I work with a number of health care and other types of clients. In the last two years, I’ve been blessed to work with more clients than I can count on my two hands. One thing I continually encounter is a very dry but important subject - chart of accounts (“COA”) structure.
Too many companies know their books do not capture financial information in the way they should but they avoid the challenge of changing their COA. That’s not a very interesting subject but it drives financial reporting so thoroughly, I thought we should talk about it. Very often, the COA was originally developed from a canned package or frankly by somebody that simply didn’t plan well enough. As businesses grow in size or complexity or simply seek to increase their level of sophistication, a change in the COA structure may be warranted.
The following is a short list of leading indicators that there may be a need for a change:
If any of these questions trigger further questions, it may be worthwhile to invest in the time necessary to revise the COA. The following is a short list of things to consider:
These are a few thoughts addressing wholesale changes. Maybe the health center does not need a wholesale change; perhaps an effective change would be to simply add some accounts or departments. I’ve seen that approach work very effectively to enhance the reporting.
What’s most important is to step back away from details, remove oneself from the resistance to spend the time, and think about the gaps in your data analysis. Improvement in the COA can be necessary to become more data driven, which is usually the difference between an effectively managed health center and one that is struggling financially (as long as there is the will to respond to the data but that is a different topic!).
Karl spends his time thinking about ways to help organizations with sound financial decisions.
Proudly powered by Weebly