The United States natural gas reserves are about 39 percent more than originally estimated two years ago. The current report estimated that the United States has a total resource base of 1,836 trillion cubic feet of natural gas. T. Boone Pickens said that the future supply cited in the study is the equivalent of almost 350 billion barrels of oil, “about the same as Saudi Arabia’s oil reserves.”

The Gulf coast remains at the top of the nations list, but the largest increases from the assessment came from shale gas which is located in the Appalachian, Arkoma and Fort Worth basins, among others. The report states that shale gas is growing in importance since it accounts for 33 percent of the reserves.

Many experts agree that the report is good news for the industry and for potential users of natural gas, but that demand must increase for the potential reserves to become actual supply. Natural gas between $5 and $6 tends to be regarded as a break-even range for natural gas producers. Shale becomes uneconomical at a price of less than $5, while prices at more than $7 are preferred for growth. Natural gas was traded at $3.80 per million British thermal units at the time this report was published.

There have definitely been tougher economic times in our country’s history, but the recession we are in now calls for effective leadership. A very important characteristic of managing in hard times is true leadership. A leader’s role changes drastically when business is not booming and there is more down time than usual. Leaders have to make tough, maybe even controversial, decisions. A leader has to be assertive and lead more directly than in good times where delegating responsibilities might be more effective. Mark Cook wrote in the Fort Worth Business Press that leaders have to assert different skills in tough times.

Honesty and Authenticity- communications with employees should show your understanding of the current events and seek input from talented people. Being honest about your concerns and opening communications will help employees see the reality and help them take ownership of the solutions.

Day-to-day Operational Presence- this is not to be confused with micromanagement. This process is more about understanding the impact of the current times at a lower level in order to dissect problems and continue high-level strategy. Top employees will respond to this involvement if it is seen as high-level investigation to make their processes easier and more efficient. These hard times require leadership focus in all facets of the organization.

Optimistic Realism- being either too optimistic or too pessimistic create doubt in employees. Focus on the solutions to the problems and do not dwell in the problems as they appear. Be realistic about performance measures and reward smart solutions and outcomes. Do not give employees a false sense of security or a false sense of insecurity due to business slow downs. You can lose talented employees if they feel uncertainty.

Smart People Decisions- leaders have to make tough personnel decisions in hard times. Be certain changes are made based upon performance and contribution to the company. Develop or better implement performance guidelines to grade your employee group. Hard times are not forgiving to decisions made based on loyalty or politics. Your company cannot afford to keep or hire a liability in this market. You may be able to replace low performers with talented individuals who are currently in an uncertain job or have been laid off due to the current economic climate.

Future Watch- build with the future in mind knowing that the economy will turn around at some point. Can you make key acquisitions now and exploit these when the economy recovers? Use this time to innovate processes, learn new techniques for operations, and look for gaps in your current processes. You can come out on the other side of this economic chasm in much stronger position operationally.

Being a strong leader includes being willing to change current practices. The skills Mark Cook focuses on could help you improve your company for the long term.

Thinking about outsourcing your accounting function?  It’s not a decision to take lightly.

Over the last few years we’ve worked with several clients who outsourced various accounting functions, such as joint interest billing, revenue processing, or accounts payable.  Others have gone a step further and outsourced their entire accounting department, including the controller function.

Some of these arrangements work really well, but some others we’ve seen created huge problems.

If you’re considering outsourcing or trying to evaluate your current arrangement, here are some things you might consider from our experience.

Remember you’re not their only client. You hired the outsourcer in part because they serve lots of companies in your industry.  That means they also serve other companies with the same reporting deadlines that you have. Before you engage an outsourcer, establish a monthly accounting calendar that details all of the reporting deadlines, and make sure they agree to meet those deadlines.  Most importantly, don’t miss your deadlines.  You will have to provide information to the outsourcer throughout the year, and every delay on your end could result in delays by the outsourcer.

Make sure you control the general ledger.  Some companies outsource the responsibility for recording transactions so that every entry is recorded by their outsourcer in an accounting system maintained by the outsourcer.  In those situations, you lose a significant amount of control over the efficiency of the accounting process and your ability to generate financial reports on a timely basis.  And what if they get some entries wrong and they have to be corrected?  Now, you’ve delayed the process even more.  Finally, what happens if you decide the arrangement isn’t working and you want to change service providers or take the accounting in-house?  If you don’t own the software and control the general ledger, you’ve got problems.

Hire a knowledgable and experienced controller. You need someone who lives in and experiences your business everyday to effectively oversee your accounting and financial reporting processes.  You need someone in-house who understands the accounting and tax implications of the operational decisions you make every day and can offer proactive advice.  An outsourcer who thinks about your company on a part-time basis when it’s time to close the books just can’t offer that service.

The decision to outsource has huge impications for your company.  If you’ll invest the time early on to set expectations, you can structure an arrangement that works very effectively.  If we can help, just let us know.