If you are sending your senior executives out into the parking lot to look for coins to help you meet this week’s payroll, your financial woes may be beyond repair. But for everyone else, there are a lot of ways that you could be working with your accounting firm to benefit your business.
The first step is to get beyond thinking of your accountant as someone who just helps you with taxes. Most accounting firms now offer a wide range of financial advisory services that, when properly utilized, can help you do anything from manage your cash flow better to meet the challenges of health care reform. But what might really grab your attention is that your firm can help you come out of the recession in sound financial condition, ready to take advantage of any opportunities that present themselves.
“Although the recession forced many companies to explore cost-saving and efficiency opportunities, in some instances, those companies may have simply deferred maintenance and now realize there are opportunities to invest and further elevate their operational efficiency and effectiveness,” says Steve Howe, Americas area managing partner, Ernst & Young. “They’ll be seeking resources that have proven experience in identifying and executing on these opportunities. Accounting firms will offer experiences and best practices to draw upon, having met similar challenges with other clients or market sectors.”
Even something as simple as getting all of your reporting done on time can mean the difference between success or failure. Why? Because your lenders want to know what’s going on.
“I think it puts them in the best possible light they can be in with their big creditors,” says Roger Hendren, Dallas office managing partner, McGladrey. “Along with that, an accounting firm can coach its clients to make sure they have the right financing in place — in terms of length of debt agreement, the covenants that regulate the agreement — so they’re positioned as well as they can be and they can have the right access to the credit they need so that when the recession goes away, they can take advantage of what should be a big upturn.”
When was the last time you took a look at your cost structure? Two years ago when the economy fell apart? It’s time to look at it again. A good firm can also help you create a more cost-efficient supply chain and identify costs that are not critical or essential to your core mission. And then there are also the tried-and-true tax opportunities accountants are known for. Maybe now would be a good time to reorganize your debt or capital structure to take advantage of either lower interest rates or sources of capital that would make things easier for you.
But the only way to find out what areas you can get help with is to share information with your accounting firm, and it should be interested in hearing what you have to say.
“The best way to advise the business is to understand the business,” says Randy Myeroff, president and CEO of Cleveland-based Cohen & Co. “You have to know what makes it tick; you have to know what the owners are trying to accomplish. You have to have some kind of base where people are trying to get to in order to be helpful. At the moment, it’s not a lot of rocket science. To get through a tough time, you really better have strong metrics and good internal information that’s giving you good feedback so you can understand the market and where it’s moving.
“Everyone’s got very short time frames in their minds. Everyone used to think about three-year plans and five-year plans. Now, to survive, a lot of businesses are thinking about three-week plans and five-week plans to monitor where backlog is, where labor percentages are, where the costs of commodity are moving. You’ve got to make sure they have really good information systems so they have great information and can react accordingly. It can’t just be about cutting costs and playing defensive strategies. You’ve got to understand your business, still take risks and be aggressive if you have opportunities to grow the business. You have to monitor and measure, because the tolerance for errors is a lot smaller than it used to be.”
