In Pursuit of Profit
Read our expert article below or sign up to get articles sent to your inbox.
Employers need to realize that they may not find an accountant that checks every one of their “nice-to-have” boxes, but if they work with an experienced accounting recruiter, they will find someone that fits their “must-have” needs. And, the sooner they can figure this out, the better because having an open role costs an average of $98/day, and rehiring an accounting employee after letting go of a bad hire costs over $50,000 on average! Therefore, to minimize hiring costs employers need to rethink their expectations around work flexibility, compensation, accounting improvements, and training when looking to fill a role.
These figures should be a real wake up call for accounting managers and their employers, especially at a time when the pipeline of students pursuing accounting degrees is drying up as well.
If accounting does not change as a profession soon, we may continue to see the numbers of accountants dwindle. The accounting pool keeps getting smaller and smaller. So, what’s next? Could it be extinction?
I have a lot of respect for accounting leaders who take pride in the way they manage every aspect of their company.
Let’s take a look at a few reasons why maximizing efficiency in your accounting department is important.
Our partners over at CFO Selections have a number of financial resources meant for executive leadership, one of which breaks down the business sales process and explains why a CFO (Chief Financial Officer) is important during the sale of a business. As you get closer to selling, we would suggest reviewing that resource and reaching out to them if you need help.
However, today we are going to look at some best practices for creating and preserving value in your business well before you start going down the path of selling it. Our team of accountants will give some tips on what you can do financially to set yourself up for success as you get closer to selling.
Do We Need a Chart of Accounts?
We’ll break down what a COA is and why you need one, give you some pointers on how to create a COA, provide an example of a chart of accounts for you, and give you some helpful reminders to be aware of as you create your own COA. Let’s get started talking about accounting chart of accounts fundamentals:
The author, Peter Cappelli, a professor at the University of Pennsylvania’s Warton School of Business, highlighted the ways in which he believes that pursuing financial goals causes businesses distort their hiring and training objectives and deprive employees of the benefits they deserve. His summary for the article was as follows:
Many HR practices in the United States are bad for companies, employees, and shareholders. Firms skimp on training and development, for instance, and tightly limit head count even when they’re understaffed. They increasingly move work to nonemployees, like leased workers, and replace pensions with more-expensive 401(k) plans. They do such counterproductive things because U.S. financial reporting standards treat employees and investments in them as expenses or liabilities, which make companies look less valuable to investors.
The solution he proposes is to change SEC reporting requirements, which would only help publicly traded companies, though he seems to indicate that these struggles are being felt by a broad array of business types and sizes.
Unfortunately, it seems this article misses one very important point – the ways in which accounting and HR can work together to benefit the overall business. As a result, we’d like to cover that aspect of the discussion to help remind companies that their accountants are not the villains in the discussion of hiring and employee retention.
It all comes down to cash flow management. Cash flow is the tie that binds. Everything your accounting and finance personnel do is centered around managing the company’s finances to ensure they can acquire customers, run daily operations, pay staff, meet financial obligations, make necessary expenditures, and reinvest into the company. Simply put, they ensure that cash will be there today and tomorrow to keep the business going (and hopefully growing as well!).
What is your recourse if you cannot remedy performance issues? How do you set up future hires or service providers for success to avoid these kinds of issues in the future?
We’ll cover these topics in our guide to accounting management:
The Association of International Certified Professional Accountants (AICPA) publishes an annual report detailing accounting program enrollment and graduate hiring trends. In their most recent report, they provided data on a problem that the accounting industry has been facing for the last decade. The problem is that fewer people are choosing accounting as a career. Our conversations with colleagues have yielded the same kind of feedback. It seems that fewer people (even those majoring in accounting) are going into accounting these days upon graduation. The AICPA backs this observation with data showing that from 2019-2020 the number of accounting graduates dropped by 2.8% at the undergraduate level and 8.4% at the graduate level. Furthermore, the hiring of new accounting graduates in 2020 decreased by 10%.
How to Improve Close
As such, improving accounting close has become a main focus for many accounting teams over the last several years as business demands have grown and hiring qualified accounting staff has gotten more difficult.
Strategies to improve close can focus on making your accounting close faster, more accurate, or less painful… and, if you do it right, all three!