Accounting Services

As the economy suffers, some afflicted vendors are regearing pricing models to “go high or go low.” Accounting solutions consultants are no different.

Given that there will be less money on the table to fund accounting system software implementations, some accounting services consultants will aim to stay profitable by upping the ante on companies still in a position to spend. The targeted end result is fewer but more lucrative contracts.

In this scenario, look for offerings containing all types of grandiose “needed” accounting software add-ons and services to justify the additional expense.

The second model is akin to a fire sale. Figuring that budgets will be very tight, consultants will cut their pricing to remain competitive. Of course, since their profitability requires maintaining some type of margin, this model presupposes accounting software implementations “on the cheap.”

In this scenario, expect a low level of accounting software service commensurate with your expenditure.

Neither model properly serves the accounting services client. To avoid being victimized, following are some initial steps to consider:

1. Get a baseline from which you can assess/evaluate additional options. While not foolproof, one relatively reliable technique is to find out how much a web-based consultant will charge for particular projects, updates and customizations.

Besides the fact that web-based services are growing in scope and sophistication, they tend to stay more stable pricewise in the face of adversity. They already are geared, at least somewhat, to high volume and lower prices. And, because so much that once was the sole purview of an on-site consultant is now available via self-directed training and rapid implementation tools that come with the accounting software, web-based assistance may fulfill remaining needs admirably—and affordably.

You may find that the web-based provider is adequate to do the job, or you can use the information to compare and contrast with other providers—on-site or online.

2. Get updated about the accounting system software you’re using. If you’re not already up to speed on the latest and greatest related to your accounting software, do some research. Three primary research tools are:

a) online—search via objective web, blog, and news sources for information about the product or process you need. String together consistent findings from these searches to help complete the jigsaw puzzle;

b) talk to an accounting software-savvy trusted advisor who can help you cut to the chase;

c) gather accounting solutions information from a trade association or organization dedicated to your industry.

3. Redouble efforts to get accounting solutions references. To help make sure they’re valid, attempt to locate two or three yourself, rather than just pursuing ones offered by the accounting services vendor.

Stay alert and attuned to pricing quirks. You’ll come out way ahead in the long run.

Two headlines sum up the coming regulatory deluge that Wall Street and Main Street alike can expect from our Federal Government.

The first, from the Washington Post, states, “New SEC Chair Off and Running With Enforcement Measures.” The second, by contracting specialist Eric Sobota in the Federal Compass, notes, “Effective Investigations Key to Compliance with New FAR [Federal Acquisition Regulation] Ethics, Compliance and Mandatory Disclosure Requirements.”

Katrina and Iraq War government contracting fraud, coupled with myriad maladies on Wall Street, have jumpstarted the regulation machine. With the new Obama Administration and a Democratic Congress, expect it to accelerate to warp speed.

To avoid being run over by it, get on top of it. Get ahead and stay ahead of this new regulatory business environment by reviewing every aspect of your company’s accounting, tracking, and reporting structures—in departments ranging from accounting services to CRM.

If you don’t do it now, here’s a taste of what you may be subjected to later:

• From the Washington Post SEC story, quoting incoming SEC chairman Mary Schapiro: “The new chairman also said she would speed up the process of launching formal investigations into potential acts of corporate crime… ‘Those who break the law and take advantage of investors need to know that they will face an unrelenting law enforcement agency in the SEC.’”

• From contracting specialist Sobota: “Contractors must now deal with increased oversight and requirements that many are not well-prepared to face…The new rules carry a heavy penalty for noncompliance…”

Think you’re immune if you don’t contract with the Federal Government or have much interaction with SEC-related realms? Think again. Quoting the Post story, “Schapiro also said the Financial Accounting Standards Board, the independent panel that sets accounting rules for U.S. companies, is exploring changes to rules that require firms to mark the value of assets on their balance sheets to whatever the market is paying.” Don’t expect FASB accounting services reforms to stop there.

Sobota notes, “…the Federal Government is becoming increasingly impatient with the perceived lack of effort exhibited by contractors towards meeting their procurement integrity obligations. We advise contractors to take a fresh look at their practices to ensure they are prepared to meet this new heightened level of scrutiny.” You may not contract with the Federal Government, but expect scrutiny nonetheless.

In the accounting software realm, start your review by checking the following:

1. How does your accounting system software provider track regulatory updates?

2. How fast can accounting system software be updated to comply with new regulations and requirements?

3. How will you be notified of accounting system software updates? Will you need to be proactive and check the accounting software purveyor’s website or other information repository? Or will your accounting software provider notify you in a timely manner?

4. How will needed accounting software updates be available? Will the accounting system software user have to go to the website to request or download new accounting solutions updates, or will the purveyor push these updates out to their subscribers? If it’s the latter, how—a link to a website download area, sending of a CD, other processes?

5. Besides actual accounting software updates, how proactive will your purveyor be in keeping you “in the know” about regulations and requirements affecting the accounting services world? Again, will these be pushed out to you, or will you need to go get them on an accounting software website?

These are issues you must become knowledgeable about, to make sure your accounting services can handle the coming deluge. For those inclined toward procrastination, just remember that if you stick your head in the sand now, it’s going to be that much harder to get out later—once the deluge has turned it into quicksand.

Instead of frantically searching for prospects to shore up business revenues in these tough times, mine one of the most valuable business development tools out there—your accounting system software. There is a treasure trove of data that can be mined using today’s robust and comprehensive accounting solutions.

Presuming you have accounting services capable of generating accurate and sophisticated reports, you can pursue all types of opportunities. Following is a starter list of ways that accounting system software can be used to enhance your business:

1. Identify upward-trending (and timely paying) customers via your accounting software. Where you find companies that have been spending ever-greater amounts of money, reach out and determine what other upselling opportunities may exist. Generally, these companies will be financially healthy relative to many others in a downturn.

If, when discussing new opportunities, you discover that they are on the verge of a cutback because of economic conditions, you may be able to forestall and limit the damage by being proactive. Offer incentives for certain revenue thresholds; possibly reward the customer with more favorable payment terms. Even though this won’t always result in a revenue increase, it may stop a substantial decrease—a win in its own right.

2. Identify downward-trending (and timely paying) customers via your accounting software. Find out why they’re trending downward. Be proactive to see what, if anything, can be done to turn the tide on their revenue stream. If you determine that some type of incentive is warranted, offer it. Regardless of the outcome, a constructive and positive discussion initiated by you will generally be favorably received. While it may not have short-term payoff, it well could pay off down the road.

3. Establish a set of accounting software metrics comprising your most valued customers. Then, thank them with an elegant gift or other token of appreciation. In contrast to the first two suggestions, this should be low-key gesture that speaks for itself—not a sales pitch.

4. Conduct a widespread accounting services review to look for overall trends that may dictate a fundamental business shift. For example, if revenues are down across one industry sector and up in another, you may opt to shift industry focus for new business development. Or, you may discover that diversifying products or services may warrant consideration.

5. Use your accounting system software to cull out a manageable group of “representative” customers that you can survey to determine likes, dislikes, and projected future needs. This can become a valuable marketing research tool to rework business development strategies and approaches as appropriate.

Bloomberg recently reported on a Denver-based jeweler citing SAP ERP cost overruns and delays as contributing factors to its Chapter 11 filing. The problem is all too pervasive across all types of ERP deployments, including accounting software product lines and processes. Accounting solutions in principle too often become accounting software nightmares in practice

Quoting from the story: “SAP, the world’s biggest maker of business-management software, took almost three years to install and implement the system instead of one year, while costs ‘ballooned’ to $36 million from a projected maximum of $10 million, Shane said in papers filed yesterday in U.S. Bankruptcy Court in Denver.

“Shane, based in Centennial, Colorado, became ‘substantially overstocked with inventory, and with the wrong mix of inventory’ when Walldorf, Germany-based SAP finished the system in September 2007, according to the filing. The software ‘adversely affected sales’ through the first nine months of 2008, it said…

“The SAP system didn’t become ‘stable and functional’ until the fall of 2008 and still doesn’t operate as initially planned, Shane said in the court filing. The retailer now employs eight contractors to modify the SAP system and ‘bring it to full functionality,’ it said.”

Obviously, the typical SMB Microsoft Dynamics accounting system software implementation is far less expensive than the millions of dollars cited in this story. But, the Shane deployment highlights key issues that can affect any ERP level accounting software deployment. Among them are:

• Lack of detailed and well-organized pre-accounting services deployment planning. Obviously, the client and ERP supplier weren’t on the same page. It makes me wonder if they skimped on deployment and training expenditures in an effort to keep overall costs down—a surefire recipe for disaster. Inventory overstocking and lack of full functionality add to my belief that there may have been a full court press to get this up and running, without dedication of resources needed to meet objectives.

• Substantial delays. Time is money—three years versus one is disruptive, demoralizing, and obviously financially damaging. Can you imagine having an empowered workforce and positive accounting system software employment environment amid these types of delays?

It doesn’t take an accounting software guru—or any type of math maven for that matter—to see that no matter how sophisticated or robust the ERP system is, success ultimately resides in the details of accounting services deployment.

Now, the jewelry company faces bankruptcy while a corps of eight contractors tries to repair the damage. Begins to sound a lot like “Humpty Dumpty” to me: “…all the king’s horses and all the king’s men couldn’t put Humpty Dumpty back together again.” This is no time to play Humpty Dumpty with accounting system software.

I came across an article on a website called isnare.com that directly addresses the critical profit-generating support that accounting software provides small business.

Many entrepreneurs—especially those who don’t live and breathe accounting numbers—view accounting software as a necessary evil required for tax compilation and some degree of performance assessment.

In reality, accounting software can provide a powerful tool to boost revenues and cut expenses. Properly installed, configured and understood, accounting system software can provide the lifeblood to sustain a company through many serious scenarios in the days ahead.

Isnare.com article author Terry Cartwright addresses the challenge by noting, “Producing financial accounts may well be an administrative headache for a small business and many self employed businesses put off this essential business and reduce it to an annual event. There are major benefits that small business can derive from operating the financial system as an important part of the business management.

“Big business invests millions in sophisticated accounting software and financial control systems because financial management is seen as a key to financial success.”

The article goes on to say that one major accounting software function is to establish and evaluate gross profit margin in both percentage terms and volume compared with fixed expense levels. Accounting software used to generate a monthly profit and loss calculation will help determine immediately if gross profit is sufficient. Identifying areas where it can be improved can substantially improve profitability.

Adds Cartwright, “That is the benefit of accounting software, the production of actual financial figures that indicate where and how much action needs to be taken to improve the net profit earned. That action may indicate a need to improve sales volume, increase the gross margin through higher sales prices or lower direct costs [through] a reduction in overhead and business running costs.”

Other useful information can be generated by reviewing historical and present financial figures. Comparisons can identify such areas as sales opportunities not being fully explored, ways to improve gross profit margins, and steps that can be taken to limit excess expenditures, thereby achieving cost control.

Although not the most glamorous part of a company’s operation, accounting services undeniably rank high on the list of most important to future survival.

So, I have been writing about the importance of accounting software that can ensure compliance with accepted practices and regulations. Then, along comes Bernard Madoff, who’s allegedly able to circumvent compliance controls and implement a $50 billion Ponzi scheme.

It certainly validates the question of how effective any accounting software can be in ensuring accurate and above-board practices. Of course, it also adds fuel to the regulation fire that inevitably will heighten levels of control and reporting—and consequently the need for secure and sophisticated accounting solutions.

A Dec. 23 article in the Wall Street Journal frames the debate: “Questions about compliance practices at Bernard L. Madoff Investment Securities LLC are troubling many securities industry observers, as losses related to an alleged $50-billion Ponzi scheme associated with the firm’s investment advisor arm continue to impact a widening international circle of investors. ‘How could you have this massive scandal going on in a firm that’s adopted adequate procedures? That’s what compliance is all about,’ says James A. Fanto, a professor at Brooklyn Law School in New York and author of Broker-Dealer Law and Regulation.”

So, what are some lessons to be learned from all of this in the world of accounting solutions?

One, hire honest people. No accounting software, no matter how robust or well-configured, can function flawlessly if the people operating it—or their bosses—have crooked intentions. Just because you have excellent accounting system software doesn’t mean you’re totally protected. People still matter—a lot.

Two, the importance of adequate accounting software cannot be overstated. Notes the Wall Street Journal article, “…investigators issued a subpoena to David Friehling, a New City, N.Y., accountant who audited the Madoff firm’s financial statements, and are seeking documents related to the Madoff firm going back to Jan.1, 2000. Friehling has until Dec. 29 to fulfill the request.” Do you think for a moment that this accountant wants to be caught with his figurative “accounting software pants” down? Obviously, sophisticated, up-to-date accounting system software would aid his cause.

Three, when accounting practices and reports are challenged, how many people want to spend inordinate amounts of time trying to comply? The right accounting software can be a huge time-saver in many types of situations. In some cases, it can be a potential “livelihood-saver” as well.

How will President-elect Obama impact small business accounting services? Let me count some of the ways that the next Administration will both heighten accounting-related requirements and offer rewards that, likewise, will increase needed tracking of finances:

1. Taxation. As the new President grapples with myriad economic woes, you can bet that one priority will be greater oversight of tax bills by the IRS. Given that current revenues fall short of what’s actually owed, look for more government involvement in your accounting services to put more money in the US Treasury. Make sure your accounting software is up-to-date, properly customized to your needs, accurate, and readily accessible.

2. Regulation. Greater government involvement means more rules for small business. Being able to stay on top of them (which the proper accounting software can help do) and comply with them (also a function of the right accounting services), will result in much stress relief going forward. Start asking questions of your present or prospective accounting software companies about how they plan to address regulatory issues and requirements going forward.

3. Incentives/Lending. Look for small business stimulus incentives with the new Administration. These may pose both an opportunity and a challenge: A new/extended Stimulus Package could make buying/upgrading accounting software and other hardware/software much more affordable. Keep your eyes open for expanded lending through the Small Business Administration, micro-lenders, and peer-to-peer lenders—all fueled with government backing. Stay aware of accounting software that will be needed to efficiently capture data and develop financial reporting enabling your company to take advantage of these opportunities.

4. Jobs. Both in the public and private sectors, look for new jobs and incentives for hiring. Accounting solutions that can reliably capture data and create salient reporting around hiring opportunities will help ensure full compliance to keep the incentives coming.

And this is just the cursory overview. Fundamentally, small businesses that make their accounting services a top priority are much more likely to generate top-notch revenues

After all the campaigning, rhetoric and spin, the choice of our next president boils down to numbers and their reporting. And what has the entire campaign been about, if not numbers—polling numbers, calculations of electoral votes, use of those numbers to motivate constituents, and the like?

How the numbers themselves are determined has been a subject of much discussion and controversy. Different analyses have yielded highly divergent results.

Think about this the next time you view your company’s accounting services as ho-hum. In reality, much of what goes on in a national election process is a macrocosm of what happens—or should happen—every day in your business.

Data must be collected. It must be reported and recast in ways that are pertinent to different audiences. It’s information critical to evaluating how your company is doing, what trends to be aware of, and how resilient you can afford to be in these challenging times.

Your company’s accounting services also are the critical link to financial backers. And it’s not just the raw numbers. It’s how they’re reported, recast and recorded.

Given the weighty role that accounting system software plays in your business, you would think that companies would employ the most effective accounting solutions. Instead, the decision-making process often hinges on finding the most well-known accounting services, often at a lower price. Only after embracing this popular accounting software does a company realize there are shortfalls they didn’t consider.

Once again, this sounds eerily like the nation’s election process. In the rush to embrace popular technology, our country faces uncertainty about how well voting machines will perform, how accurate they will be, how vulnerable they are to tampering.

Popular accounting solutions are just that—popular. It doesn’t mean they are right for your business or unique needs. So, before investing in any accounting system software, investigate the following as part of your overall assessment:
1. Security. Consider multiple versus single layers of protection. Assess how valuable your accounting data may be to a competitor or disgruntled employee, then make sure to protect yourself adequately;
2. Power. If you have employees waiting around to use the system, that’s a problem (in some ways, not unlike voters waiting for hours at under-powered polling places). Think of the lost productivity employers suffer on Election Day because of those long waits—then think about how much money is going down the drain when employees are waiting around waiting on slow or balky accounting system software;
3. Reliability. Evaluate whether or not present or prospective accounting services give you what you need, when you need it, in the ways you need it. Think about connectivity with other critical systems, such as customer relationship management (CRM). Think about ability to tailor reports to various departments (e.g., salespeople and accountants generally do not read off the same page).

Numbers, and how they’re accounted for, are a critical part of any corporate structure. Staying on top of them by using the right accounting software will keep your company at the top of its game.

How does reputable mid-market accounting software reward those who implement it? Let me count the ways:

►Avoid data theft/compromise by disgruntled employees. Mid-market accounting software should include sophisticated theft deterrent features. Care to add up the potentially catastrophic costs of an employee selling sensitive personal data to outside parties? For starters, there’s the expensive and time-consuming process of informing affected parties and offering remediation recommendations. The bad press generated by such an event can destroy a company as present customers pull their business and prospects rule out the company because of the breach.

►Increase productivity and motivation of accounting employees. When employees discover that there are accounting solutions that can make their job easier and more productive, one of two scenarios likely results: they’re really frustrated because their company doesn’t have it; they’re really grateful that their company has it. This ranges from the most minute data entry tasks to ability of concurrent users to get on the system immediately versus waiting for colleagues to log off. It encompasses immediate generation of on-screen information and printed reports.

►Develop a more productive overall workforce. Providing the right types of financial information to everyone from the sales department to fulfillment clarifies roles, responsibilities and objectives. Clear communication of reliable and timely financial information using the right accounting system software generates clear and crisp results; murkiness begets murkiness.

►Keep regulators off your back. Anyone who’s experienced regulation difficulties will attest to their costly, time-consuming and productivity-draining nature. Accounting solutions that handle regulatory issues competently will yield many dividends—both monetary and in peace of mind.

From Roosevelt to Roosevelt, the message is clear: Our biggest enemy is inability or unwillingness to act constructively when adversity strikes.

Teddy Roosevelt said, “In any moment of decision, the best thing to do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”

FDR proclaimed, “The only limit to our realization of tomorrow will be our doubts of today.” He’s also responsible for the famous line from his first inaugural address: “…the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

Unfortunately, too many small-to-mid-sized businesses operate mainly from a place of fear. At the first sign of a downturn, they start tuning out the cacophony of bad news by burying their heads in the sand. Of course, once you bury your head in the sand, you—and your company—will run out of life-giving oxygen rather quickly.

Fear drives more business failures and economic malaise than any other downturn-related factor. Hope, determination and perseverance are the antidotes.

At this uncertain time, I call upon small to midsized businesses of America to find renewed hope, fortify it with determination, and rely on perseverance when the going gets tougher.