Opinion: Why a business manager should think like a financial archaeologist

John Taylor

When looking at financial reports, a good business manager should be like a good archaeologist, knowing when to use the bulldozer, the chisel and the pick. This is increasingly true as business accounting processes accelerate in the name of convenience and efficiency.

Viewing financials as an archeological site can help ensure the numbers remain reliable sources of business information.

Consider autopay: a convenient, hands-free way to ensure timely payments for bills, loans, credit cards and subscriptions. According to the Federal Reserve, use of ACH – including autopay – increased markedly during the mid-2010s, then far more rapidly during the COVID pandemic. Uptake has accelerated further since, to the point that virtually everyone has an auto-payment somewhere in their books today.

The value of autopay is undeniable. Transaction costs for ACH payments beat other methods, and setting up autopay saves processing time. But for managers who need reliable financial statements, the advantages of setting it need to be weighed against the disadvantages of forgetting it.

Who can confidently say which auto-paid Dropbox or Office 365 subscription corresponds to which employee? Who can positively claim now to be as aware of a potential problem with the utility bill as was the case before automatic payments? Raise a hand if you’ve recently used all the time savings from autopay to examine (or even care about) how your parcel shipments, social media posts or merchant fees individually bill out.

Now, if I’m not seeing many hands up, ask yourself what you’ve lost. When it comes down to it, autopay can be a little like attending a class with a voice recorder: Come exam time, you might find yourself at a loss for lack of any active, pen-and-paper engagement with the content. When you let the system do it all, it’s easy to miss the nickels and dimes. Those cents can become substantial dollars during a fiscal year.

I’m not arguing for a return to ’90s-era paper processing. Nor am I advocating combing through every bill. But a set of financial statements without any inquiry is like an archaeological site that’s only as detailed as what the bulldozer can manage. A strategic approach, targeting large expenses, key business activities or particularly opaque billing structures, offers a host of benefits:

1. It can improve decision-making. As you see where your costs come from, you can see how they get there. Suddenly, not everything under margin looks like a fixed cost. You can begin to see more clearly how your costs behave, which can allow you more readily to get your costs to behave.
2. It can improve your negotiating position. When you have clarity regarding how the vendor bills (be it for shipping, insurance or even raw materials), you can get specific about what you want. It’s easy to tell an account manager you want to pay less. It’s also easy for an account manager to say no (nicely). A different story is for a customer to point at a small detail and say: Here’s how I’d like to be paying less. That’s something else.
3. It sends a message to your employees. By taking time even to ask about the etymology of an account balance, you communicate to your employees what’s important. It’s a good thing when a system processes money automatically; it’s far less so when your employees do.
4. In fact, it can even motivate your employees. Sometimes, an employee who internalizes the importance of gritty details evolves into one who pushes management to make improvements. Not only does that mark quality staff, it can also save you time from having to guess which little detail to look at next. The team is now taking that guesswork away.

How all this gets done can be as straightforward as sitting down with the bill or quizzing the account rep. It can be as involved as setting up games or other incentives with the team. It can extend to seeking advice from trusted partners, consultants and specialists outside the company. The important thing is to make it a goal: Getting the archaeological picks and brushes out from time to time can vastly improve business performance. It replaces your gut with your mind, and it can turn a staff into a team that sees the tangible rewards from digging a little deeper.

John Taylor is an Elliott, Robinson & Co. LLP consulting specialist. He can be reached
at jtaylor@ercpa.com.