The five responsibilities of today’s management accountantEmma
“I’ve been told to speed up my delivery when I perform. But if I lose the stammer, I’m just another slightly amusing accountant.” – Bobby Newhart
American standup comedian Bobby Newhart may have been joking when he made this quip about accountants, but his point stands to reason. You might have been told that you need a management accountant, but what exactly does such a person actually do?
If you’re worried that your management accountant is, as Newhart infers, nothing much more than a big talker, then you’ve got the wrong person on the job. In reality, a management accountant should be performing five main functions. Here’s a checklist to ensure that the management accountant you appoint is all he’s ‘cracked up’ to be.
Your management accountant should:
1. Advise managers about the financial implications of projects.
There’s a reason these accountants have the word ‘manage’ in their title. They should be playing an advisory role to other managers. Every time the business contemplates a new project, the management accountant should be involved from the inception process. When any sort of risk is contemplated, be it a new expansion project or the purchase of new equipment, the management accountant should be determining whether the contemplated act can be met with current cashflow and responded to by future business needs.
2. Explain the financial consequences of business decisions.
Hindsight is 20-20, right? If your business is making effective use of a management accountant, then your ability to predict the consequences of future decisions should be sharpened as well. Your management accountant should give the financial green light or a flashing amber before – not after – decisions are made. He or she should have this insight by drawing on up-to-date, accurate management accounts that give a picture of the company’s balance sheet, cash flow and income statement at any given point.
3. Formulate business strategy within your competitive landscape
It stands to reason, then, that your management accountant should be a key partner in determining your company’s future course. How aggressively should the business be growing? How much should you be putting into capital? Is it time to broaden your product offering?
Your management accountant should be ready to engage with you to derive meaningful answers to these questions. He or she should understand your financial strengths in relation to those of your competitors, and help you realize where best to leverage the strengths of the business. In addition, he can help you anticipate how your competitors’ actions and strategies may impact your bottom line. For example, she will let you know the impact of cutting prices in order to compete with a new entrant? Or, he will indicate if you can expect a dip in your order numbers because of a new competitor.
4. Monitor spending and financial control
Are you worried that your marketing team is getting a little liberal with the company credit card? Do you want to ensure that the business is going to come out on budget at the end of the month? Your management accountant should help you set spending targets by creating budgets, and then keep regular track of who is spending what.
You should be getting a measurable reflection of this by receiving accurate monthly or quarterly management accounts from him or her.
5. Conduct internal business audits.
A management accountant can also act as your friendly neighbourhood sheriff. In this vein, he should be able to interrogate any sort of concerns you may have about fraud or rogue spending, but should also be able to pinpoint where departmental expenditure might be getting a little reckless.
How urgent is your company’s need to contain or cut costs? Where are the opportunities to optimise cashflow? How can you run departments more efficiently? Here once again, these are answers your management accountant should have handy by monitoring internal spending patterns.
When looking around for a management accountant, ensure that he or she has the experience, skills and drive to consistently perform in these five areas. If you are wondering where to find such a person, The Finance Team may be your answer. We have a highly skilled and experienced network of management accountants who are vetted to be able to meet these requirements. We can help derive a flexible solution for your company’s needs, and ensure you only pay your management accountant for the time he or she is actually needed and no more.