I would rather start out by stating what Operational Accounting Consulting is not as I have spent years solving business issues using what I consider to be strategies directly related to accounting accuracy and how it affects business operations.

The strategies I have used over the years work and can be proven via many successful client projects.

Operational Accounting is not tax accounting nor is it data entry into the usual A/P, A/R side of a business.  That’s the job of an accountant.  Note that Accountants and CPAs are very different.

Both CPAs and Accountants have the ability to file taxes on our behalf (which is why we source them the most), where CPAs and Accountants are really supposed to keep us out of tax trouble.  They are supposed to be up on the latest and greatest tax laws where this is really the only reason to source a CPA or Accountant.

In all my years of consulting business, I have never met a CPA or Accountant that can strategically plan the future of a business via business operations, nor have I met a CPA or Accountant who can do what I can do as it relates to understanding how accounting influences business processes.

This is important to acknowledge, because how we account for our debits and credits directly influences operations.  It just does. 

Over the years, I have had the opportunity to re-define and specialize in Operational Accounting Consulting.  Do not misunderstand my comments about CPAs and Accountants.  We do need to source good CPAs and Accountants for tax purposes. 

Operational Accounting Consulting starts with thorough analysis of accounting entries, general ledger reports, financial reports, and accounting policies and procedures.  Necessary corrections and adjustments are made complemented by revised policies and procedures that allow business to operate more efficiently and effectively.  

As proper and accurate accounting is the life blood of business, accurate and relevant accounting procedures allow for the opportunity to affect all aspects of business efficiently and effectively.  All aspects of business include general operations, supply chain, sales and marketing efforts, management, and technology integration.

We cannot assume that as we fix one aspect of our business the rest will fall into order.  That never happens and there are case studies, to include my clients to prove that when we change one aspect of business, we must change all the other aspects of that same business.

We can draw an example from a recent client who in reviewing the annual report for 2008, we noticed that sales in a particular category were up significantly over last year.  Further analysis revealed that he had incorrectly accounted for over $212,000.00 as sales and not an expense he had paid in the middle of the year. 

Prior to our analysis, this business owner was making plans for the coming year based on his increase in sales in 2008 where he did not recognize that the cost to operate his business in 2009 was actually more than he thought.

Obviously, he had to make dramatic adjustments to his operating plan for the coming year now that he realized his business expenses are higher.

Operational Accounting Consulting does not stop here, where once errors and adjustments are made to the accounting aspect of business, we now must concentrate on how those corrections may or may not affect other aspects of business.

It is important to correct business issues throughout a business where starting in the accounting department is the best bet.

On Monday night January 12, 2009, CNBC ran a great episode on “Saving GM; inside the crisis”, hosted by Phil LeBeau.  I thought this show interesting as Phil interviewed the current President and owner of Seaway Bolt & Specials Corporation, a family-owned business in Columbia Station, Ohio with 75 employees that's wrestling with Detroit's downturn by cutting back on production… and jobs.

As I watched this show I felt sorry for the workers and the owner of this business as he is facing difficult times in the business his father built back in 1957.

I work with small businesses like this and I am familiar with how difficult it is for these business owners to make the decisions they make.  Workers become family to some of these businesses and lay-offs is not something business owners want to talk about.

In watching this show I have to ask if Seaway has already made a plan to expand what it makes.  In other words, as Seaway makes nuts and bolts for the auto industry, have they analyzed whether they can make other parts as well?

Rather, have they looked at possibly diversifying their product mix to offer other items to other industries at a lower rate?  This is a classic marketing strategy called loss leader.  We can sell an item at cost, which will generate an appropriate amount of cash flow to keep the business running.

How does this relate to Operational Accounting Consulting?  If businesses like Seaway had the ability to accurately track and monitor costs versus sales in the past, they would have noticed a trend and could have been PRO-active in solving their business issues.  Result – no job loss.

The same could be said about GM and Ford.