Thursday, August 09, 2007
Bean Counters’ Lament!
Most General Ledger applications are worthless as a financial management tool. They report only historical “dollar” information, usually in a time frame that has nothing to do with your company’s business cycle. I have alluded to this problem in past rants. Here are some of the specific problems:
Typical G/L reporting is a P&L, Balance Sheet, and a summary Financial Statement. This may satisfy the bank, but it does NOTHING for TIMELY information on the efficacy of your company! What good does it do to sell a lot of Widgets if you are losing money on every one that you sell?
Dollars alone are not a good measure of performance. The value of money fluctuates over time, and comparative statistical data is required to evaluate a true picture of performance. Few, if any, financial packages offer broad statistical information “within” the G/L, and those that do only have limited capabilities. Every G/L account should have the capability of being supported by at least one statistical account.
Another requirement for an effective financial management tool is flexible reporting periods. I have ranted on this subject before in, “Can the Buckets.” Does your business cycle revolve around the month-end reporting? Would a weekly position report be more useful? How about comparing last week to the same week a year ago? What about a five-year comparison? Why lose the detail information after the current year?
To perform effective analysis, interface data from ancillary systems (A/P, A/R, Inventory, and Payroll) must be timely and not tied to a laborious batch process that can only be run on a dictated schedule from the application developer. This would have to include statistical. Information will not be timely if it can only be updated on a weekly or monthly schedule.
Most accounting packages don’t provide this capability or even a decent report writer to work with. Instead, the accounting staff is required to spend an inordinate amount of time preparing spreadsheet reports for management because their antiquated, poorly-designed, piece-of-trash financial package can’t get the job done! I can’t believe that bean counters aren’t pitching a fit about this!