Accounting is traditionally used as a money manager, however accountants’ skills can make them ideal data analysts as well…

Accounting is defined generally as the process of communicating financial information about a business to people such as shareholders and managers; Accounting produces accounts, a standardised format of financial statements which categorise money as various resources under control. (sorry for being a bit geeky here – but bear with me).
The Accounting that concentrates on reporting inside your business is called Management Accounting and is concerned with providing a basis for making management or operating decisions.

Why is it that so often management accounting confines itself to money,
instead of numbers?

Numbers, not just dollars, can add really useful and valuable information to decisions.
As an illustration… In conversation with a very money savvy business owner yesterday, I asked him what his repeat business percentage was, and what % of new business came from referrals – very straight forward questions I thought, especially since I honestly was curious given his business is focused on networking.
Beyond the renewal and referral of new members/guests (the majority of his new business) he hadn’t put a $ value on those particular KPIs, for as a new business he was still determining what was ‘normal’ on a range of metrics for his particular business model beyond the usual profit/loss and cash flow statements.
Now, I don’t blame him entirely – we all have our own blind-spots that are glaringly obvious when pointed out – LearnSmart spend a lot of time training business owners to ask the right questions.
Useful business numbers are no longer so buried – accountants just need to use them.
But I did wonder was what on earth are his accountants up to? Actually I probably can guess the answer – they are too busy doing the same day to day compliance routine to stick their heads up and add value to the business. He could definitely make some great decisions if he was tracking this data. AND the data is probably available, it will just be deeply buried in his MYOB or Quickbooks.
Which illustrates the gap:

In the general punters mind, business owners and staff alike, accountants are the numbers people of any business, not just the money people.

HOWEVER

In many accountants minds compliance, meeting reporting deadlines and audit readiness are the focus – it is mostly about “ticking the boxes”.

Accountants are trained to be comfortable with numbers… we use them for variance reviews, extrapolations and hunting through data to find the anomalies – we do it all the time for budgets, forecasts and coding errors. Money is represented as numbers all day every day…
But how often do accountants put this numerical knowledge to other uses? How often are they asked to do so? How often do business owners see the value in using their own numbers to make better decisions?
Challenge yourself this week to make one small step towards using numbers more wisely in your business.

Keep me updated on your ideas here in the comments

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