In Pursuit of Profit
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As a fan of Star Trek, one thing I like to ponder about is the concept of time dimensions. Can you be in two points of time at the same time? For many people, living in a pandemic has made the sensation of time change. Things have simultaneously seemed like they happened long ago and also only yesterday. And, at one point or another we have all thought, “It seems like it was years since I saw you. Wait, it has been years!” But time has more than just social implications. The concept of time is relevant to you professionally as well, especially as an accounting manager or a member of an accounting team.
To have an effective accounting and finance team, an individual’s time view preference must match their job responsibility. If it is not, your accounting operations may suffer, and your company may experience unnecessary attrition. What do I mean?
Well, let’s look at how each of your accounting staff views time in their roles:
The Present: Daily Accounting Transactions
When you think of the engine of your accounting operation, it is the team in charge of qualifying and vetting vendors and customers who are the engine. This would be the payables and credit-A/R departments.
These roles must live for the present, today, getting today’s purchasing or sales information in the accounting system to keep the payables or sales invoices moving along the production floor of accounting. Or, if you have implemented automation, then they are watching and reviewing today’s activities. They are recording what is happening today (unless you are way behind, then they live in the past… and then you have another issue to deal with entirely).
For Employees: If you find yourself in this role, yet you dream of the future, or wonder about did last week’s payments to vendors end up posting correctly to the accounting records, you may be in a job not suited to who you are. You generally do not live in the moment, you either dwell in the past or always wonder about what things will look like a few months from now if you act in advance. Those attributes are a benefit to the organization in a different kind of accounting role, just not on the transaction side.
For Managers: The main role in the accounting engine room is to keep that engine going for today, the now. So, as a manager if you spot a mismatch in your payables or receivables roles, it is your responsibility to shift employees that would be happier elsewhere into the roles that they will find more fulfilling.
The Past: General Ledger and Financial Statements
The three basic financials statements (balance sheet, income statement and statement of cash flows) are all rear-looking. What happened in the past? The accounting roles general responsible for managing the past are GL (General Ledger) Accountants, Accounting Managers, and Controllers. One of the primary duties for people in these positions are making sure the past is recorded correctly. Two examples of this would be balance sheet reconciliations and income statement analysis to spot potential misclassifications amongst cost centers. Time in these roles is spent thinking about what happened previously and resolving past issues that arise like, “Wait, I know we had a larger number of people take vacation last month yet accrued vacation liability increased.”
For Employees: In these roles your focus at work needs to be rear-looking. If you find yourself in an attitude of “Let’s move on” or “What’s next?” or “But that was yesterday – what about today?”, you may be in the wrong type of accounting position. There are plenty of other types of accounting roles where this kind of fresh, forward-looking perspective is highly beneficial.
For Managers: Depending on which level your rear-looking accounting professionals are at, there are opportunities to rehome them into other accounting roles that will satisfy their need for a broader financial view of the organization. For instance, a Controller that is burnt out of the repetitive view of rear-looking accounting activities may find professional satisfaction moving into a CFO role, which encompasses a higher-level view of the company.
The Future: Budgets and Financial Projections
Once the financial statements get closed someone in the accounting department takes that information and analyzes it to inform management of what the future will look like in the form of financial statement projections. At smaller companies the Controller may do this. At larger companies a team of Financial Analysts or Business Analysts typically performs this function. Often the role of projecting and predicting the future is that of the CFO. Creating a budget is also forward-looking, attempting to answer questions like “What will health insurance costs be next year?” or “How many new customers will we have and how much will they buy?”
Predicting the future is fraught with unknowns. You make a projection based on all the information you can get about the past and today. And you make assumptions. Often the assumptions are wrong, but that does not mean you were wrong in your projection. The assumptions, if made on the best information available at the time, were the best you and your team could likely know. As the future becomes the present and then the past, you learn more about your assumptions.
For Employees: Often, I see people in accounting struggle when assigned to a budget team or working on a projection. It is usually because they do not want to be wrong. These kinds of people have a strong need to be accurate and correct. If this describes you, the only way to satisfy your personality is to stay in accounting roles that focus on the past or the present because living in the future means something will be different than you thought, and you have to be ready to adapt and change immediately.
For Managers: Recognizing when your accounting personnel that are involved in financial projections are anxious about the work they are doing, is a key step in fixing a mismatch between staff and their roles. Experienced accounting staff that are uneasy about future-looking work can thrive in rear-looking or present-focused roles because of the predictability and stability inherent in these types of roles.
How a CFO Takes a Multi-Time Dimensional View
The most unique member of the accounting team when thinking about the concept of time is the CFO. Why? A CFO must always live in three time places at once – the past, present and future.
They are responsible for all three aspects of time every day of the week. Yes, the size of their team does allow a CFO to have others working closely in any aspect of time, but the CFO is ultimately responsible for that work. A person who struggles as a CFO often is challenged by being in “three places at once.” If they don’t spend enough time in the past, guiding and mentoring their Controller or Accounting Manager, that person can get disgruntled, and the recording of the past can suffer. If the CFO buries themself the first week of the month on closing the financials, and then wonders the next week, “Why do we have a backlog in unprocessed invoices to customers?” they forgot the present.
Correcting Time View Mismatches
In the world of accounting and finance, there are always three time views that require focus by an accounting and finance team: past, present, and future. As an accounting employee, make sure your job fits your time view preference. And as a manager, make sure your employees are in their ideal time dimension.
Remember, when employees are not aligned with the responsibilities of their roles, they are more likely to burn out, driving them to underperform or quit. Neither is beneficial to a company’s accounting operations. Turnover and poor performance can reduce the company’s growth potential, which is why finding the right alignment between an employee’s preferred time view and their role is so critical. If you find a mismatch on your accounting team, you may need to use an accounting recruiter to hire someone who is a better fit for the role or utilize a third-party accounting services provider.
About The Author
Alex de Soto
Alex de Soto anchors the CFO Selections search practice and brings over 30 years of experience in accounting, finance, human resources, and executive search to his role as leader of the search team.
Since 2008, he has spent most of his time helping CEOs and CFOs of Pacific Northwest based companies find that unique match they seek in a CFO or Controller.