Here's a great video from the smart people at Xplane that makes sense of the problem.  As a CPA, people ask me about what caused the subprime problem on a regular basis. Now I can send them to this website.

http://www.xplane.com/subprime/

 

I was sitting in a presentation where a technology company executive announced that his software "moved at the speed of his customers."  The person next to me, a master technologist,  whispered "then it sounds to me like he needs better customers." 

Do you ever get the feeling you are in the same boat? Do you think you need better customers? 

I hear this sentiment expressed by business people in a number of different ways. "I wish my customers paid me faster", "I wish they valued my services", "I like it when they say I did a great job", "I wish they would tell people about my services.", etc. My question to to them is, what are you doing to train your customers so they do whatever it is you want them to do? 

Want your customers to pay faster? What are you doing to encourage that behavior? How about accepting electronic payments. Giving them early payment discounts. Providing a hotline where they can resolve any billing questions.

Want customers to value your services? How are you helping them see the value in what you provide?  If you provide a technical service, you need to offer free educational seminars, create whitepapers, send them a newsletter that explains technical concepts in a straightforward manner.  Deliver training webinars, post video clips explaining one concept or idea at a time.

Want your customers to give you feedback? Do you have a survey tool or other way for them to provide feedback? Create an electronic survey, hand out notecards for feedback, or have someone call them and see how the service or product is working for them.

Want people to tell others about your product or service? Make it easy for them. Make your story simple and easy to repeat. Build a tagline that they can remember. Create a one page referral sheet that helps them understand your target customer. Thank them for their business and for any referrals. Direct them to sites like yelp.com where they provide their feedback.

Just like the dog owner who complains about his poorly behaved pet, maybe you should look at the training you are providing your customers before you start looking for new ones.

You can tell a lot about a person from their house. It reflects their personality in ways that their words can't. The same is true for a business.

I have been working with a client to craft their story and one of the things that struck me is how their office mirrors their personality. It is an oasis. That sounds so corny, but it really is true. You walk in and it is light and airy. It is comfortable and well laid out. Beverages are offered and you feel comfortable. Everyone has an office. That is a big deal. In the world of public accounting where I began my career, you had to earn your office and you got rewarded for promotions by moving to offices with increasing numbers of ceiling tiles. And there was a rule about how many tiles each level of staff should have.  I don't have a clue how the office managers could manage the configuration issues that resulted. 

But in this company the office reflects their philosophy and the organization chart agrees - they don't have a big hierarchy with client relationships only happening at the top of the chart. They have people assigned to take care of clients at all levels.

Retail stores understand this. Walk into a Container Store. It is always cold, wide aisles, uncluttered, bright. It feels like you have left the noisy cluttered outside world and have entered the "everything in its place" zone. In my case, it lasts for much too short a time.

Walk through Nordstroms. You don't see a bunch of sale signs, the shoes are well laid out with plenty of space for sitting and viewing the wares. They have cafes in their stores, they provide nice restroom facilities. It seems like they almost understand that their customers are people. They probably get a million dollars in revenue a month as a result of that restroom traffic alone.

If you are in the service business and people visit your office, what does it say about you? Is it an oasis or Grand Central Station?  If you are a bank, is everyone behind a wall or are there people you can talk to?  Are you a discount store like Kmart or clean and airy like Target? 

You have just been told that there is a storage capacity issue.  Henceforth you will be allowed to keep only one measurement.  That's one operational, one financial, and one HR measurement. 

Which measurement would you keep?

For financials:  I think I would have to go with ROCE.  Return on Capital Employed.  It's pretty easy to calculate and tells you a good bit about the results of your efforts in the business.

For operations:  Hmmm.  I'm worried about cash flow, so I need to watch Days Sales Outstanding but that's not the whole picture.  I think I might just start watching my expenses per employee number.  That's pretty telling. If I can get a handle on the expense side of my business, I might also be able to improve the cash situation.  But that's a tough one.  Only one measurement huh? 

In HR: It has to be employee turnover.  No other measurement tells you more about your operation than the rate at which people flee. 

Now that you've imagined what it would be like to have limited options, you can sit down and take another look at exactly what you are measuring.  What insights are you gaining today?  Do you have so many different metrics,ratios and comparisons that you can't make sense of them?  Well start paring them down and see if it doesn't give you new insight.

One of the best books I have read lately is a book by Edward DeBono called Six Thinking Hats.  The book suggests an interesting technique that can be used in group decision making exercises.  It is easy to understand and easy to use but its results can be powerful. 

Each of the six hats have a different color designed to represent the perspective that its "wearer" is asked to adopt when approaching the issue at hand. 

The best way to find out your potential clients and customers want is to ask them.  Tools like Survey Monkey and Zoomerang have made that easy.  They manage the process and give you a good format for asking different types of questions.

The balance in Accounts Receivable at the end of each month is a telling number.  It is one of the key items that determines whether your business has any cash to spend.  And  should included accounts end up being non-collectible, they can take a big bite out of your profits for the year. 

So how to stay on top of this account?

Here are some suggestions:

 1. Measure - DSO, average days to pay and look for changes in trends
 2. Monitor - watch for balances by customer, including year over year sales comparisons for each customer
 3. Review your qualification process for adding new accounts - are you performing credit checks on new accounts?
 4. Look at your dispute resolution and error handling processes- inaccuracies in Order Entry are common causes of slow payment.
 5. Consider expanding your acceptable payment types - do you take credit cards or PayPal for example? Have you looked at onsite deposit processing systems like Heartland Express Funds?

 And if you really want to improve collectibility, you might consider contacting your customers before their payments are due, creating a customer portal where they can answer many of their own invoicing questions, and building in an automated process of communication.  Or you could implement a solution like www.cashcollector.com which does all of this for you. 
 

I was an employee of a software company.  I was in charge of Product Marketing for our ERP solution and my boss assigned me a special project.  The year-long assignment was to put together a team of people who could help move our DOS software customers to our current Windows product.  These faithful DOS customers had been using our product for more than 10 years without support, so this was not going to be an easy task. 

I was fortunate to have help from almost every department in the company and the support of our partners -we had a ball designing campaigns and coming up with a different twist for each quarter.   But here's where the cool part comes in.  The wonderful thing about the project was that we had an assigned unit objective and a way to see our performance against that goal. And we had complete control over a number of variables that impacted our ability to achieve the goal.  It was the perfect job- reasonable goals, with the right tools, measurable outcomes, and access to all of the people who would impact our ability to hit the target.  We designed special quarterly promotions, had a dedicated website, and got the job done.  I could run a report every single day and watch the results of any campaign or promotion.  And as the results rolled in, I could keep everyone informed of our progress. 

As you move up in an organization, the measurable, achievable stuff is few and far between.  Often you are given assignments and responsibilities with no way to really impact the outcomes.  Or you are given goals and can't monitor your progress against them.  Or maybe you know the variables, but you don't have the resources you need to change them.  You are assigned a target by someone in another country and then try your darndest to hit it.  But you don't really get much satisfaction out of the effort - whether you win or lose.

Wouldn't it be great if we could give everyone in every company accountability, the resources they need to get the job done, access to great tools, buyin from others who have a stake in the outcome, and measurable quarterly targets?  

I know what it feels like to watch the numbers exceed the target, quarter after quarter.  And to know that you made an impact. Those are the best days.  Every day should be like that.   

Created by the smart accountants at the Association of Certified Fraud Examiners, the museum is a great way to advertise their services and educate consumers about their expertise. It is an actual place that you might want to visit the next time you are in Austin, Texas.  Imagine the great marketing campaigns you can build around this concept. "Hire us to make sure you are not the next exhibit at the Fraud Museum! "

Since my husband is one of the few employees who retired from WorldCom, one of the exhibits is near and dear to my heart. It is a WorldCom stock certificate. Now I'm wondering if I should donate the photo of my husband and Bernie Ebers to the cause . I'm not sure I want my husband to be among the ranks of the famous at this particular museum, but at least it is a way to get some satisfaction out of the whole experience. 

The anti-fraud area of accounting has really taken off as a specialty in recent years. I'm not sure that is a good thing, but it is nice to know there are qualified experts you can call in the event you discover that there is something funny going on with your bank statements. 

According to an article titled "Financial management better than perceived" which is pretty ironic, members of the defense department including Homeland Security are having a hard time producing financial statements.

"In the case of Homeland Security, the four-year-old department is still struggling to merge multiple entities with separate finance and accounting systems and procedures." (Aren't there automated systems that can handle volumes of transactions and even consolidations?)

The article goes on to explain the difficulties in accounting for volumes of transactions and includes this insight from Relmond P. Van Daniker, the association's executive director,  "As professionals, we say that we exist to provide information so people can make decisions. I'm not exactly sure what decisions people make relative to the financial statements. They come out after the fact and they're very thick."  (Sound familiar? )

Here's the part that really resonates, from Defense Comptroller Tina W. Jonas, " Improving financial management at Defense hinges on showing military leaders and managers why it's important to their mission."

It seems that the Defense department shares a common problem with businesses : the troops can't follow if they don't know where they are going.  Like this department, accounting professionals have to help their teams see the relevance of financial information, especially those people who are on the front line.