By Rich Bond
Accounting is a foreign language to most business owners and senior executives.
Even though I am a Wharton MBA, I am confused at times by accounting interpretations and reasoning.
Many business owners tell me they avoid talking to their Controller because most of what s/he says is neither intelligible nor actionable.
The good news is that you don’t need to learn this foreign language, if you have a lead finance person who presents information in actionable English.
For example, inventory is defined by accountants as an asset. A businessperson usually sees inventory as a use of capital.
A good finance person will help you manage inventory by looking at the inventory turnover rate and tell you if the measure is increasing or decreasing and how it compares with your competitors.
Managing your inventory by looking at the turnover rate can free up working capital. One of our clients reduced inventories by $1 million, while increasing their on-time order fill rate from 85% to over 90%, after we replaced their Controller.
Reach out to me if you want to talk about how finance can improve the control you have over your business, while making it easier and more fun to run.
