Lost in Translation

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• November 2005 Issue
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From the November 2005 Issue

Professional accountants know the importance of financial statements because such statements provide an overview of the economic situation of a business or individual. While many small business owners often keep themselves busy well beyond an eight- or 10-hour workday and “live and breathe” their business, the nuts and bolts facts of their financial condition are often overlooked. This may be due to a lack of comfort with financial data, limitations of their accounting systems or lack of formalized accounting training.

While virtually every accounting program on the market has the ability to generate income statements, balance sheets, cash flow statements and a few other basic financial statements, most software programs designed for small and midsize businesses lack deeper analysis tools, whether they are off-the-shelf programs or those sold by consultants. But several programs are available that begin where the general ledger and traditional financial reports end, providing in-depth statements, reporting, analysis of key indicators, goal setting, forecasts, what-if scenarios and comparison of the company’s performance to benchmarks or others in their industry.

Accountants have offered variations of these services for years, often through the use of spreadsheets they built themselves, which must be constantly adapted to meet the needs of individual clients. Financial statement analysis programs, however, will automate these tasks and provide added value to both the client and the accountant. Analysis reports often include graphical elements that help clients visualize where their money is, where it’s coming from and where it’s going, what the future may hold, as well as client deliverable reports that are written in plain English. In addition to helping identify trends and tendencies in operations such as turnover of inventory or receivables, some of these systems offer enhanced budgeting and forecasting capabilities, as well as ratio analyses, which greatly eases the task of examining liquidity, efficiency, profitability and solvency.

With increased scrutiny of financial documents for even closely held companies, financial statement analysis and forecasting programs are an excellent resource for accountants. Use of such tools will help clients gain a better understanding of their present and potential financial condition and can ease the process of acquiring additional funding, whether through loans or private investors.

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Sage Software, Inc.
www.sagesoftware.com

Sage offers several forecasting, reporting, budgeting and analytics programs under the ACCPAC brand name, which it acquired in March 2004. The foremost of these offerings is the ACCPAC Comprehensive Financial Optimizer, or ACCPAC CFO, which provides financial diagnostic and strategic analysis functions.

ACCPAC CFO provides users with an easy-to-use, yet comprehensive “financial scorecard,” which provides an overview of key financial information and indicators relating to a business. The program includes budgeting and forecasting capabilities, cash flow analysis, and includes “what-if scenarios” that help users see the potential effects of actions such as changing inventory or AR rules, allowing them to more accurately assess influences to their financial condition. In doing so, users are also able to better predict and prepare for potential changes to their business model or in the market and develop a plan that addresses the business’ needs.

While stand-alone financial applications provide some assistance in business performance management (BPM), a key advantage to ACCPAC CFO is in its integration with Sage Accpac ERP (formerly ACCPAC Advantage Series) and Sage Pro ERP (formerly ACCPAC Pro Series). By being able to automatically retrieve data from a business’ accounting system, the ACCPAC CFO program provides advanced analytics that are truly real-time, without the need for redundant data entry. The program can also import data from Excel spreadsheets.

For the benefit of business clients whose entrepreneurial, fast-moving, strategic thinking style is sometimes not entirely compatible with the detail oriented communication style of accountants, reports are generated in common language and utilize multi-color visual images including charts and graphs, with at-a-glance summary information.

Through these reports, “ACCPAC CFO is the communication ‘bridge’ that allows these diverse communication styles to find a common ground,” says Geni Whitehouse, CPA.CITP, CSPM, and vice president of product management for Sage Accpac.