The accounting decisions that could mistakenly hurt your business

Written on Apr 11, 2019

By Jessica Salerno, OSCPA senior content manager

LeeReginaldAccountants are known as trusted business advisers, but not having the right tools or perspective can lead to harmful business decisions that undermine that trust.

“We tend to look mostly at accounting data to make operations decisions and decisions that improve the cash performance of an organization,” said Reginald Lee, PhD, professor at Williams College of Business at Xavier University. “And one of my hypotheses is that looking at only that information doesn’t give us the best picture of how to make operations decisions and how to improve cash.”

Lee will reveal how to consider cost accounting in a new light April 24 at OSCPA’s Strategic Cost Transformation Seminar. Looking at the picture holistically is key, he said, which can be difficult because it might require an awareness of a different way of thinking. In short, being unaware of what you don’t know could add up to getting blindsided in your business decisions.

“We think when we look at accounting data and look at margins we know how much money we’re making, and if I can improve my margins that’s going to make me more money,” he said. “But that’s not necessarily true.”

Lee said too often there is a cash cost associated with decisions that don’t actually have a cash impact. He encouraged professionals to be proactive about finding more information and to consider how accounting and operations work together.

“The decisions that are made in accounting and the decisions that are made in operations mean they need to know how to speak a common language,” Lee said. “Because sometime operations makes decisions that are good for operations and accounting doesn’t necessarily know why, and sometimes accounting need operations to do things for it and they don’t know why.”

Understanding these cost accounting procedures in a different way means avoiding problems down the road and can help with planning and budgeting decisions.

“We need more information to make better decisions,” he said. “It’s important to understand how to model your organization and doing that to avoid being blindsided.”

Register for the seminar today!

Can't make the seminar? Reginald will be presenting this topic at four upcoming accounting shows:

Dayton / May 22-23 

Cincinnati / Sept. 25-26

Cleveland / Oct 29-30

Columbus / Nov. 7-8

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