In a young business there are many priorities and few people to get them done. If there is money in the bank and customers are happy, accounting may not be high on the list.
At my first job in Chicago, the owner managed his cash in personally, week by week, However, he only got one set of financial statements, six months after the end of the year. Any projection only existed in his mind.
He bought a new business in January and the existing accounting staff did not have the tools to process the transactions, for 5 months.
The owner invested energy in turning the product around, and I was hired to be his senior financial person. With some detail work on the new business transactions, it soon became clear that the new business would sink the existing company.
Accounting had not been a priority until it was. By looking into the future with some basic assumptions we could see the future catastrophe coming.
We sold the largest asset of the acquisition and shut it down in time.
A large successful Private Equity firm decided to start an operating company to horizontally integrate a part of its operations. It was a very different business than its existing operations and the accounting was a little complex.
Due to other priorities, the accounting for the new entity was not monitored closely and it became apparent during an audit that the accounting had not been accurate for at least 18 months.
The operating company’s existence was in doubt because the accounting had not been monitored and was too different for existing accounting staff to do. Outside help was needed, was obtained and with 3 months of concentrated effort, the accounting was caught up and the audit was completed.
Accounting can seem like a low priority, but lack of attention can leave ownership in the dark about issues that can threaten a company’s continued existence. If you are not getting solid, timely, reliable financial information that you can understand, call Mark Twain CFO Consultants. With over 40 years of experience in entrepreneurial companies, including 6 years at the top of the profession at Price Waterhouse, our principal, John Salmon is available to meet and discuss your needs and what you feel is missing. We will roll up our sleeves, dig out reality and communicate it to you clearly.
Contact John at 312-479-0963 or visit our website at https://www.marktwaincfo.com
Or you can email at john@marktwaincfo.com