Recently I attended a conference on financial indicators for companies. This conference was sponsored by the Ordre des CPA (Chartered Professional Accountants) . The subject was very interesting and aroused much interest among the participants, who were, not surprisingly, accountants.

By cons, throughout the conference, I had discomfort. I thought we feared the unidirectionally business either in terms of God dollar.

Do not think that I minimize or denigrates the importance of financial indicators and the role of accounting in sound corporate management. On the contrary, accounting and financial indicators have their uses! That is undeniable. My view is that the performance of a company can be measured by the “accounting numbers”. Let me explain from real cases…

Suppose you are the owner of a computer company or a technical repair business with trucks and technicians on the road. Want to know the number of service calls with the status “Open”. You also want to know the duration of service calls. In short, you want to emphasize service calls that are “Open” too long. These indicators, if they are too high may hide signs of internal inefficiencies that you can improve quickly. Without it, you can reduce the quality of your customer service and tarnish your company’s reputation. A high number of service calls “Open” too long can be caused by different variables that you need to look to solve this potential problem.

Examples:

  • employees who service customers are poorly trained, making a service call is longer to be treated;
  • there are not enough technicians on the road to meet demand;
  • etc.

Once the cause of the problem identified, you can take corrective action and avoid losing customers. You can even call your customers whose orders are late to explain the situation and how you will overcome these delays in the future. That’s be proactive! Obviously, the financial indicators will eventually be revealed that the company’s revenues decrease as customers leave the company because of its poor service. But at this point it is too late …

You are responsible for production in a small engine workshop. You realize through your management indicators that production times are too long. What’s happening? After a quick investigation, you find that the stocks are often in short supply in your warehouse. Thus it is not uncommon to wait several days to receive your missing parts suppliers used in the assembly to produce small engines. Here, it is difficult or impossible to obtain this information from the accounting software.

With these few examples, it is easy to see that indicators of “management” can quickly paint a picture of the performance of your organization or departments that only financial indicators can not give you! In short, thanks to management indicators, you have a 360 o your business! One last anecdote. A client of mine was telling me he watched the enterprise management features offered by a well-known accounting software to help better manage their business.

Indeed, an integrated management software can certainly help his business grow. As already using this accounting software in its business, it seemed reasonable to explore the other features “management” offered by this product. The findings of his investigations are the following: despite the efforts of the company that developed the accounting software, in order to extend the functionality to include the overall management of a company’s activities, its financial guidance remained too and not enough “management”. Result: this well-known software could effectively help in his business management and thus help achieve its goal to grow the business without increasing administrative costs. I specify that this customer is very familiar with this accounting software because it sells it (!) In summary, accounting software offers only limited vision of your business. The serious entrepreneur who wishes to move his business to the next level must necessarily look to an integrated management software (“all-in-one”). This will allow him to really run his business and keep an eye on the health of its business.