Executive Summary. Accounting is, to some, a necessary evil. Here we hear from an accountant what accounting actually is, why it’s important, and how you can best benefit from your accountant.
The guest. Kelly Jennings is my younger sister who has been in accounting two less years than I’ve been in heavy/civil construction. She started in a “Big 6” accounting firm and eventually graduated to being her own boss in a position she calls Fractional CFO. That’s a fancy word for CFO-for-hire.
The questions I ask my sister. If you can last all 37 minutes, you’ll learn a lot. Here are some of the topics I think will help you start, understand, and grow your business:
- What is a CPA?
- What’s the difference between cash and accrual accounting?
- What are financial statements?
- What is a “WIP”?
- Who uses financial statements?
- What is the difference between compiled, reviewed, and audited financial statements?
- Is cash in the bank a good measure of your business’s health?
- What’s the difference between a bookkeeper, controller, CFO, and a CPA?
- How can a business owner, or CEO, get maximum benefit from their accountant?
My story. Kelly and I talked ahead of the podcast about what I would say here and we had a disagreement. I talked about how it’s good for an engineer to get out of his own/her own way when it comes to running a larger business. It is valuable to have someone at, or very near the top, who knows money. A finance person or an accountant who will work diligently to track the money is vital.
On the flip side, Kelly looked at it a little differently. She thought that the #1 person (the CEO) should know the product and make the rain for the company. The CEO has the vision. The #2 persons should know the money side; this person should help make the dream become reality and help with larger financial decisions.