Six Questions to Determine if You are in an Accounting Nightmare

As business owners, we all have areas of strength and weakness. At some point, just maximizing your strength will not overcome your weakness. How do you know you have reached that point? How do you know it is time to ask for help?

Recently I have come across a couple of different companies that are well established, profitable, and doing very well in their fields, but have major issues with their supporting business systems. Both companies had reached a critical juncture in their business cycle. Lack of internal systems was preventing them from growing and getting new contracts. Strong growth would also put them out of business because they would not be able to handle the new work.

Of the two companies I am thinking of; one had a major issue with information technology, the other with accounting and back office management of information. So what would be the signs anyone could recognize to know you needed to revamp your accounting and internal control systems?

1. Does it take longer than two weeks to get an invoice out to a customer or client?
2. Are customers complaining that it takes too long to get the product or service they ordered?
3. Are bank reconciliations not done monthly and if they are done, does the cash balance on your balance sheet match the bank reconciliation number?
4. Is someone watching your balance sheet and profit and loss (at least taking the time to see if the detail Accounts Receivable and Payable agings match the Balance Sheet numbers and checking for open invoices more than 60 days that are not being followed up on)?
5. Is the organization’s staff using different sources of data? (ie: their own spreadsheets and word documents rather than one consolidated source of data.)
6. Has your business grown substantially since you last reviewed your accounting systems and programs? (ie: your sales have increased 10 fold or your number of employees has increased 10 fold.)

If any one of these questions has a yes answer, it’s time to ask for help or at least ask if there are alternative ways of doing a task that night be much more efficient and effective. The solution does not have to be a massive expenditure of time, money and effort. Rather than throwing more payroll at the problem, a one-time investment in a smarter, more efficient process will save time as well as money. Smooth running systems behind the scene allow you to devote quality time and effort to building and growing your business and enhancing your industry reputation.

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