Dollars and sense Featured

7:00pm EDT November 25, 2009

You might not think of your accountant as some sort of bean counter, better suited for the Dark Ages than for the Age of Information. Most folks, after all, recognized the error of that thought years ago.

You also might not think of that same accountant as a trusted business adviser. But you should.

Gone are the days when your accountant would just sit down with the company ledger and crunch numbers. An accountant is able to offer so much more now, especially in this economic state.

Need to evaluate your inventory turnover, to analyze what is selling, what is not and why? An accountant can do that.

What about an examination to make certain that all available credit lines are being used or that capital needs are being met? An accountant can do that, too.

And, of course, there are taxes, an area where there has been so much evolution that one industry expert says he estimates the number of allowable tax incentives and minimization techniques has more than doubled during the quarter of a century since he analyzed his first set of financial reports. Another expert says the number has more than tripled during that period. Whatever the actual amount of exponential growth, there is no doubt that accounting is more complicated, and more important, than ever.

“In a down economy, companies are focusing typically on making decisions about costs and expenses,” says Drew J. Sutter, partner in charge of audit and enterprise risk services, Deloitte. “They are evaluating their overall business strategy, evaluating their processes and service lines and products.

“Because we work with many different companies to help them tackle their business challenges, to help them analyze issues and implement leading practices, I think we’re well positioned to bring a broad range of knowledge to the individual client and be a business adviser.”

Talk with your accountant

The key to bringing your accountant into your proverbial inner circle is communication. Nothing is more important, just ask an accountant.

“We might be talking with our clients on a weekly basis or even multiple times per week,” Sutter says. “That personal interaction really let’s me get to know them as people and establish that trust that I want to have as an auditor.”

Without some level of constant and consistent communication, your accountant cannot know the full spectrum of activity within your company and, in turn, might be unable to offer constructive criticism and potentially prosperous ideas and suggestions. The more communication between you and your accountant, the more opportunity and the higher the possibility you will receive a far more favorable result.

Many industry experts recommend you plan to get together with your accountant for at least three or four formal meetings per year, though multiple variables might swing that number higher or lower, including the size of your business, the challenges you are facing now and expect to face during the course of the next year, and the strengths and weaknesses of your internal financial team. Others recommend more casual meetings or phone calls in order to communicate on a regular basis.

Whether you meet around the boardroom table or over beers at your favorite bar, take advantage of that time to ask your accountant important questions, like how can you best utilize your accountant? What should you do internally? Externally? And what are your priorities for the next year?

A high level of communication with your accountant can also lead to you becoming more comfortable around each other. Your accountant should be familiar with many of the folks on your upper management team, and you should be familiar with many of the folks who play top roles for the firm.

“The mutual value to the accountant and company relationship is maximized when professional service providers have a clear understanding of a company’s strategy, business imperatives and issues,” says Mark Stephens, managing partner, San Diego office, Ernst & Young LLP. “Executives should meet with their accountants as often as necessary, especially in these volatile times.”

Take advantage of financial opportunities

The reason so many accountants prefer to be so involved is because the more information they know about you and your company, the more areas they will be able to explore in order to save dollars and cents. And saving dollars makes sense.

“The more the accountant knows about the company, the more value he or she can add on important business issues,” Stephens says.

But the burden of trimming the budget lies not only with your accountant — you need to do your part, too. So be organized, be prepared, be proactive and be accessible.

Just consider the average audit. If your files are scattered around your office, stacked in piles that are toppling over, an audit performed by your accountant might last far longer than it should. In order to avoid a heftier bill, keep your internal financial team on a schedule to update your books regularly, perhaps even every day. Exorbitant costs for an audit — or even just a review or a compilation financial statement — are normally only incurred when you are not organized and prepared.

“A comprehensive financial statement close process is very important,” Stephens says. “Businesses should take the time to close their books properly and review their accounts for accuracy and integrity. The company’s executive team should meet with the auditor early in the planning session and ask for a comprehensive assistance guide to fully understand what’s needed by the auditor, and in preparing for the audit, the company should identify the need to apply new accounting standards and conduct research, gather facts and prepare a memo proposing recommendations.”

If you are particularly strapped, you might even consider consulting with your accountant and other business advisers to consider altering the end of your fiscal year from the end of the calendar year to the end of another quarter. That would allow your accountant to work with you less during the peak months of January through April and more during the off months, when rates are far less expensive. And though such a shift is filled with internal and federal paperwork, the potential savings of such proactive measures can reach more than 20 to 30 percent.

There are even extreme situations where you might be able to save hundreds of thousands of dollars because you and your accountant are both accessible and open to conversation.

Several years ago, one industry expert was working with a client who had installed defective materials in a sewer and storm drain system, and lost thousands of dollars. Though the client was able to file a claim against the manufacturer, the expert was also able to find a case law that allowed for the property loss to carry back 10 years, a far longer retroactive period than the standard two or three years. The result? The client received $500,000 in large part because the expert had been involved in the situation from the start and because the two sides were accessible to each other.

“Our goal is to be a trusted business adviser to our clients,” Sutter says. “Any time there is an important business event or an issue pops up, the company will be talking to us so that we can help them.”