Think about this for a moment. Recently, a small privately-held manufacturing company was sold to a much larger industry player. During due diligence (the "tire kicking" exchange of information before sale), it became clear that the target company's accounting was a mess and it didn't have a consistent method for determining its product costs. Yes, the little company did generate significant cash flow, but the business owner lost credibility and never regained negotiating advantage. The business was sold for far less than its true worth.

Clearly, the downside of sloppy financial records is lost cash and lost opportunity. There are other risks associated with poor accounting controls. Your banker probably knows that check forgeries and theft are common within small company accounting departments. The very people you trust to pay bills and reconcile your bank accounts are best able to hide their crimes.

Poor accounting can also disqualify a company from receiving venture capital or expansion funding. Investors reason, if management doesn't understand the crucial role of accounting in business planning, they are not seasoned enough to take a business to "the next level" of operations.

Today, all businesses are under pressure to improve the accuracy of their financial statements. Since Sarbanes Oxley was put into law, more than 1,000 public companies have issued corrections to their financial statements. If the big audited companies can ignore the rules, imagine the state of accounting in smaller, privately-held companies where there is less regulatory oversight!

So what should you do next? First, it's unwise to ignore your banker's comment. If you don't demonstrate concern for your company's books and records the bank may not renew your credit lines.

Call the banker and ask specific questions about your controller's performance. Does your controller lack basic understanding of some of the mechanics of loan agreements, loan covenants, lock boxes or letters of credit? What is it that needs improvement?

Second, hire a professional accounting consultant to review your company's accounting procedures and recent financial statements. Choose an independent firm that can provide a candid appraisal of your accounting department's operations. Provide full access and cooperation. Also ask what is it you need to review on a daily, weekly and monthly basis to measure your controller's performance.

Your banker is holding you accountable for your company's financial results and financial organization. No longer can CEO's get away with saying "I just didn't know." No matter how high the bill to conduct this independent accounting review, you can't afford not to have a top performing accounting department.

You deserve the best. You've worked too hard for too long to settle for anything less. So take charge of the situation before a little managerial problem becomes an even bigger problem for your entire company. There is no more important priority on your plate today. Solve it now!