Kevin Den Adel: Bad Accounting Leads to Lost Profits

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Inaccurate or incomplete accounting practices can cost businesses a great deal of money; Kevin Den Adel encourages business owners to implement proper accounting policies in an effort to improve and better understand profit margins.

Accounting is a field that keeps businesses on track, financially. Through proper accounting practices, companies are able to determine exactly how much overhead they have and how much to charge customers for their goods or services in an effort to both cover that overhead and create a profit. But, according to an article in Forbes, many businesses are unaware of the amount of capital it takes to complete a work order. Additionally, the article notes, they are frequently unsure as to whether their estimation services are quoting prices that will create revenue after covering the costs of operating expenses. Kevin Den Adel, an accounting lecturer and the Director of the Undergraduate Accounting Program at the University of Iowa, encourages business owners to reconsider their accounting strategies. He believes that an improved accounting department can pinpoint areas of a business that need to be adjusted in order to achieve a maximum profit margin—and increase overall success.

According to the article, there are two reasons that a business is losing money or is not making the profit that its owners expect: "Your profit on each job or customer does not cover your overhead, or you are losing money on too many jobs or customers." The author of the article, Bill Conerly, relays an anecdote that perfectly illustrates the fact that many business owners are unaware of how well their organizations are faring because of inadequate accounting standards.

"Strolling down the aisle of a trade show in the area of metal fabrication, I chatted with the owner of a cost-accounting software company. I assumed that everyone in the industry had a good handle on their costs by job—but I learned otherwise. Only half of the companies in the industry could accurately track their costs by project, he told me," writes Conerly.

"Being able to measure profitability on an individual job or customer order is essential to a company's success," comments Kevin Den Adel. "Complete and accurate cost accounting information is necessary for businesses to make sound investment decisions. Business owners who prioritize this process will increase their future performance prospects."

Den Adel encourages business owners to tighten their accounting practices and turn to trained professionals to handle such important tasks.

ABOUT:

Kevin Den Adel is an accounting lecturer and the Director of the Undergraduate Accounting Program at the University of Iowa in Iowa City. With both a Bachelor of Arts and a Ph.D. in accounting, from Central College and the University of Iowa, respectively, Kevin Den Adel shares his vast knowledge regarding the financial field with students while spearheading administrative tasks necessary to keep the program running. Kevin Den Adel has received multiple honors and awards for his dedicated professional efforts and is a member of the Iowa Society of Certified Public Accountants and the American Accounting Association.

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Carlton Swagness
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