As a business manager, you should identify the handful of critical information variables that you need to keep a close eye on in your business. Insist that your internal accounting reports highlight these factors. Only you, the business manager, can identify the most important numbers that you must closely watch to know how things are going. Your accountant can’t read your mind.
Experienced business managers can tell you that they spend a good deal of time dealing with problems because things don’t always go according to plan. Murphy’s Law (if something can go wrong, it will, and usually at the worst possible time) is all too true.
To solve a problem, you first have to know that you have one. Managers need to get on top of problems as soon as possible. A well-designed accounting system should set off alarms about any problems that are developing, so you can nip them in the bud.
Here are accounting information variables that should always be on your radar:
Sales volumes
Margins
Fixed expenses
Overdue accounts receivable
Slow-moving inventory items
If your regular accounting reports do not include the exact types of information you need, sit down with your accountant and spell out in detail what you want to know. Don’t take no for an answer. Don’t let your accountant argue that the computer doesn’t keep track of this information. Computers can be programmed to spit out any type of information you want.
Experience is the best teacher. Over time, you discover which financial factors are the most important to highlight in your internal accounting reports. The trick is to make sure that your accountant provides this information.
