5 Ways to Know You Need a New Accountant

Having the right accounting and finance team is important.

Really important.

Why?

Contrary to popular belief, your accounting team is not just overhead.

You need timely and accurate financial information to make smart decisions to build and grow your business.

At New Economy, we think about the right seats needed to support the accounting department for any business. Then we think about getting the right people in those seats.

Most small businesses need some form of an Accountant, Controller, or CFO.

It really depends on the type of business, the stage the business is in, and the growth plans the business has for the future.

And each of these seats has a different skill set and value they bring. It goes from tactical to strategic in nature.

For more information on the differences between each seat check out our post on Do you know the difference between an Accountant, Controller and CFO.

But what are the signs that your accounting team is not working?

In this article, you will learn about:

The top reasons your accounting set up is no longer working
5 ways to tell it’s time to change accountants
Top 3 Takeaways

Let’s dive in.

The Top Reasons Your Accounting is No Longer Working

There are several reasons why this can be the case but here are a few.

Reason #1 – Sorry, You really don’t have an accountant.

Very early on in the life of your business, you might have had Tony’s aunt doing the accounting.

There is nothing wrong with Tony’s aunt. However, she is self-taught and doesn’t fully understand what she is doing. Sure, she can pay bills and is wicked cheap, but she’s just a family friend, not an accountant.

This is common and ok, but this will hold you back if you don’t make a move.

Reason #2 – The business outgrew your current accountant.

You have a vision of where you want to be. You are chasing down that vision and raising capital, hiring people, building processes, and executing your plan.

Your business is growing and evolving, and when that happens things can get complicated in the various departments, such as your accounting department.

But your current accountant is stuck in the old way of doing things. They don’t have a grown mindset and they are not open to technology and new ways of doing things.

This results in delays and inefficiencies because the business is growing but your accountant is not growing with it.

This too will hold you back.

Perhaps you have a good tactical person but need to layer on a more experienced person who focuses on strategy from an internal perspective.

Reason #3 – Your accountant is overhead and is doing too many administrative tasks.

Many internally placed accountants get very comfortable and are overpaid.

Yup, I said it.

They have a high-level technical skill set and are compensated for it.

But they are given tasks that don’t relate to this skill set. They start doing administrative work, they get pulled into a bit of human resources or even managing technology.

They get pulled in too many directions, are overpaid, and are no longer adding value.

They become overhead as opposed to an investment that is helping you get closer to achieving your goals.

Reason #4 – You don’t need a full-time accountant.

Once you really dive into point #3, you may realize that you don’t need a full-time accountant.

How can this be?

You have them focus on the functions that require their specialized skill set. Nothing more, nothing less.

For more information on this check out our blog post on hiring a part-time remote accountant.

Also, as part of not needing a full-time accountant, you can save money. You are not covering insurance, benefits, training, or even internal time to manage this person. We believe the cost of a part-time remote accountant can be a big savings with a better return on your investment.

For more information on this check out our blog post. “What will it cost to outsource my accounting?”

Ok, so now you have some reasons as to why our accounting might not be working.

And it’s ok.

You are not alone. Part of your job is to ensure the right people are in the right seats to help you achieve your plan.

In the next section, we will discuss some of the indicators that it’s time to start thinking about some changes on your accounting team.

5 Ways to Tell It’s Time to Think About a Change in Accountants

So we know why you might be having issues.

But how exactly do those issues manifest?

After years of experience, we have identified 5 key ways to tell it’s time to make a change.

Here they are in no particular order:

Reason #1 – You are not getting timely financial information.

If you are not getting the following reports within the following timeline a red flag should go up:

Cash Flow reporting – Weekly
KPI / Scorecard reporting – Weekly, Monthly, Annually
Financial statements – Within 20 days of month end
Budget vs Actual reporting – Within 20 days of month end
Forecasting – Updates within 20 days of month end

Having timely information is important. You want to make real-time decisions based on data that is current.

Reason #2 – You are not getting accurate financial information.

If you are not getting accurate financial information a red flag should go up. The information is the same as that listed above.

But how do you know it’s accurate considering you’re not an accountant and an entrepreneur?

Here are some thoughts:

Use your gut, it got you this far
Share the information with a peer group and compare information
Ask a trusted advisor or mentor with a financial background to have a look

Timely and accurate information are the keys to making smart business decisions.

Reason #3 – You keep getting surprised and are not learning from the past.

No one likes surprises.

So if you’re looking at your budget versus actual reporting and are surprised when something is off track, a red flag should go up.

Or if you get to year-end and your monthly financials that have been reported on change, a red flag should go up.

Or if you are caught off guard by an unexpected tax bill, a red flag should go up.

Things change fast in business, but learning and applying is key.

Remember the old saying “Fool me once shame on you but fool me twice shame on me”?

Reason #4 – You can’t see into the financial future.

Your historical statements are very important.

As we stated, they need to be accurate and delivered on time.

But we also need windows out into the future from a financial perspective. So if you can’t see out into the future whether it be 13 weeks of cash flow into the future or 24 months of your profit and loss out into the future, a red flag should go up.

Reason #5 – You are frustrated and feel pain and confusion on the financial side of your business.

We have said it before, trust your gut. You have great intuition.

So if even hearing the word financials causes you to feel pain or frustration, a red flag should go up.

Or if your accountant is confused and can’t seem to give you straight answers, a red flag should go up.

So there you have it; 5 examples that can give you an indication it’s time to think about changing your accounting team.

3 Key Takeaways

At New Economy, we want to help you gain control of your finances to make smart decisions. Part of that is understanding your finances and how to drive business performance.

Here are 3 key takeaways.

Make sure you have the right people in the right seats on your accounting team. Early on Tony’s aunt might have been a great fit. But since you have raised some capital, have 10+ employees, and are on your way to profitability it’s time to increase the firepower of your accounting team.
Make sure you are not flying blind. You should have timely, accurate historical financial statements and visibility into the future financial condition of the business based on your forward-looking projections.
Trust your gut and invest in your accounting and financial team. They are an investment that should help you to get closer to your goals by providing you with invaluable insight to make great business decisions.

There you have it 🙂

New Economy Team Members are Experts in Accounting for Entrepreneurs

If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner.

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.