In Pursuit of Profit
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Senior leadership must possess the financial knowledge to understand the work that is being performed, exercise appropriate oversight while balancing trust in the individual, delegate the functions of the role appropriately, and provide a support framework. When these conditions are met, an accountant is poised to succeed.
Many business owners are able to start and run their business initially without any advanced financial knowledge. However, as the business grows, better mastery of financial topics becomes necessary to keep the organization on its upward trajectory.
Business owners that are not as financially savvy often hire an accountant at this point. Yet, that same lack of financial awareness that necessitates bringing in an accountant also makes them ill equipped to manage their new hire effectively. Without the financial acumen needed to check an accountant’s work, a business owner cannot understand the nuances and implications of what the accountant is doing or proposing.
Furthermore, an accountant may be performing adequate day-to-day work without excelling at long-term strategic planning. Without knowing what to look for, this failure could go undetected because everything essential for the business to function normally would be tended to appropriately.
Unfortunately, a business owner may not discover until much later that opportunities had been missed which could have reduced its tax burden, aided in scaling operations, generated supplemental revenue, or reduced operating costs, for instance. In some cases, this knowledge may never be discovered, resulting in an ongoing opportunity cost across the lifetime of the business.
An accountant with unchecked autonomy poses significant risk, either from marginal performance or the human factor of temptation. While the interview process should aim to eliminate unscrupulous candidates or those with ulterior motives, even the best employees can still make mistakes.
Poor work can have serious repercussions for the business, which is why it is necessary to check over an accountant’s work. When this type of oversight is outside the scope of senior leadership’s experience, another financial professional can be consulted with to ensure work is being done properly.
However, if an outside accountant or financial firm is going to be overseeing the work anyways, it usually makes sense to outsource the work from the beginning. Forgoing the process of hiring an in-house accountant eliminates the extensive ongoing employee-related costs that businesses incur in favor of paying for financial expertise from a team of dedicated professionals. Leveraging this type of network typically requires far less hands-on management.
While the importance of oversight cannot be underestimated, senior management cannot feasibly oversee every aspect of the business with much depth. Therefore, an accountant must also be trusted to make the best decisions for the future of the organization.
Bringing an employee into a solo role, especially one that has been newly established, inherently results in less accountability than inserting someone into a team of employees doing the same kind of work. This is compounded for professional roles where specialized degrees and licenses are required because there is no expectation that fellow employees will be able to learn the job secondhand to assist or fill in when needed. However, experienced accountants should be willing to put measures in place to ensure accountability among existing management. Trusting that they will hold themselves to a high standard is integral for effective management.
Failure to place trust in an accountant can slow down critical decision-making and time-sensitive reporting. Utilizing a third-party accounting solution reduces the risk of errors, narrow-minded thinking, and outdated methodology, making business owners more apt to entrust them with their financials.
With the preponderance of business owners exhibiting Type A personalities, micromanagement styles can result. Unfortunately, these tactics are not compatible with employees that yearn for a high degree of independence.
Logical, organized, achievement-driven employees, like accountants, typically do their best work when they own a process. While it may be difficult to relinquish control over some financial functions, giving accountants authority helps their morale and can improve performance. Delegating responsibility for financials in their entirety establishes respect for the position as well as the individual. In the fragile ecosystem of a smaller business, respecting each employee’s authority can ripple through the rest of the company, creating a culture of respect. Unfortunately, the reverse is also true.
Financial professionals are often underappreciated across the organization, which can lead to turnover without proper senior-level managerial support. Accountants can become a target for blame when financial issues occur whether the sentiment is deserved or not. Their highly visible position can make them the scapegoat when business objectives fail, and goals are not met.
Negative attention can sour even the most dedicated professionals regarding their work, degrading their passion for the job. Better transparency helps reduce this propensity. By providing honest information across the organization, management can assume this onus instead of letting it fall on the accountant.
Outsourcing your accounting to a professional firm such as ASP may be the best option for you vs. hiring an accountant in-house. If you are interested in learning about how or team of experts can support you, please contact us here.
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The Cost of Hiring an Accountant >