A lack of accounting literacy can be debilitating and costly for business and individuals. In business, expensive mistakes are made because of lack of understanding In people's personal lives they manage their finances blindly, confuse their total worth with their net worth, and give up on careers that they would have enjoyed because they are stumped by accounting. By promoting accounting, financial and business literacy, Color Accounting is benefitting people in all walks of life. Click an industry below to learn more... Banking
People are often surprised that many bankers don't understand accounting. Because banks deal with money directly people assume that people involved with the money must be proficient in accounting. That's not the case. By understanding accounting in the comprehensive way that Color Accounting presents it bankers get a better understanding of funds flows within the bank, between divisions and to clients. The bankers also benefit from seeing the big picture of the banks business operations. Very pertinent issues such as leverage levels are clarified for junior bankers. And senior bankers (for whom we sometimes run programs privately) get a logical and rigorous framework into which they can integrate their years of practical on the job understanding and terminology. We work with investment banks in New York and London. And with commercial banks in the US and South Africa. One of the largest banks in South Africa has put every branch manager and administrator through the CORE! workshop in a successful training rollout. The bank has a policy of not using external training solutions but made an exception because of the effectiveness of the Color Accounting approach.
You'd think that accountants have nothing to learn at a fundamental workshop like CORE! And yet even they have new insights into how accounting works when presented with the visual Color Accounting approach. The greatest benefit that CORE! provides for accountants is enabling them to better communicate with their clients. Accountants are made aware of the many ambiguities and confusing representations that have become invisible to them - but which confuse clients. The accountants also get to see what their clients aren't understanding. And rest assured, there's a chasm of misunderstanding between accountants and their clients. One of our Canadian Color Accounting resellers is making a big difference for family owned businesses. By getting the families into a room for a day together with their accountants she is helping them achieve communication breakthroughs. This in return helps those - sometimes feuding - family members get aligned about their personal needs and the needs of their commonly owned business. For example, the silent shareholders get to understand why the business shouldn't pay the dividends they'd personally like to receive, why the business needs the cash and why they would be better off leaving it in the business.
Small business & Entrepreneurs Managers of small businesses have a tough time. They have to juggle many hats, such as sales, marketing, production, inventory management, and of course finance & accounting. Often those managers are more focused on the sales and marketing side of things, because of course nothing happens without the all important sales. But it can be disastrous if the business manager doesn't understand the full financial picture of the business. He or she needs to maintain a 360 degree view of what is going on with the business. This comprehensive view is what Color Accounting is effective at teaching. If the business owner focuses only on the income statement where sales happen, they may not realize that their sales are resulting in accounts receivable and not cash. And if all the inventory is being purchased with cash instead of, e.g., a charge card, this has a negative impact on cash flow. It's particularly gratifying for us to see the myriad benefits that business owners get out of the CORE! and PLUS+ workshops: because owner-managers are directly affected by what they learn they are highly motivated learners. And with Color Accounting, happy ones too.
Insurance professionals benefits especially from an understanding of accounting. The CFO of a large U.S. life insurance company said to us "Help me teach my staff how we make money". Over the four years that we've worked with his company we've together come to realize that to understand the business of insurance you really need to understand accounting. This is because insurance is an 'extreme accrual business'. Payments and expenses can be separated in time by years. The insurance professional must understand accrual accounting concepts such as expense reserves if they are to understand what determines the insurance company's profits.
Color Accounting is used by some of the top law firms in the world, in London, Australia, South Africa and the United States. Lawyers often have a birds-eye view of accounting issues, working with balance sheets, income statements, cash flow statements, accounting policies, tax assets and performance ratios such as EBITDA in the course of their work. The lawyers we've worked with like the way that the Color Accounting Framework presents the big picture of a business's finances. It also enables the translation of the accounting jargon that appears in legal documents into understandable, logical and meaningful information. Most people don't like to ask 'dumb questions'. In the legal environment where a hostile opponent may seize on a blunder lawyers are even more loath to ask that silly question. An important benefit that the Color Accounting Framework delivers is the confidence to ask question knowing that they will be valid. We tell our students that there 'is no 6th square', meaning that their understanding of the universal 5-square Color Accounting Framework is all they need.
Clearly, management consultants need to understand the financial purpose of management. Many consultants come up through the technical side of organizations, with qualifications in engineering, HR, marketing and other non-financial fields. The consultants are often stronger on the management side of things than the finance side. Those who have attended our Color Accounting workshops are more confident about engaging and advising on the financial aspect of their clients' businesses. They make their analyses and recommendations with a sharper financial consideration, including the impact upon key performance measures such as return on assets & equity, and specific measures such as inventory turnover.
A nuclear physicist and education pioneer friend once said to us: "If you distill the essence of a subject you can teach it like that", snapping his fingers as he said it. That's what Color Accounting is all about. You probably wouldn't believe it if we told you how many students graduate from accounting courses without truly 'getting' accounting. Even the chairman of a top-4 global accounting firm told us that he's used to seeing the lights go on for 3rd year employees. "I learned more in one day than in three years of college accounting" is how we've heard it from more than one student. By getting to the essence of how accounting works Color Accounting accelerates true understanding by students. The CORE! workshop is good primer before college accounting courses. It leverages those courses so that the details and practices they teach are integrated into a deeply understood conception of accounting. A number of executive education divisions of business schools are selling Color Accounting to their clients. We are experiencing some resistance from college professors to the use of Color Accounting in academic courses, though this is starting to change.
Government is a big place, and Color Accounting is finding niches in many areas within it. Whether it is the visual explanation of the budgetary process of Federal Government, or the education of agency workers who have to regulate for-profit commercial organizations, a solid understanding of accounting is useful. And as local government authorities develop full double-entry balance sheets and reporting the staff within those organizations benefit from a comprehensive understanding of accounting.
Some of our most gratifying work has been with not-for-profit organizations. Whether they are a small Washington D.C. AIDS organization or an international medical services provider operating in Africa, Asia and South America, the results of empowering their staff with an understanding of accounting is remarkable. We have seen demonstrable behavior change by, for example, a field worker who realized what the expiry date on a bottle of medicine meant in financial terms. The result was that she began to send old medicine back to the supplier which had supplied it 'stale', instead of accepting and wasting it. NFP organizations are often stretched for resources while burdened with additional reporting obligations to funders who frequently provide restricted funding. They are often also dispersed geographically with little administrative support. A practical understanding of accounting practices & procedures and the ability to communicate effectively with the head office accounting department makes a great difference organizations. While accounting is not the sexy end of the work not-for-profits do, it is clearly essential to achieving their mission. Accounting Comes Alive has worked with not-for-profits on five continents, as well as umbrella organizations such as the Washington DC-based Non-Profit Roundtable who offer the CORE! workshop to staff of member organizations. The US Association of Fundraising Professionals offers the CORE! seminar to its members via web-conference.
Whether it is job costing or the tax effects of LIFO/FIFO accounting changes, accounting has a big impact on manufacturing organizations. The CORE! workshop and relevant PLUS+ modules can contribute to the aligning of management teams by strengthening the common language they communicate with. We've seen financial controllers sigh with relief that they are finally being understood, and divisional managers grinning when they realize they now know what the CFO is going on about.
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