Setting up a new Accounting Department Pt.2

Hi, Osuji Franklin here once again. How’s your weekend going? Hopefully not like mine, here blogging.

I am here anyway to give you my lovely readers an update on my new office setup in Lagos. It is located in Chevron, by the way, thanks for asking. Just penning down my thoughts here on the objectives and goals I intend to achieve in the accounting department of my new office in Lagos.

The two main objectives for the Accounting department set out to be achieved include:

1. Improving Financial Results

The Accounting department is an integral part of the company and will look for ways to help and support the Management team, whose daily duties include executing strategies and tactics designed to grow the business and drive profitability and cash flow. One of the most effective ways to help the team is to provide them with fast, accurate, and insightful financial information. Of course, the accounting department is not out there on the front lines with customers closing sales. Their role is more about supporting the company goals and influencing good decision-making. When the accounting department plays that role well, it can make a big impact on the quality and speed of business decisions and financial results, in the field.

If the accounting department was slow in paying vendors, sent out inaccurate customer invoices, ignored accounts receivable, seldom reconciled the cash accounts, had no controls related to expenditures, and no safeguards around company assets, the accounting function would quickly become the enemy of everyone inside (and outside) the company. They would be killing the company’s ability to improve profitability and cash flow. They would be driving results down. They would be defying the inherent promises the management has made to vendors, driving cash flow from customers down, and seriously hurting profitability.

Operational excellence is important throughout the company — and that includes the accounting department. Being good at transaction processing because it supports the larger goals of the organization. Sloppiness in the day-to-day work in any part of the company will create problems and distract everyone from the more important work that needs to be done.

2. Attracting Capital

The accounting department’s role in attracting capital is two-fold. Firstly, as the company gets better and better at improving its results every month, every quarter, and every year, it becomes easier to attract capital. Lenders and investors love to find financially solid companies to lend to and invest in. And they love to see improving results. As the company successfully improves financial results, it becomes easier to attract capital. Lenders and investors quickly see that the leadership team knows how to make money. They see their investment in the company performing well. That’s a recipe for continued access to capital.

Secondly, attracting capital requires that you instill confidence, credibility, and trust in the minds of lenders and investors who can provide the capital you need to grow. From a CFO perspective, I like to look at this objective by considering the people and institutions that can help us financially as my “customers”. That includes existing lenders, shareholders/owners, the Board of Directors, and our leadership team. It could even include various regulatory bodies—basically, everyone who has a vested interest in our current and future financial success.

Lenders and investors value and appreciate insightful and accurate financial information more than most people. It’s important to remember that most of them are financially oriented people. They respect a professional approach to accounting and financial reporting that helps them monitor the key drivers of the company’s performance. They know the difference between sloppy financial management and one that is tight and serious-minded. They know what a high-functioning accounting department looks like.

I Thank you all for your listening ears. See y’all next time.

#MEMBA11