6 Eye-Opening Questions To Ask Your Finance Controller
Whether you have a finance controller or not, someone in your company has the role of top dog accounting person. As CFO consultants, we seek out that top dog accountant to gain insight into the state of the state when engaging new clients. We have found that these six eye-opening questions to ask your controller have proven to be prescient when identifying how and where to focus our consulting efforts. The six questions along with a brief explanation as to each question’s relevance, are as follows:
Question #1 Can I review your accounting close task list?
There should be a list of monthly close entries and quarterly accounting reviews for balance sheet accounts and other reconciliations. Having a task list illustrates an understanding of the interdependencies that exist in the close process as well as the underlying sense of urgency, which exhibits a good level of discipline. Not having a list should be a concern, because it reduces trust in both the accuracy and timeliness of financials. You can learn more in our earlier post on what the reasons are for effectively closing your accounting books.
Question #2 What are your top three business concerns and/or frustrations?
CEOs and business owners, from time to time, should consult with their controllers about the concerns and frustrations affecting the accounting function. Finance Controllers experience the end result of nearly every business process; consequently, they have a unique perspective on what processes are working well and more importantly, not working well. Do not ignore this valuable source of feedback. You might be surprised what you learn…
Question #3 Where Are We Least Efficiently Using Our Resources?
This allows your controller to articulate where they see others within the organization using scarce resources less effectively. Perhaps there are employees in Sales submitting excessive travel expenses or the company is not leveraging its ability to negotiate competitive pricing for inventory. Whatever it may be, controllers do have a good sense where value is being created and destroyed within an organization.
Question #4 How Frequently Do We Have To Reissue a Payroll Check or an A/P Check and/or Correct An Invoice?
These nonvalue-add activities sap resources and reflect poorly on business processes used throughout the organization. Excessive errors, such as these, can be indicative of larger business issues that need to be addressed. Start tracking these errors and stamp out the root causes with a vengenance.
Question #5 Can You Describe How The Dimensional Data That Is Used to Record Accounting Transactions Supports Our Business Strategy?
Not having a strategy is not the controller’s fault, but if you have a strategy then the accounting system should generate metrics to support it. Regardless as to whether you are using SAP or QuickBooks, there are many ways to code transactions and produce metrics that are aligned with strategy. The sales can pertain to sales initiatives, quality control metrics and operational effectiveness. If you are not doing so already, figure out how to use your accounting system more fully to instill greater accountability throughout your organization.
To learn more about how dimensional data works, see our earlier post on considerations when setting up or modifying your accounting/ERP system.
Question #6 How Are You Monitoring Our DSO, DIOH and DPO Trends, And What Are Those Metrics Telling You About Our Cash Management?
Cash is king and how your business performs on these three metrics will make you a prince or a pauper. The metrics are Days Sales Outstanding, Days Inventory On Hand and Days Payable Outstanding. The net of the three equals your cash cycle. If your controller is not already tracking these metrics, then that person needs to immediately learn how.
We establish financial management dashboards for all of our clients that include all three when appropriate. Clients with no inventory do not need a DIOH metric.
Profitwyse provides the expertise needed to overcome these issues and will transform your accounting function into a value adding asset. Contact us today to learn more about our 3D Financial Analysis process to get your business on the right track.