The First Step In Optimizing Performance


Mike Ford is the Managing Director and Founding Member of PBO Advisory Group.

Over the course of my 25 years of financial and business consulting, I have seen many companies make the mistake of putting the cart before the horse—reversing the proper order of actions to be taken—when optimizing and/or addressing problems regarding their finance and accounting department.

There are several ways to make this mistake—hiring a senior finance leader, bulking up the department staff purchasing technology and/or a change-up in processes and procedures—with the hope that these actions will lead to the desired results or at least fix the current problem. Unfortunately, while these may be good options that eventually need to be taken, they often don’t address fundamental issues.

Instead of proceeding with these costly fixes, I have found that companies should first invest in a finance and accounting assessment. This would be an examination of all aspects of your finance-related operations, resulting in a specific action plan of what you need to do and the order in which to do it. If implemented correctly, these actions will lead to successful, long-lasting results.

Why An Assessment?

What you may think you need and what you actually need can be significantly different. We are experiencing unprecedented times that are affecting businesses in unique ways. A pandemic, supply chain issues, rising interest rates, the “great resignation,” quiet quitting, a tight labor market, downsizing and more can lead to rash decisions—not to mention outright panic by companies.

Taking the time to analyze your current situation and future needs will provide you with a better outcome. An assessment can improve your accounting and finance policies, as well as performance, to meet your company’s goals and objectives.

Without an assessment, you are taking the very real chance that you will overstep and make mistakes. With an assessment, you’ll have a detailed, individualized guide to meeting your goals and objectives. And you can do this on your timeline while managing your cash.

An assessment doesn’t mean a complete redo of your current policies, procedures, staff and/or technology. The best assessments simply adjust and enhance these functions while aligning them with your organization’s business strategy, which is something that companies don’t typically do.

What Is Involved?

The best approach to conducting an assessment is to bring in someone from the outside to manage the process. Your in-house team may have biases, not to mention egos, that are detrimental to an assessment. It is important to hire a professional who has experience with many different finance and accounting departments and understands the best practices to run yours. While understanding your industry is helpful, it isn’t absolutely necessary. Oftentimes, solutions can be “borrowed” from other industries.

The best assessments examine your finance and accounting foundations in three ways: process, people and systems. This can include several steps, such as:

• Interviews with key staff to discuss business strategies and current issues.

• An evaluation of your accounting foundation to identify gaps in policy, SOPs, internal controls and financial reporting.

• Identifying strengths, gaps and development opportunities for the current accounting team.

• Reviewing the current accounting structure in alignment with the business growth strategy.

• Pinpointing cost-saving opportunities.

• Identifying potential fraud prevention measures.

• Assessing current accounting technology systems and future needs.

• Evaluating various accounting workflows to identify inefficiencies.

Vital to this process is access to your staff. Leadership and entry-level personnel alike can provide insights. Your assessment team should also have access to your business plan and current financial reports.

The process needs to be thorough but doesn’t need to have a long timeline. A comprehensive assessment can take as little as two weeks, though coordinating interviews and collecting data can extend the timeline. Hiring someone who has conducted similar assessments will doubtful save you time as well as provide a better outcome based on long-term goals versus short-term fixes.

What Is The Deliverable?

A properly executed assessment will result in a plan with specific priorities and recommendations to align the finance and accounting department with the company’s financial objectives and overall business strategy. It should provide concrete steps that will streamline functionality and support sustainable growth by addressing a variety of issues including financial reporting gaps, training and development of your accounting team and the utilization of technology to help streamline processes.

Ideally, the individual or team that you hire to conduct the assessment should continue to be a resource to you, guiding you through the implementation of their recommendations as needed. The assessors will have developed an in-depth understanding of your company and can continue to serve as a valuable asset to you. I do recommend that you and your team (as time allows) be as heavily involved with the implementation of the recommendations so you have complete knowledge and ownership of the changes.

Where To Begin?

While the assessment approach isn’t a brand-new concept, it is gaining popularity as businesses are facing uncertain times and understand the need—now more than ever—to be strategic in their decision making.

Asking for a referral is one of the best ways to find an assessment professional. Reaching out to your peers may yield a good crop of candidates. Your CPA can also be a good resource for a referral. However, I do not suggest engaging your CPA firm to do the assessment as it may raise independence concerns.

Don’t be a company that makes knee-jerk decisions in response to uncertain times. Assess your current situation and prepare a plan to implement changes that will result in successful outcomes.

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