In this edition of our new feature called Industry Insights from leaders in the security alarm Industry, we reached out to industry accounting expert Mitch Reitman from Reitman Consulting Group.
Reitman Consulting Group is a brick and mortar consulting firm with associates who know your business and have the experience and resources to assist you. RCG began with a pencil and knowledge of the security industry and systems integration industry. Although founder Mitch Reitman has much more than a pencil now, he still has the desire and ability to serve the industry.
We recently sat down with Mitch to get his specific accounting perspective as it related to alarm dealers and the security alarm industry.
What are some common mistakes you often see alarm dealers making with their financials?
We encourage our clients to focus on showing monitoring revenue and expense as a separate component of revenue and expense. This shows the high gross margins in monitoring and explains the willingness to install systems at lower margins or even at a loss. It is also important to break out deferred revenue so that RMR stays consistent. We also see many direct costs such as installer vehicles and other install expenses in overhead when they should be in cost of sales. Many companies also do not have a good handle on their inventory levels.
What issues you see when dealers use an off the shelf/generic accounting software?
Of the shelf software typically cannot handle RMR and deferred revenue. Many packages are not meant to handle more than a hundred customers and a handful of vendors. The level of internal control is low and it is easy for a bookkeeper to hide mistakes, or, even worse, to hide irregularities.
How important is partnering with the correct billing/service software for dealers?
Billing accuracy is critical for a Security Company. An inaccurate bill can drive away a customer that is worth over a thousand dollars. Knowing RMR and attrition is important to the well-being of your company.
What is the most important advice you often share to alarm dealers?
You are very good at what you do, but you didn’t go into business to be a bookkeeper. Leave the bookkeeping to those of us who did and let us help you focus on what you do want to do.
For more information on Reitman Consulting Group, please visit their website
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