'What If's' Lead to I See's
When clients of Gordon J. Wiber visit him annually for tax preparation, audits, and financial planning, Wiber offers to sit down with them to ask a few questions about their businesses.
Wiber, a sole practitioner based in Vancouver, B.C., says they worry about, "How much money do I have in the bank? How much do I owe in taxes? How much does the company owe me?"
To answer these questions, Wiber uses CaseWare Scenarios to forecast growth opportunities for his clients using the numbers he has tabulated for their financial statements. Wiber, who has been using the product for six months, says clients are enthusiastic about the financial snapshot the business analysis software provides. It answers the questions that are of most importance to them,
"One thing about the clients I deal with is they certainly understand cash flow," Wiber says. "They may not understand GAAP."
Scenarios has also proved an effective marketing tool. It helps "to further solidify the relationship I have with my existing clients," he says. Performing a business analysis for his tax and accounting clients also differentiates his firm from its competitors, and leading vendors are hoping that many tax and accounting professionals will reach the same conclusions that Wiber has.
With the client by his side at the computer, Wiber used Scenarios to calculate the impact of increasing inventory turns from 2.5 times a year to 3 times annually, while reducing receivables from an average of 45 days to 30 days outstanding.
A wave of new analytical tools has hit the market in the last two years. Many enable accounting professionals to perform what-if calculations that show how changes in any one financial measurement can impact the rest of the business. Many are also linked to benchmarking statistics to enable business owners to compare themselves to similar operations.
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In Canada, Wiber says he is more pro-active with his clients using what-if's to telegraph future growth as opposed to just being a scorekeeper tracking their past performance.
"This gives me a chance to be more dynamic by showing them how to increase their cash flow," says Wiber.
For example, Wiber cited a client that wanted to increase cash flow. With the client by his side at the computer, Wiber used Scenarios to calculate the impact of increasing inventory turns from 2.5 times a year to 3 times annually, while reducing receivables from an average of 45 days to 30 days outstanding.
The longer it takes to collect receivables means someone else is earning interest on your monies, says Wiber, while turning over inventory more quickly should increase the cash flow.
"I can show them how to generate additional cash flow,'' Wiber says, "but I can't show them how to generate sales."
In the six months Wiber has been using CaseWare Scenarios, he has seen a surge in recurring visits from his existing clients. More than 10 percent of Wiber's clients visit him more frequently now that they can receive analyses of their most recent numbers.
"Within five years, I don't think you'll be able to be an accountant and not provide this service," he says.
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CaseWare Scenarios allows the accountant [to] do as many "what-if" scenarios utilizing the 74 data points encompassing key performance indicators.
"It is important to show the client the relationship between the numbers,'' says Dwight Wainman, chief executive officer CaseWare International. "CEOs are focused on those parameters that drive their business and drill down from there.
Among the key performance indicators it analyzes are sales, research and development, gross margins, market penetration, and currency exchange rates.
The financial analysis software from the Toronto-based vendor can be used as a stand-alone or run with other CaseWare products. Scenarios starts at $199 for a single user.
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CaseWare has not yet added benchmarking to the general release of Scenarios. Wiber's firm is part of a pilot group of accounting firms testing CaseWare Scenarios' Benchmarking. He was enlisted in that effort last summer.
In the six months Wiber has been using CaseWare Scenarios, he has seen a surge in recurring visits from his existing clients. More than 10 percent of Wiber's clients visit him more frequently now that they can receive analyses of their most recent numbers.
While Wiber concedes Scenarios is "fairly easy" to learn, he says, he would like to have had a session with a trainer that could have shown him the degree and depth of Scenarios benchmarking applications.
"Fundamentally, it could change the way I do things," says Wiber.
Riccardo A. Davis is Associate Editor of Accounting Technology and can be reached at Riccardo.Davis@sourcemedia.com.
Refer to page 37 for the review and pages 37-41 for the full article.
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