CPAs: number-crunchers, business advisers or both?
Just how much should your accountant do for you, especially if, like many business owners, you look at the columns of numbers your CPA provides and see just columns of numbers?
"I'm not great on those details," admits Mike Davis, president of Creative Care Management Ltd., a Winfield-based employee assistance company. "It's a whole different side of your brain." But thanks to what Davis calls "a holistic view" his CPA takes, he says "Now I understand."
Especially today, it seems fair to say that your accountant should help you make sense of all that data. But Davis' accountant, John T. Miller, does more -- for example, once helping Davis put together a marketing-sales plan, and critiquing a mock sales presentation by Davis and a colleague.
Charles Kiolbasa's accountant has reviewed and consolidated his startup's prospectus (since discarded); "professionalized" numbers presented to a local bank; and will review the company's QuickBooks-generated quarterly statements; and advise on tax issues for Layer Saver LLC, Kiolbasa's Burr Ridge company. Layer Saver is a two-layered, collapsible and reusable shipping pallet that Kiolbasa says provides more capacity in the same footprint than conventional pallets.
Miller, a principal at DiGiovine, Hnilo, Jordan & Johnson, Ltd., Naperville, is Kiolbasa's accountant, too. He clearly has his own thoughts about the support an accountant should provide.
"The CPA's role is to understand what the business owner understands" and react accordingly, Miller says. To Miller, that means asking questions, listening to the answers and, along the way, offering advice. Among the questions Miller asks:
• Do you have a business plan? "When the answer is 'Yes, we did a plan 17 years ago when we went to the bank for some money,' I suggest that every business should have a plan (that's) updated with current goals," Miller says.
• Do you have a budget? When that answer is "Yes," Miller probes to determine whether the owner compares actual results to budget.
• Do you have effective credit and collections policies? That may be the key Miller question. The issue, he says, is that "business owners love sales," but the sales are lost -- with attendant expense -- if the customer doesn't pay or takes too long. "You have to establish credit limits" even on longtime customers, Miller says. How often you check customer credit status "depends on the amount of (sales) volume and the credit you've extended," he says.
• How are receivables? "How old are they? Are they growing?" Miller asks. Rising receivables often indicate trouble may not be too far ahead.
Miller certainly isn't the only accountant who has morphed from numbers crunchier to business adviser; many CPAs take a similar approach. Expect the added expertise and advice to come with a price, of course, but the additional cost likely will be money well spent.
• Questions, comments to Jim Kendall, JKendall@
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