IMGCAP(1)]In the modern marketplace and competitive landscape, one of the most common questions, complaints and areas of focus for management is the concept of adding value.
Generating more resources than are consumed by operations, by definition, is either the stated goal, or a necessity, for any enterprise. Even not-for-profit organizations providing charitable care, or other socially oriented organizations, must track changes in net assets, as well as the effect that these changes have on the ability of the organization to continue providing services. It is against this framework, and faced with competition from advances in technology, from other accountants and non-accounting firms, that the following question must be asked. How, exactly, can accounting professionals add value and help the business achieve stated goals and objectives?
The Challenge
Much has been written, both in Accounting Today as well as in virtually every other accounting and finance media source, about the need for the profession to evolve and to keep abreast of expectations in the market. Whether the proposed solution is framed in the context of embracing technology, reaching out to the next generation of leaders, or seeking new opportunities with existing clients, the focus has remained external. While focusing on services such as attestation and tax is a start, it provides an incomplete picture. With tens of thousands of accounting professionals working in industry, or for organizations, this leaves a large segment of the market unaccounted for. These professionals, working side by side with other functional areas, have a real opportunity to effect change from the inside out.
The Opportunity
Organizations in every industry are faced with challenges from regulations, competitors and customers—all of whom are expecting and requiring more information on a more frequent basis. In contrast with the current reporting paradigm in the marketplace, with quarterly statements filed with the SEC focusing on prior months, users of financial information are demanding more real-time information and analytics. Additionally, and arguably more importantly, both financial and non-financial stakeholders are looking for more information. Organizations now have to quantify and report on issues and ideas that have previously been relegated to footnote disclosure, or a narrative discussion. In essence, as end users of organizational information (both financial and non-financial) demand increased transparency and real-time availability, organizations have to redesign both their operations and how information is distributed to end users.
The Solution
Accountants currently working in industry, i.e., not for a public accounting or consulting firm, are in a unique position to help organizations meet the needs of both internal and external customers. Whether it is getting a monthly report over to operations, preparing a summary schedule for a finance committee meeting, or delivering information to external third-party users, there is a need for better-quality information that is readily accessible to users. Accounting professionals working in industry are, in almost every case, the professionals responsible for the preparation and dissemination of these reports.
Such an issue, however, cannot be approached from, or solved with, the traditional mindset of accounting personnel. In order to effectively address such issues, accounting professionals must adopt a proactive mindset and vigorously initiate conversations about how to improve the status quo.
Accountants working in a managerial capacity, or “in industry,” depending on who you ask, are truly embedded within the organization as a whole. Working with other departments such as procurement, information technology, accounts payable, finance and budgeting, legal and operations, exposes these professionals to virtually every aspect and area of the organization. At the end of the day, and regardless of which specific area is being discussed, management of those areas requires sufficient information to make decisions. From new product development to capital expenditures for a new facility, the key decision-making criteria are the same. Information that is adaptable, real-time and readily understandable is absolutely essential for organizations seeking to make the optimal decisions.
Linking together the concepts introduced above, which deal with reporting information to internal and external users, and the idea of utilizing information for improved decision making, are one in the same.
As external pressures continue to increase, with limited relief on the horizon, it is increasingly important that organizations take advantage of all of the information available to them to make the best decisions. In essence, the role of the accountant, and the role of accountancy in the professional landscape, is shifting from one of historical analysis to that of information management. Against this framework, comprising both internal and external pressures, as well as an unrelenting need for management to utilize information effectively, an opportunity for management accountants is clear.
Three specific steps and tactics that accountants working in industry can use to promote and increase their value are listed below.
1. Become the data expert. Simply using and relying on information provided to you by other areas of the organizations is not enough. Accountants in industry should understand the source and quality of the data. Working with IT, and building processes to protect the integrity of the information, as it enters and passes through the organization, is critical. Additionally, by cleaning and standardizing the information used by management, accountants highlight the value of the internal accounting function to the senior leadership team, as well as to other departments within the organization.
2. Find out what users want. Whether it is a monthly report sent out to other departments on the same floor, or annual financial statements used by the SEC to report financial results for the most recent year-end, it is imperative that the organization deliver the correct information, and do so in an efficient manner. Management accountants have an opportunity to reduce time spent compiling and creating monthly reports, make those reports easier to understand, i.e., create the appropriate dashboards and metrics for different end users, and get the information into the hands of the final decision-makers faster.
3. Make data and analytics part of strategy and risk management. Following in the wake of high-profile hacker attacks at corporations across the globe, it is safe to say that organizations are on notice as to how vulnerable electronic information is to hacking and electronic threats. While that aspect of data management and information security is well-known, it is not clear how well known or frequently discussed is the linkage between data management, reporting and strategic decision-making. More to the point, it has not been explained how organizations can plot strategy and make long-term decisions with sub-par information.
4. Advocate and speak about the value accountants bring to the organization. In a world and business environment almost entirely dependent on data and analytics from an ever-expanding number of sources, the importance of data management is difficult to over-state. Accountants in industry, in addition to taking proactive steps and approaches to embrace this changing environment, realize that the concepts and ideas mentioned here represent the tip of the iceberg, must vocalize and discuss the importance of such concepts.
Adding value, or increasing shareholder value, is an oft-repeated phrase that sometimes has a negative connotation, depending on other external circumstances in the marketplace. That being said, every organization that wishes to continue operations must create more resources and value for end users than it uses during the course of operations, and data and information are integral to the fulfillment of this goal. Accountants in industry, or managerial accountants, are uniquely positioned to take advantage of trends in the marketplace, and existing skill sets, to add value to both their organizations and themselves as professionals.
Sean Stein Smith is a Financial Analyst - Joint Venture Finance, at Hackensack University Medical Center.
