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Taking a Higher Level View

Ed Kaplan

Even though I am not a CFO, I recognize that there are ways that I have been impactful to my clients.

After all, although the matters that I deal with are not strategic, I am in a good position to be advising not only my client, but the staff I work with, on some practical interventions that help assure that the numbers that everyone is depending on are accurate.

I realize that I have been impactful to my client’s AP clerk, in helping her complete her bank statement reconciliations. Now you are wondering how working with someone on a bank reconciliation can be impactful. After all, the exercise only involves bringing a cash book balance and bank balance into agreement, and you might be right.

Nonetheless, it was impactful, and here’s the reason why. It’s important to keep in mind that exercises like bank reconciliations are fairly cut and dried exercises involving bringing two disparate numbers (i.e. bank and book balance) into agreement. It’s not the task per se that is important here, but how it can be used to open someone’s mind to think in a conceptual manner.

Let’s call the AP clerk Sally. One day, when I was working with Sally to try and figure out why a bank statement was out of balance, we started out looking at the usual suspects:

  • Are the outstanding check amounts correct?
  • Is the deposit in transit number correct?
  • Are there any miscellaneous charges or deposits that hit the account outside of “typical” transaction postings?

After we exhausted the usual approach, I started having Sally look at this work from a more conceptual point of view. I directed her through the process with a series of questions.

  • Which is higher, the bank balance or the book balance?
  • What kinds of transactions could cause this type of situation?

After thinking about it, she came back to me and suggested that if the bank balance is higher than the book balance, that meant that we have more cash in reality than what we have recorded on our books.

So, what does that mean?  One thing it means is that we have either overstated our expenses or understated our revenue.  I explained to Sally that since this is where the problem originated, we were now able to narrow our search to what might be causing the problem, rather than looking scattershot at every transaction on the books.

The lesson learned from this story is that whenever you are dealing with numbers, it always pays to ask yourself the 10,000 foot question.  “What are the types of transactions that could possibly affect numbers the way we’re seeing them?” Look at it from the broader overview in terms of expenses or cash position, or whatever you might be able to relate it to. Looking at things from a higher-level perspective always opens your mind to possibilities that you could not otherwise anticipate.

I know this approach has helped me immensely over the years, and Sally also commented that this has now helped her gain a more impactful perspective on her work.


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