If you don’t know how to do this, you should. If you don’t know how to keep up with accounting software, you should also. It’s not essential knowledge; there are plenty of accounting people in the world who’ve never had to learn it. But if you’re going to run a business, and you’re going to manage money, there is no way to do that without knowing how it works.
Modern accounting software is powerful enough that we often don’t realize we’re using it. Accounting software can track sales and inventory and cash flow and liabilities and debt for each vendor and each customer in real time, something most of us couldn’t even imagine doing 10 years ago.
All of this amounts to a tremendous amount of data about your business: everything from the specific numbers on the balance sheet to the specifics on the income statement.
When you work with accounting software, you have to keep up with what’s new.
I’m an accountant by training and profession, but I still have trouble learning new software. I don’t think I’m alone in this.
The first trick is to learn to use the controls. Each piece of software has its own way of doing things. You have to learn that. I use QuickBooks myself, but not everybody will have that, so here are some basic hints for using other systems. Once you know how to use them, it’s easy enough to stay abreast of the latest developments, either by reading the papers or by chatting with your accountant or consulting a few books on the subject.
Here are some basics:
- The Accounts Receivable Ledger is different from the Sales Leder and the Purchase Order Ledger. If you don’t understand how they work, you’ll never be able to do your job properly. Check them out before you go into meetings with your boss.
- I like to use QuickBooks Pro. It’s easy to learn, it integrates very well with most other software, and it imports all the data you need to run your business.
- If you want to be a financial director, you really need some kind of accounting system. Most small businesses spend that much time looking at the books that they find it hard to keep track with that themselves. And once you’ve joined the club of people who count every penny, you’re stuck with it for life; there’s no switching to something easier later on.
- There is a lot of jargon, and some of it is hard to get the meaning of. But you don’t need to know everything.
- If you can’t be bothered to learn it, make a spreadsheet instead. Since spreadsheets are easy to use and understand, and because they will only ever contain numbers, you can understand them without any specialized knowledge. You can also summarize information in a spreadsheet and communicate it simply and clearly to your boss or accountant.
The financial controller will be responsible for all the information management and analysis that supports the financial decision making. This is a big job, but it is also one that can be done very quickly, because there are only a few things to do.
First of all, you need to keep on top of your business processes. If your company will use different software in different areas of the business, you need to understand what it is doing and why. You need to make sure people are following the procedures they should be following, and that they are not doing things differently from what they are supposed to do. And you need to make sure the process itself is working properly.
All this means getting involved with your IT department. But it can be done through some kind of software package. The basic thing is that you need a data warehouse that collects data from all your systems. It’s just a matter of organizing the data by area, rather than by individual system records, so you can concentrate on specific areas of concern.
There are lots more tasks, but once again the trick is just to divide them up into bite-sized chunks so they are manageable at any given time.
Financial controllers handle day-to-day accounting. They prepare the accounts for the general ledger, enter transactions, and reconcile accounts. A financial controller is usually responsible for how the figures look on the books at the end of each accounting period.
It’s very hard to know what a company’s cash position is until you account for all of its costs and income and subtract all its debts and expenses. That takes time, and not everyone does it right. The results can be wildly misleading: a company that seems wildly profitable on paper might be struggling to stay afloat.
It is all too easy to think of the job of a financial controller as simply counting money. But in reality, financial controllers are also acting as captains of industry. They are running their companies the way captains run ships, with a plan for how to get there. They are making sure that the ship has enough fuel to reach its destination–that it has enough cash, that it has enough assets, that it is full of cargo destined for certain customers, and so on.
It is true that running a business takes more than just numbers. It also takes people skills, understanding of the market, and the ability to make tough decisions when you have to. But these are skills that can be learned or developed. And if you don’t learn them in the right kind of company, they are not likely to be learned in any other company either.