Page 121 - (DK) The Business Book

MAKING MONEY WORK 119

hands-on directors should also understanding the huge potential For financial accountants, the
spot when rewards for staff are of the mass market. When looking traditional stance has long been
so out-of-control as to threaten the at China today, the most exciting “playing by the rules.” Integrity and
profits being made for shareholders opportunities are for products that adhering to accounting principles
and for the future financial health would appeal to the hundreds of such as prudence and consistency
of the business. “Profit before millions of potential consumers were seen as most important. More
perks” should be the mindset. who are workers, not managers. recently, career opportunities have
Important to good governance arisen for accountants who are
is a willingness to ignore the herd. Using money wisely willing to be more creative. This
For example, if every US bank began In management accounting, two way of thinking stems from the
to expand into South America, a factors are of particular importance: scope for “making money from
smart South Korean bank would cash and costs. A management money,” by lending the company’s
refuse to copy. However, in practice, accountant works hard to provide cash deposits to other companies at
this proves hard to do. Directors accurate data on production costs, high rates of interest, or speculating
meet each other in the same clubs so that managers can make on future trends in exchange rates
and conferences, and like to be part informed decisions about pricing, or commodity markets. In a world
of the same pack. Nevertheless, on outsourcing, and on which where a quicker, bigger buck can
US investment guru Warren Buffett products to back with marketing be made from money than from
has become one of the world’s spending. Activity-based costing, manufacturing, playing by the
wealthiest men by ignoring the which provides the most complete rules may seem a poor choice. ■
herd instinct among investors. data on costs per unit, is the best
way to do this. When trading
The mass market is poor, however, management
Some modern boards of directors accountants place their tightest
accept that if there is wisdom focus not on costs but on cash
among crowds, there may be flow, following the maxim that I am incredibly nervous that
even greater wisdom among staff. “cash is king.” This arises because we will implode in a wave
Henry Ford was one of the first the worse the trading conditions, of accounting scandals.
to realize that your workers are the more that companies try to hold Sherron Watkins
your customers, but it has taken onto the cash they have—making
US executive, former vice president
a century for others to see the it much harder to get paid if they
of Enron (1959–)
potential in this phrase. Not only are your customers. The flow of
is there value in drawing ideas from cash dries up, so an early focus on
staff who care about the products cash flow makes sense: start your
they both produce and use, but own cash hoard before others
there is also strategic value in begin trying to create their own.