert in their field, you don’t really know what they do but you know you can’t do it yourself. You tell them what you need doing and they get on and do it.

You trust they are doing it right, but you might not know if they’re not. Until you’re half-way down the hill and the lake is coming towards you!

Where does it all go wrong?

A successful business needs a way of recording the numbers regularly during the year, otherwise it simply doesn’t know how it is performing. But finding the right people to do the job can be very difficult. Two factors are important:

  1. MDs do not hire bookkeepers, financial controllers or accountants very often so it’s not a skill they develop and it’s a decision they can easily get wrong
  2. Many bookkeepers, financial controllers and accountants are simply not good enough to do the job properly, but they get away with it because the MD doesn’t know enough to challenge them

Management accounts – a simple test

Are you seeing fit-for-purpose monthly management accounts within a week or so of each month end?

If you are then share them (in confidence) with a couple of other people you know who run their own companies and ask for their feedback. Then act on their feedback.

If you are not – then reach out for help straight away.

There does seem to be a skills shortage in the area of competent financial management for companies. We see far too many examples of businesses let down by their bookkeepers and accountants and it’s all so easily avoidable.

Bad accountant, bad car mechanic – tell them to jump in the lake so you don’t have to!

Michael
@diaryofanomb
 

Click here to see how one company went about changing their accountant and how easy they found it.