Plain Talk About Financials That Will Make Your Job Easier

Let’s face it. Those of us in accounting and finance have a well-deserved reputation for being boring. The language of finance does not make for good cocktail party chitchat – even in the best case, it will bore the sox off of the average Joe. Even business owners, who have a lot riding on the finances of their company, will stare into space as they yawn their way through a conversation with an accountant.

The message is too important to let this happen, but whether a business owner hears your message can mean the difference between success and bankruptcy.

How can we help our clients hear – and heed – important finance advice? Keep these simple road signs in mind each time you connect with a client.

Ditch the Fear

How many times have you admonished a client with the threat of failing an IRS audit or incurring a tax penalty? If “following the rules” is the best motivation you can offer, don’t expect fast action from a business owner. Business owners are as averse to following the rules as they are addicted to risk. In my experience, four out of five will meet your concern with an “I’ll take my chances” attitude.

So, put away the stick and get out the carrot. Offer them an opportunity – show them how good financial information can magnify profits and minimize effort. Focus on the business benefit and watch how the message changes:

  • Don’t Say This: “You should switch to true accrual accounting because you must comply with IRS rules and properly report depreciation.”
  • Say This Instead: “Accrual-based records will show you whether you are making money each month and give you real-time information to manage the business before expenses get out of hand.”

Tell a Story

Afraid of appearing ignorant, business owners avoid tough questions about cost of goods, common sizing and cash flow. Afraid of boring our clients to tears, we avoid bringing up these same topics. By themselves, textbook finance topics are neither interesting nor accessible to non-finance peeps.

Throw out the textbook and tell a compelling story instead. Start with a story you know well – perhaps an example from another client. Tell the story from the client’s perspective, and keep it simple and include real-life details. Practice that story – make it your policy to start every customer conversation with it.

  • Don’t Say This: “Cash flow statements show you how the money moves between balance sheet accounts over time.”
  • Say This Instead: “Steve also had a problem with cash flow, so we looked at his cash flow statement and found six ways that he could take home more cash every month. Since then, he’s doubled his own salary.”

Inch by Inch, It’s a Cinch

Getting a busy entrepreneur to change bad accounting practices is a bit like eating an elephant. Some accountants prefer to go after the beast with a chainsaw and a sledgehammer, demolishing every bad practice and starting over with simpler, GAAP-friendly systems. Yet, accounting changes are infinitely easier for everyone to swallow when they are taken in small bites.

Remember that the priorities of the corner office are more often about meeting customer expectations, getting teams to work together and making enough new sales to meet payroll. Accounting is almost always an afterthought; even worse, it has the potential to disrupt or derail other more important goals.

Remember that accounting exists in a complete ecosystem of other business processes and practices. A bull in the china shop will soon be shown the door.

  • Don’t Say This: “We really need to get rid of those Excel spreadsheets you use and put everyone on QuickBooks® Enterprise, so we can do true cost accounting and track open purchase orders.”
  • Say This Instead: “This month, let’s give the accounting department the tools they need to do a better job, and then next month, we can talk about how some people can use that accounting database instead of Excel.”

Putting it All Together

You’ll probably find that these three suggestions are not nearly enough to get a hardcore entrepreneur to become a raving fan of proper accounting overnight. But, when you mix a go-slow attitude with a compelling story that includes a clear business benefit, you’ll at least be starting a conversation that will lead them in the right direction.