Matthew LaWell

Wednesday, 25 November 2009 19:00

Dollars and sense

You might not think of your accountant as some sort of bean counter, better suited for the Dark Ages than for this 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.

“A lot of middle-market CEOs are really on an island,” says Jeff Kovacs, accounting and auditing shareholder, Alpern Rosenthal. “They don’t have a lot of places they can turn to, especially when there are difficult economic times, and rather than internalize that, they need to reach out to their accountants.

“The companies that I’ve seen that have been successful over the years and can kind of weather this downturn are those that really view their accountants, their lawyers, other business advisers, as good sounding boards.”

You can never talk too much

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

During conversations with more than two dozen industry experts, that one word, communication, cropped up again and again. 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.

“The best relationships we have with our clients are those with which we talk on a weekly basis,” Kovacs says. “They truly view us as a business adviser, as a partner, in their operations. They have developed that comfort level where we are that quarterback for them.”

But you might not want to meet with your accountant for one of the three or four formal meetings per year many of them recommend, for lunch, or even pick up the phone for an impromptu call, because every second costs something. And right now, the bottom dollar remains the bottom line.

In order to provide you with a sense of financial ease, some firms opt to not charge for those phone calls, which are so important to maintaining that constant contact. Others charge only for hours during the traditional workday. Want to grab dinner with your accountant? Throw back a beer? Play a round of golf? Your accountant might want to do the same thing in order to learn about you more as a person than as just a business owner or executive.

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.

“I think it’s key that the business owner, the CEO, the CFO, is not just in a relationship where the accountant is going through the motions, providing compliance services without giving any kind of feedback,” says John M. Yanak, managing partner, Grossman Yanak & Ford LLP. “The accountant should give feedback on things like what the company’s performance is like relative to their peers, what other companies are doing in this environment and what savings opportunities are available.”

Everything revolves around dollars and sense

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.

“If CFOs or controllers are in constant contact with their CPAs or their firm, that really provides an avenue for the exchange of information and savings that can be generated,” Yanak 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 or 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 are normally only incurred when you are not organized and prepared.

“Preparation is the key,” Yanak says. “There should be a clear communication between the accounting firm and the company as to what information is going to be needed to effectively complete the audit, along with a timeline to determine when that information will be needed.”

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 the client 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.

“Especially if a company is facing difficult times, it can be embarrassing to them to air their problems with outside advisers,” Kovacs says. “When the reality is that’s exactly why they have trusted business advisers.”

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