Pity the poor accounting department.
When business is booming and everyone is high-fiving that sales went up 25%, management starts to think about hiring more production staff to handle the extra volume. But the impact of the extra sales volume on the accounting staff is often ignored.
However, when revenue drop off, the staff reductions often hit the accounting department first. With optimism running high that sales will get back on target, no one wants to cut sales, customer service or production staff. So the accounting team takes the hit…even though they still have a great deal of work (such as processing payroll and ensuring the lights stay on) that’s not tied to sales volume at all.
Inadequate accounting staffing levels can hinder your company
Consequently, whether their company is growing or shrinking, many Controllers and Accounting Managers feel like they’re just treading water. With staffing levels inadequate for the volume of work to be done, analysis and other high-level tasks take a back seat to keeping up with the basics, such as creating invoices and paying bills.
In situations like these, there’s a lot that may be falling through the cracks. For example:
• No one is looking at the likely impact of shrinking sales on projected cash flow, and how this will affect operations. Will you run into a problem with your bank on your loan covenants? Will you be able to continue taking advantage of “early pay” discounts from your vendors? Will you make payroll?
• Internal control processes are not being followed. When something doesn’t look quite right, no one is taking the time to investigate why the numbers are what they are. Or even worse, perhaps no one is taking the time to look at the numbers closely enough to even notice that they don’t look right.
• You’re in danger of growing yourself out of business . No one is looking at how increased sales volumes will affect your staffing and working capital needs.
The solution: bring in a part-time CFO
A part-time CFO can help right-size your accounting department, working on an hourly or project basis to get all of those high-level accounting tasks handled. They can create and review the reports, do the analysis, provide oversight, help the Controller prioritize tasks, address projects that are important to senior management, and much more.
Want to learn more about the difference a part-time CFO can make? Give me a call! I’m here for you.