The movie world has taught us all about ‘cooking the books’ to reap the benefits of clever (corrupt) accounting, while TV shows like The Sopranos and Breaking Bad have us well educated in the world of money laundering. The trials and tribulations of accounting and debt collection are frequently glamourised activities.
The problem with the fictional portrayal of accounting is that issues are almost always solved with a man wielding a baseball bat threatening to ‘take things into his own hands’. This is great motivation for developing a plot line, but doesn’t offer much in the way of a real-world solution to some familiar business problems. It’s clear most people understand the importance of accurate accounting, but it’s not always clear how accounting struggles can be avoided.
For example, with a cash flow forecast, Tony Soprano would have been able to see which months he could expect to see a cash deficit, and which months he could expect a surplus. He’d also have had a pretty good idea of how much cash his empire would require over the next year or so to survive, meaning the body count would be significantly lower, and to be honest, the show would struggle to keep its audience.
Drama can be great in marketing, it can generate great publicity, but drama in accounting can be disastrous for morale. When people aren’t paid on time it causes friction that puts relationships at risk. This can be easily averted by keeping accurate records and invoicing promptly, of course, but it can also be prevented by one simple tactic: establishing good relationships between accounts departments. A strong finance-based relationship between suppliers and customers helps to encourage prompt payments, without the need to seek outside help (be that from a consultant, or a hitman).
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