The Top Ten Things that Will Get Controllers Fired!

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10.  Controller does not pursue self-improvement by attending classes, reading periodicals in their field.

9.    Doesn’t care anything about learning the Industry they are working in.

8.    Lacks the vision to implement improvements in accounting systems, processes and procedures.

7.    Fails to develop or mentor staff and often feels threatened by subordinates.

6.    Arrogant

5.    Fails to grasp the importance of Fast Closes and producing Financial Statements on a timely basis as defined by management.

4.   Always puts personal needs ahead of company’s needs.

3.   Does not ask questions or seek support from their system’s software vendor and outside accounting firm.

2.   Is seen as ‘in over their head’.

And NUMBER ONE REASON CONTROLLERS GET FIRED:  The CEO, CFO or Ownership of the company does not trust and/or respect them. (The reason is immaterial).

 

ARE YOU A SCALABLE CONTROLLER and what exactly does that mean?

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A few years ago I began seeing the word ‘scalable’.  It  generally referred to whether typeface could be enlarged.  But today ‘scalable’ means a great deal more than just that.

From Wikipedia:

Scalability is the capability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged in order to accommodate that growth.[1] For example, it can refer to the capability of a system to increase its total output under an increased load when resources (typically hardware) are added. An analogous meaning is implied when the word is used in an economic context, where scalability of a company implies that the underlying business model offers the potential for economic growth within the company.

We talk about businesses and how they handle growth.  Some businesses prosper in a growth mode and others self-destruct under the weight of too much business.  For example,  you opened a store on ETSY.  You sell just one thing, crocheted dolls.  It takes you one day to make each doll.  Your opening inventory is 25.  Day One you receive orders for a 1000.  You don’t have enough money to buy the yarn for 975 dolls or the time to make them and customers won’t be charged until you ship.  This is the most basic definition of ‘scalable’ (or not) in a business sense.

Recently on a Linked In Group (FSN) that I love participating in, someone wrote in about how to develop a program of study for a new role he was assuming at his company (a very large and well known one).  He is obviously intelligent and recognizes the need for learning all there is to his new role.  He is on the right track.

If you are a CPA you’re required to earn 40 CPE hours a year (at least in my state).  If you attend classes (in person or online) are you just going through the motions or are you selecting classes that will enhance your knowledge?

The entire point of this dissertation is to get you to look at yourself and ask ‘Am I still relevant’?  Warren Buffet is in his eighties but no one thinks of him as less than relevant.  This is not about your age, but your abilities.  Who wouldn’t want a seasoned professional on their team if they bring a lot of experience and forward thinking to the table.

Below are ten questions you need to ask yourself to determine your scalability.  We all should know what a passing grade is.

  1. How many newsletters, journals, magazines related to Controllership, Management Accounting, Finance and other related subject do you subscribe to?
  2. Do you attend CPE classes or other classes even if you don’t have to?
  3. Are you working on a designation such as CPA (Certified Public Accountant)  or CMA (Certified Management Accountant)?
  4. Do you have a Linked In account and, if so, do you belong to groups of accounting and finance professionals?
  5. If they are close enough, do you belong to any accounting Chapters?
  6. Do you spend time improving your Excel skills?
  7. How many accounting related books have you purchased in the last year? Whether you or your company paid for it.
  8. Are you a member of AICPA or IMA ?
  9. Do you welcome new challenges in your position as Controller?
  10. Are you passionate about accounting?

Let’s create another scenario.  Lately at the office there have been a lot of closed doors and whispering coming from the CEO and CFO’s offices.  They seem to be gone more than ever or always tied up on conference calls.  Something is going on but they may choose not to bring you into the loop until further down the road.  Fast forward…..It’s Monday morning and you’re getting that first cup of coffee.  The CFO passes you in the hall and says ‘I need to talk to you, bring your coffee’.  What he tells you is that the company has made a commitment to acquire 25 locations, thus doubling the company’s size overnight.  Are you scared? Excited? Angry?  How you react is going to determine your future.  If the CFO views you as weak or not up for the challenge, he and the CEO are probably already putting out feelers to replace you.  If that’s the case, it is almost too late.  Do not kid yourself.  You better start thinking about how you are viewed in the C-Suite.

Make no mistake…………..this is a serious issue.  It is the difference between surviving or failing at a company with a bright future.  As a consultant who has seen the demise of more than one controller, I can tell you that there is definitely a common thread between them.  Next week, I’ll write about those in my  ‘THE TOP TEN MISTAKES THAT WILL GET A CONTROLLER FIRED!”.  Stay Tuned!

 

 

 

WHY SALES EXCEPTION REPORTING can pay for itself! – (Part II)

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If you did not read the blog post last week regarding the Sales Exception Reporting mechanism, please go back and read it now.

We ended our discussion last week by stating that for the Sales Exception Report to work you have to set certain criteria.  In most large companies with a big product ‘catalog’ they have some kind of grouping.  Let’s take a cosmetics company.  They will group their product as follows:

  • Face
  • Lips
  • Eyes
  • Hair

You might call these ‘departments’ just as you would in a Department Store.  So let’s set up our report as follows:

  • For ‘Face’ Department show all sales with Gross Margins less than zero or greater than 50%.
  • For ‘Lips’ Department show all sales with Gross Margins less than 5% or greater than 30%
  • For ‘Eyes’ Department show all sales with Gross Margins less than 2% or greater than 60%.
  • For ‘Hair’ Department show all sales with Gross Margins less than 0% or greater than 25%

Now we have the parameters for our new report.  For some, you may need to ask your software vendor to design and deliver the report.  You may be able to build an Excel spreadsheet that can handle it but a hard coded report is preferable as long as it is not cost prohibitive.

Accurate cost of goods sold per unit of measure of product is critical.  If you don’t have an accurate and reliable (not perfect) costing system, the report will not be effective.

In reviewing your report, you are looking for two things:

  • Is the cost right
  • Is the Selling Price Correct

Compared to fifty years ago when prices did not change from day to day at the grocery store or the gas station, prices were much more stable.  But now, even with the technology that allows price scanning (UPC Coding) we believe we are keeping up.  But a price scan depends on what a human being entered into the system somewhere along the line.

Who among us has not been to the grocery store or a big box hardware center and seen the price ring up incorrectly.  The item has been put on sale based on the signage where you picked it up but the sale price has not been entered.  Conversely,  prices increasing the Selling Price may not have been updated.  Someone needs to monitor how items are being priced and more significantly, losses that may be generated through bad costing or errors in unit sales price.

Sales Exception Reporting is the essence of ‘Management by Exception’.  Not looking at everything but just those things you defined as outside the expected result.

If you have any questions on this topic, please feel free to contact me.

The Real Road to a FAST CLOSE………….really!

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There are books on the Fast Close.  There are seminars and webinars.  We come home with great pointers and ideas.  Now we are going to have internal financials produced on the fifth day after Month End.  But somehow we just never get there.  Isn’t it all just so frustrating?  If you are the Controller you are most likely on the front lines of the Month End Close.  Many controllers working for privately held companies end up closing various sets of books, sometimes including  truly diversified business types.  And, if inventory is involved, that adds another layer of complexity.  Here’s what I have discovered and learned observing CFO’s I’ve been associated with:

  • Consider issuing a set of Preliminary Financial Statements with the following caveats:
    • These statements do not reflect the following: (Example)
      • Depreciation Expense
      • Insurance Expense
      • Other Allocations
  • Review all your POST CLOSING Journal Entries
    • Can your software generate automated entries for the Month triggered by the Closing Process?
    • Are you making entries or reconciliations at month end that could be moved to mid-month as long as there’s 30 days between reconciliations?
  • Can you create a ‘CLOSING’ Team, even if it’s just you and one other person.
  • Do you have a MONTH END CLOSING set of Checklists that can be ticked off as processes are completed?

Start ‘GRADING’ your Closing team as a whole after the  FINAL Financial Statements for the period have been issued.

Then go through the same processes shown above next month and every month.  Continue to look for the ‘constraints’ that slow down the closing process.  Then do something about them!  And, as always, consult your outside Accounting Firm to be sure you are on the right track.

IS YOUR OFFICE A ‘HOUSE OF CARDS’?

 

If you’re not a fan of Kevin Spacey as the devious maniac & master manipulator  Frank Underwood in Netflix’s ‘House of Cards’ , let me give you some background. He was a powerful congressman slated to be tapped for Secretary of State.  However, the President’s Chief of Staff ruled him out.  Now he’s been sworn in as Vice-President, after murdering two people who were obstacles to his goals.

It’s a great series but Vice President Underwood is a scary guy.  The congressional in-fighting, the backstabbing and ‘take no prisoners’ mentality is a frightening look into the way things are at some level in too many good companies (and to some extent in Congress).  We’ve seen it on full display in ‘Mad Men’, and the sarcastic and cynical t.v. hit ‘The Office’. So what does that have to do with you as a Controller or Accounting Manager?  If your office is a kingdom of kindness, cooperation, teamwork, and respect…..then the answer is nothing.  But if there are few days that go by that you aren’t dealing with complaints by one employee against another i.e. the  smooth talker, the slacker, the sneaky one……let’s talk!

One of the biggest challenges trained accounting people face is moving into management positions and then dealing with their direct reports.  As a CPA with a BBA in Accounting, I can tell you that there wasn’t one single course available to deal with handling personnel.  I don’t remember ever seeing any CPE offerings on the subject.  We are born knowing how to breathe, but not how to manage. There are stacks of books, reams of papers and countless experts regarding inter-personal behaviors in an office setting.  You may have even found some that have helped guide you in managing your people so at least some work gets done. Recently, the Wall Street Journal published an article about ‘bad bosses’ and that the day of the ‘command and control’ boss is gone.  If you think barking orders will insure they are obeyed you may have a ‘dinosaur’ attitude of days past.  But it is you who is risking extinction.  The collaborative voices of your employees, marshalled against you can cost you your job.  I’ve seen that happen more than once. From my perspective, after having managed as a Controller in a very large privately held company, here are some of the things I believe must happen if you plan on getting anything done:

1)  Meet with your direct reports on a routine basis.  I know it’s not easy but meet at least once a week.  Schedule your meetings at 4:00 p.m. assuming quitting time is 5:00 p.m.  This way people will be less likely to ‘digress’ and you can manage your meeting to a goal of one hour.

2) Make sure when you are hiring that you have a written, very detailed job description available for the candidate.  The better people understand what is expected of them, the less conflict there is about job duties down the road.

3) Be fair and not petty!  The worst kind of manager is one who is petty.  It kills respect for you, it kills morale and it kills motivation.  Enforce the office policies firmly but fairly.  What is petty?  Denying an employee a few hours off to attend their child’s school program because they were late the day before.  Constantly denying people the equipment they need to get the job done because you worked there five years before you had one.  Get my drift?  Petty is small and mean acts against the people who work for you.

4)  During Staff meetings put as much as you can on the table about what’s going on in the company that you can share.  Keeping secrets, knowing more than they do, is also petty in this day and age of fast moving events and storms of information.  If you keep secrets when you don’t have to, so will your employees.  Count on it.

5)  Do not over share personal information about yourself.  If an employee tells you about her husband’s big promotion, or a big inheritance, be happy for them.  But do not share your life on Facebook or Instagram.  Reserve that for ‘family’ only groups.  My sister had a new manager who shared constant pictures of her children to her telecommuter employees, including a picture of her son on the operating table as he was carried in for a tonsillectomy!  But then when my sister needed time off for personal reasons it was denied.  So how do you think she felt about seeing more of her manager’s family pictures?  This is the kind of behavior that drives employees crazy and can lead to serious problems such as being pulled in by HR and questioned about your behavior.

The conversation in the arena of business management and productivity practices is gaining a lot of ground these days.  Do you really want to be like the president of AOL who fired an employee during a company wide conference call?  Maybe he was trying to prove how powerful he was.  He just proved what a terrible leader he is.  As Controllers, Accounting Managers, CFO’s, we can do better than that.

BECAUSE THAT’S WHERE THE MONEY IS!

 Bank Robber

My column today is not the first one regarding your Accounts Payable department, nor will it be the last.

If you are a new controller unfamiliar with managing an A/P department, you need to get educated as quickly as possible.

Several years ago I was faced with the same challenge and through a stroke of luck,  I found Mary S. Schaeffer.  To say that Mary is a leading expert in the U.S. on Accounts Payable is an understatement.  I have almost all of her books and several of her writings.  I couldn’t have managed a multi-million dollar A/P department without her.

Mary has just published a new book ‘Internal Controls in Accounts Payable’ which I would describe as everything you needed to know about A/P but were afraid to ask!

I know it’s an old joke but it cannot be repeated often enough……….when Willie Sutton, a famous bank robber of the 20’s and 30’s, was asked why he robbed banks…………..he replied ‘because that’s where the money is’.
As controller, it is your job to manage and eliminate as much risk of theft in A/P as you possibly can.  As I have said before, A/P is not about cutting checks and making payments.  It’s also about fending off all would-be crooks inside and outside your company.

If you want to preserve your career and your reputation, don’t let yourself and your company become a victim of A/P fraud…..AND  don’t lull yourself into a false sense of security believing  that no one in your A/P department is smart enough to pull it off.  I’m giving you a stern warning that first…….it doesn’t take a genius to pull it off and second……some A/P fraud is committed by top management.

We often hear Controllers and others say that they cannot maintain necessary Internal Controls because of segregation of duties, probably because A/P might be a one person department.  In Mary’s book she offers practical solutions to segregation of duties and other Internal Control practices.

You can order her book now  at http://www.amazon.com.

Below is an image of her newsletter you can subscribe to in order to stay abreast of all the new developments happening in this corner of the world.

 

Newsletter of AP-Now

Newsletter of AP-Now

 

 

THE FIVE REASONS EMPLOYEES WANT A RAISE….and what to do about it.

This weekend we filled up the car, bought groceries, visited our Sam’s club, and had lunch out with our family…..and our electric bill was due. Let’s start with our 20 gallon gas tank that sat on empty.  We filled up at Sam’s for around $72.  I spent $80 at Walmart and $40 at Publix to feed my husband and I for a week.  We both are  home all day working from our prospective computer desks.  We eat lunch and dinner at home six days a week.  Additionally,  there is the astronomical costs of home heating this past winter.  Many parts of the U.S. were hit hard and long this winter. I used to think nothing of buying a couple of New York strip steaks or ribeyes.  It seems like just yesterday I paid about $8 for two steaks.  Today, they run from $16 to $20 for two steaks.  Almost everything at the supermarket is sky high.  Milk is pushing $4.00 a gallon where we live. An employee working a 40 hour work week making $12.00 an hour for the last three years because your company has forgone raises in the recent economy is now stretched to survive from week to week.  How are they able to pay for food, gasoline and other car expenses like insurance, maintenance and installment loans?  What about the cost of heating?  If they have children in school, there is no end to the costs of clothes, school supplies and the constant, almost daily requests for money to be sent to school with the child. As the job market slightly improves and now with the Affordable Healthcare Act, employees don’t feel tied to their current employer simply because of healthcare coverage. Very soon  many employers are likely to find that there is going to be a steady stream of employees through their door asking for a raise.  No matter how lofty your position in the company, you are probably facing some of the same strains on your finances as your employees. What are some ways to help employees cut the costs of working:

  1. Before you hire the next employee in a department, see if other employees would like to work overtime.  There is a point beyond where overtime does become so expensive it could be cheaper to hire a part-time employee but until that point is reached, offer the overtime.
  2. Would it be possible for your company to convert to a 4 day 10 hour work week?  If not, could some employees work that schedule to save on transportation costs.
  3. Could you allow some employees to telecommute, even for one day a week?
  4. Can your company facilitate an office car pool schedule?
  5. Is there money to buy gasoline gift cards (Walmart works great for this) and hand them out for a job well done?
  6. If you require uniforms for some employees and it is deducted from their pay, consider picking up the cost of uniforms.
  7. For companies that provide company cars to sales forces & management, could you extend the replacement term and use the savings to increase pay for lower level and staff employees?
  8. Bring lunch into the office at least one day a week.  Call it ‘Thank You Pizza Day’ or whatever you think works.
  9. As a company, do you have any discount programs you can offer employees.  In our community, the Chamber of Commerce offered discount cards to use at various restaurants and businesses in the community.  As a member of the Chamber, all employees in the county received the discount cards.
  10. Remember that pay increases may very well lead to reduced turnover.  We all know how costly and time consuming it is to hire and train new employees.

As Controller of your company, I know you may not be in charge of pay raises for all, but if you have input for your own staff, plead their case and communicate their value as often as you can.  And make a serious effort to  implement as many of the above recommendations as possible.

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