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Efficient & Effective – 2E Accountants
People often ask me what ‘2E’ stands for in 2E Accountants, so I decided to do a short blog on the meaning of Efficient and Effective. What it means and what difference it makes.
The easy way to explain is like they say ‘Efficient is to do it right and Effective is to do the right thing’.
Example: let’s say one morning you had to pay number of bills totaling £5k and you checked your bank account and it only had £1k balance. So you are confused about the low bank balance and you very ‘efficiently’ produced the Profit & Loss statement. It was an accurate P&L statement and you spent a little time to produce it. It told you how much you sold during the period and what expenses you incurred and that you made profit of £20k. So you are even more confused now, the P&L statement did not answer the problem of low bank balance as you are now expecting £20k in the bank but it only has £1k.
So while the activity of preparing P&L statement was efficient, it was not effective as it did not answer the problem of the low bank balance.
If you produce an Aged Debtor’s report you will quickly see that some clients have not paid worth £24k invoices and you can chase them to get paid and improve your bank balance.
This was just a simple example. The issues could be more complicated for which having an expert to look at things means you can run your business more efficiently and effectively.
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