Momentum Podcast: 438

Hold Finance and Accounting Accountable

by Alex Charfen

Episode Description

There are very few entrepreneurs who love accounting and finance. For must of us, looking at the numbers is something that makes us feel uncomfortable. If that's where you are right now, you are not alone. Personally, we use an outsourced finance and accounting company. 

This is generally a fantastic option for us, however, you still need to be involved and paying close attention. If something doesn't look or feel right, call out your finance team. Question them so that you understand what is really going on. Make sure that you hold them accountable. It is the job of your finance team to make you feel comfortable and to make sure that you understand exactly what's happening with your money.

Full Audio Transcript

I'm on a walk right now. I actually just got off of a call with my outsourced accounting and finance company, and I'm really frustrated with how it went; so frustrated that I had to get out of my office and actually go on a walk, but as I was walking, I realized there are some massive lessons with what happened today that I can share with you, and also, some personal growth that I've achieved that I can share with you, and some realizations I've come to.

Alex Charfen: I'm Alex Charfen, and this is the Momentum Podcast, made for empire builders, game changers, trail blazers, shot takers, record breakers, world makers, and creators of all kinds. Those among us who can't turn it off, and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution.

Alex Charfen: Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat, because you only lose if you stop, and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few, who are willing to hallucinate there could be a better future, and instead of just daydreaming what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters; clearly the most important people in the world, because entrepreneurs are the only source of consistent, positive, human evolution, and we always will be.

Alex Charfen: Let's be honest, there are very few entrepreneurs who love accounting and finance, unless they're in the accounting and finance industry. In fact, for most of us, accounting, finance, and meeting with the accountant, doing the bookkeeping, looking at the numbers, is something that we really don't love. In fact, for a lot of us, it's something that intimidates us and feels ambiguous, and it makes us feel like we don't understand what's going on, and the entire language around accounting and finance can be overwhelming and frustrating.

Alex Charfen: To be candid with you, I was running multi-million dollar businesses before I really understood my books, and I was running huge organizations without really understanding accounting and finance, so if that's where you are right now, I want you to know, you're not alone. We talk to hundreds of small businesses on a monthly basis in our company, and the percentage that have clean books on a monthly basis is way below 50%. The percentage that have clean books and understand the books is way below that. Alex Charfen: So I just want you to know, accounting, finance, bookkeeping in general, is one of those areas that is just really difficult for entrepreneurs, and so today, the way we solved this problem, is we have an outsource accounting and finance company. And actually yesterday, we got on our normal monthly call with them, and I had some specific questions about how some of our expenses were being booked. Yesterday, the person who handles our account couldn't answer those questions, so she had to go get her supervisor. He got on the line with us, he couldn't answer the questions.

Alex Charfen: So then overnight, they went to figure out the answers to the questions and we were going to get on another call today and they were going to explain it to us, so we got on that call, and things did not get better. In fact, they didn't explain clearly what was going on, it was clear that there was some inconsistencies in how our books were being kept. In fact, there was some serious inconsistencies in how some of our expenses were being booked. I don't know if it's effected our actual results or numbers, but it was very clear on the call that things were not being done consistently.

Alex Charfen: Rather than say, "Alex, it's clear something may be going on here. We don't know yet. Let us check on it, we'll get back to you." Instead, I got condescending tone, and basically what a lot of finance and accounting people do with the, "This is how it is, this is how we did it. There's nothing wrong here." So I just asked simple questions. "Well, if there's nothing wrong here, then why are you doing it differently each month? If there's nothing wrong here, why was it not consistent?"

Alex Charfen: At one point, the supervisor at the company we use actually said, "I've been a CFO for over two decades," and he went into this long thing about how I should just trust what he was saying. I said, "In your two decades as a CFO, was accounting and finance consistent? Did you book payments consistently? Did you book expenses consistently? Because I've run companies for a long time, and the one thing I know for sure is that finance and accounting should be completely consistent on a monthly basis."

Alex Charfen: He didn't really have anything to say about it, but here's where I feel like I learned some lessons, and here's where I feel like there's some learning for you. So first, when I go into an accounting and finance meeting, I pay attention to how I feel, not what I'm hearing. So yesterday, the reason that I started asking questions about an expense is I felt uncomfortable that the person we were talking to wasn't really clear on the answer she was giving us. Alex Charfen: I didn't know there was an issue there, but I identified that I felt like there was an issue, so I started asking questions, and where I felt like there was an issue, there clearly now is an issue. I always share with my team when it comes to something like accounting and finance, where there's smoke, there's probably not a fire, there's probably a raging inferno.

Alex Charfen: If you feel uncomfortable, if you see that there's an issue, if you can see that there's some inconsistencies, could it be just a little error, or could it be something that's not that big a deal? Absolutely, but pursue it. If you feel uncomfortable, do not stop until you feel comfortable. Even with accounting and finance, if you don't understand the language, if you don't know what they're saying, make them make you feel comfortable. Insist that they explain it to you until you feel good about it.

Alex Charfen: I have been through a lot when it comes to finance and companies. I've built massive organizations, I've had all different ways of solving this equation, and I've also been in a business where we used an outsourced CFO who embezzled over a million dollars from us. You can listen to my podcast called Why Entrepreneurs Don't Talk About Embezzlement, and having been through all that, here's what I know now, is that when I'm in a meeting with accounting and finance, or when I'm in a meeting looking at my books with somebody who's helping me and supporting me, it's their job to make me feel comfortable, and it's their job to make me feel like I understand everything that's going on.

Alex Charfen: I think what happens to far too many entrepreneurs when we get into an accounting or a finance meeting, because it's already naturally uncomfortable for us, we feel intimidated by it. We're afraid to ask questions. If we feel uncomfortable, we blame it on ourselves. If we feel like it's ambiguous or we think that there's something going on, we tell ourselves, "Oh, it's just us because we don't understand this, because this is one of those places we don't have a high level of expertise."

Alex Charfen: Well, here's what I want you to know. You shouldn't feel that way. If I had identified when I felt uncomfortable when we had Michael Goldberg doing our books, who is the individual who embezzled over a million dollars from us and ended up in federal prison, I would have done something, because there was more than once when we were in a meeting where I would feel uncomfortable, and I would say to myself, "Oh, it's just because it's accounting." There was more than once where I had asked him a question, and the answer didn't feel 100% right, but I would say, "Oh, it's just because I don't understand this." Alex Charfen: There was more than once where I left an exchange with Michael feeling like it just didn't all fit together, but I would always blame it on myself. I will never do that again, and I don't want you to, because if you're in a meeting talking about your numbers with somebody, if you're in a meeting talking about your books with somebody, it is their job to make it so that you feel comfortable, and to make it so that you feel okay with everything in the discussion, so you should keep asking questions until they help you understand it.

Alex Charfen: When I did that today, that condescending tone that I got was such a major mistake, because I will grant the individual that was on the line that I'm sure he's been a CFO for a long time, but I've employed a lot of CFOs, and I've had a lot of different accounting and finance departments, and the one thing I know is consistency in accounting is ... like the number one rule is consistency.

Alex Charfen: We have to hold our accounting and finance people to an incredibly high standard. Let's be really clear, accounting and finance is not complex, or difficult, or hard to do, especially in most small businesses. In fact, most of it is addsies and take aways. You don't even have to get into advanced math.

Alex Charfen: If you ever feel uncomfortable, stop the meeting, and keep asking questions until you don't feel uncomfortable anymore, because again, where there's smoke, there's probably a raging inferno. Keep asking questions, and figure out what's going on, and hold them accountable, because what we normally do as entrepreneurs is we internalize, we blame ourselves, we feel inferior, we feel vulnerable, we feel like we shouldn't be in the conversation, and then we walk out.

Alex Charfen: That's how accounting and finance people make major mistakes where we don't really identify them and fix them. That's where accounting and finance people may be doing something dishonest that they shouldn't be doing, and we don't mention anything, and we don't communicate our discomfort. When you're feeling uncomfortable, it may be that just something's happening wrong and you need to understand it, and maybe it's just because you don't understand something, but it's that person's job to help you understand.

Alex Charfen: I want to give you permission, and I want to give you license to hold finance and accounting in your company 100% accountable for your feeling of being comfortable, of being taken care of, and feeling like there isn't exposure, because if for any reason when it comes to your numbers you feel anything but fully confident, comfortable, and like there isn't exposure, there is something wrong.

Alex Charfen: When I started this podcast, I promised that I would share good and challenging. The call I had today and yesterday was incredibly challenging, and it will most likely result in us changing the service with use, but in this call, there is learning here, because I am ... It's so clear that by expressing where I was uncomfortable, we were able to identify something today, and I'll share one more thing with you. On this call, I didn't blow up, I didn't get angry, I didn't raise my voice, I didn't yell, and in the past I probably would have.

Alex Charfen: When I in the past have felt uncomfortable, when I in the past feel like I might be getting taken advantage of, or somebody is screwing something up and they won't admit it and they condescend me, I used to escalate the situation and go back at them just as strongly as they were coming at me, or more. I would eclipse their energy, their condescension, with anger, and frustration, and aggression.

Alex Charfen: I didn't do that today, and I'm sharing this with you because I'm having this profound realization more and more these days, that when I used to do that in my early business career, when I would yell, and scream, and cause the attention to happen, instead of the attention being on the issue, like today, the issue that our books seem like they're not being kept consistently, the attention would go to the issue of me yelling, and screaming, and being angry.

Alex Charfen: It would shift the attention from where I wanted it, fixing my books, to me being angry, and frustrated, and afterwards, if I'm honest, I would feel bad. I would feel like I overreacted. Once I came down off the adrenaline rush, I would feel empty and frustrated with myself. I would feel like I had completely overreacted, and today I didn't. I stayed in my body, I stayed grounded.

Alex Charfen: I actually had Melanie and Haley on the call with me, and it was funny; at one point, you could tell that I was getting frustrated, because I was getting condescended to and talked down to, and I actually said, "I don't understand why you're being condescending, and I don't understand why you're taking the tone that you are, because there's clearly inconsistencies here, and it's frustrating." Both Melanie and Haley texted me while we were on the call and said, "Hey, grab some water, you're doing great." So I even had backup in staying present, and aware, and in my body, and in momentum, and not losing control.

Alex Charfen: So for me, the lessons today were massive, and the realizations I'm having today are massive, and I just wanted to share them with you, because when it comes to finance and accounting, I want to make sure that you feel comfortable, and it is the other person's job to make that happen. If you ever feel like there's ambiguity or a lack of clarity, make them explain it to you until you feel better. Alex Charfen: When you're in a business conflict like this, I used to think yelling, and screaming, and putting my chest out, and saying demeaning things, and making sure that they knew how angry I was was the right way to handle things, and today I feel like not only was it not the right way to handle things, but it shifted the energy so much away from what I wanted, and more to how I was acting, that it is so clear to me today that the more I can stay calm, and in my body, and present, and aware, and state my case factually, and in a way that is very direct, it is so much better of an outcome.

Alex Charfen: If you own an accounting and finance department ... or sorry, if you own an accounting and finance company, you should shoot me a Facebook Messenger message and let me know who you are, and if you have an accounting and finance company you love, let us know who they are too. Shoot me a message, and I appreciate you listening today.

Alex Charfen: When it comes to accounting and finance, it is one of those things that is a necessary evil. I've heard very few entrepreneurs ever say they're excited for a finance meeting, and those that are have been doing it a while, and have finally come to the understanding that's where you find out how much money you've made.

Alex Charfen: But most of the time, it's one of those things that is just a frustration and an irritation, but it's up to you to make sure the people around you help you understand, and that is exactly why they're there. Hold finance and accounting accountable to making you feel comfortable, you understand, and making sure you're in momentum when it comes to everything around the numbers in your business.

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