How can accounting grow your small business?
The accountant is a key player in any business – after all, bad money management often equates to why businesses will fail in their first three to five years.
Unfortunately, the accounting department, including Accounts Payable and Accounts Receiving, is one of the most singularly complex branches of any business, as well. Rife with complicated and interdependent processes, as well as various stages of involvement and approval from other departments and managers, it’s easy to see how accounting can be bogged down.
This issue should ALWAYS be addressed – remember, your financial department is what helps you get the money your business deserves for the hard work and quality service or product provided!
Why hinder them by arguing about “cost v. value” on the new project they want to engage in to improve their department?
Efficiency. We all want it in the workplace. And there’s no area where efficiency is more important than in accounting. Here are suggestions for making the accounting function at your organization more efficient without spending a bucketful of money.
In any company, the accounting department will always have a huge responsibility in managing business finances: incoming and outgoing cash, financial statements, all managed by the department. When your accountants are slow at work, there will be consequences that could result in losses to your company. As a business owner, it’s so important for you to encourage your staff to be able to work more efficiently. Check out these useful tips.
Train your staff.
The first step to take is to ensure that the people in charge of your accounts are proficient. They must be able to adapt to both financial procedures and any accounting software that have been used by your company. Therefore, it is highly recommended that you conduct training to optimize your finance team performance.
There are different types of training you can provide, such as in-house seminars, external conferences, one-on-one training, and more. Cross-training is also needed to cover up the gaps in your accounting department, especially when an accountant is sick, on vacation, or leaves without notice. When this situation happens, another employee who has been cross-trained can step in to handle the financial tasks temporarily.
Establish effective policies.
Indiscipline in financial management is one of the biggest money wasters for companies. Thus, it is essential for your company to create policies and deadlines regarding any payment. Ask your finance staff to process all the payments, including salaries and contracts in a timely manner.
You also need to pay attention to your customer payments. Ask your staff to send reminders to your customers or clients before their invoices become past due. By complying with established policies, your finance staff will be able to manage your business cash flow easily and submit complete financial statements each month.
Improve collaboration between departments.
Your finance and accounting department can’t run on their own, and they often rely on other departments for their financial data. Requesting data from each department manually is very time-consuming. To improve efficiency, we recommend that you allow all departments in your company to use a shared system. A Cloud-based ERP software can help your company integrate all the departments, thus allowing your finance department to get complete data from each department in a matter of seconds.
Use batch payment processing.
Processing every single invoice or receipt that comes one at a time is very inefficient. To save time and effort, make sure your finance staff consolidate all the invoices and process them simultaneously. Therefore, ask all your staff to submit their invoices or claims for reimbursement at a designed time so that the finance staff can process it all at the same time.
Automate manual processes.
In this technological era, manual accounting which takes a long time, should have been abandoned. In order for your finance department to be able to work more efficiently, provide an accounting system that serves to automate their complex tasks. The system allows your finance staff to generate reports, calculate profits and losses, create invoices, record and save transaction details, manage taxes and many more in just a few clicks. By automating a lot of manual work, your finance staff can focus more on other important jobs.
Communicate well with your team.
Communicating the expectations of your accounting department from the outset will give your finance team clarity on what they should do. Explain the policies and procedures your company has established upfront so that they will always comply with them. Be open to their helpful advice and opinions, especially if they are truly experts in finance.
Upskill your finance team.
Ensuring the people in charge of your accounts are proficient is very crucial. They have to be able to keep up with both internal procedures and any accounting software that has been implemented by your company. Therefore, conducting training to optimize your finance team performance is highly recommended.
There are various types of training you can provide, such as in-house seminars, external conferences or one-on-one training. Cross-training will be very helpful to enable another employee to temporarily handle the financial tasks while your accountant is on leave.
Ensure compliance with policies and procedures.
Indiscipline in the financial department is one of the biggest money wasters for companies. Thus, it is very important for your company to create policies and procedures to ensure financial operations are conducted in accordance with your company’s regulations and standards. Ask your finance staff to process all the payments, including salaries and contracts in a timely manner.
Pay attention to your accounts receivable. Ask your staff to send reminders to your customers or clients before their invoices become past due. It will be easier for your staff to manage your business cash flow and ensure the accuracy of the financial reports at all times.
Integrate your accounting department with other departments.
Your finance and accounting department doesn’t work in isolation, and they often rely on other departments for their financial data. Requesting data from each department manually is a tedious task. To improve efficiency, we recommend that you allow all departments in your company to use a shared system. A Cloud-based ERP software can help your company integrate all the departments, thus allowing your finance department to get complete data from each department in a matter of seconds.
Take advantage of batch processing.
Processing every single invoice or receipt that comes one at a time is very inefficient. To save time and effort, make sure your finance staff combine all the invoices and process them simultaneously. Therefore, it’s best to ask all your staff to submit their invoices or claims for reimbursement at a designed time so that the finance staff can process it all at the same time.
Reduce manual processes.
Manual processes are consuming a lot of time and energy. In order for your finance department to be able to work more efficiently, provide an accounting system that serves to automate all the complex tasks. The system allows your finance staff to generate reports, calculate profits and losses, create invoices, record and save transaction details, manage taxes and many more in just a few clicks. By automating a lot of manual work, your finance staff can focus more on other important jobs.
Improve team communication
Communicating the expectations of your accounting department upfront will give your finance team clarity on what they should do. Explain the established policies and procedures so that they will always comply with them. Listen to their advice and opinions, as they may have some good ideas for eliminating unnecessary work, getting activities completed faster and finding new ways of collaborating with other teams.
Put cutoff policies in place.
Create policies for the monthly cutoff of invoicing and recording expenses — and adhere to them. For example, require all invoices to be submitted to the accounting department by the end of each month. Too many adjustments — or waiting for different employees or departments to turn in invoices and expense reports — waste time and can delay the production of financial statements. Moreover, making late adjustments can impair any financial analysis that’s underway.
Keep it timely.
You may be able to save considerable time at the end of the year by reconciling your bank accounts shortly after the end of each month. It’s a lot easier to correct errors when you catch them early. Also, reconcile accounts payable and accounts receivable data to your statements of financial position.
Design a coding cover sheet.
An accounting clerk or bookkeeper needs a variety of information to enter vendor bills and donor gifts into your accounting system. Speed up the process by collecting all of that information on one page. A coding cover sheet should list your organization’s general ledger account numbers so that the employee entering data doesn’t have to look them up each time.
The cover sheet also should indicate if the invoice is to be paid by check, electronic transfer or credit card, and provide a place for the appropriate person to approve the invoice for payment. Use multiple-choice boxes to indicate to which cost centre the amounts should be allocated. The invoice or copy of the donor’s check can be attached to the cover sheet for reference.
Batch items to process.
Don’t enter only one invoice or cut only one check at a time. Set aside a block of time to do the job when you have multiple items to process. Some organizations process payments only once or twice a month. If you make your schedule available to everyone, fewer “emergency” checks and deposits will surface.
Insist on oversight.
Make sure that the individual or group that’s responsible for financial oversight (for instance, your CFO, treasurer or finance committee) reviews monthly bank statements, financial statements and accounting entries for obvious errors or unexpected amounts—the value of such reviews increases when they’re performed right after each monthly reporting period ends.
Resist crunching numbers outside of your accounting software.
Many organizations underuse the accounting software package they’ve purchased because they haven’t invested enough time to learn its full functionality. If needed, hire a trainer to review the software’s basic functions with staff and teach time-saving tricks and shortcuts.
Become more efficient by avoiding any calculations or financial report presentations in Excel® or other spreadsheet programs. Stick with your accounting software and print reports directly from it. This also will reduce input errors.
Consider performing standard journal entries and payroll allocations automatically within your accounting software. Many systems have the ability to recall transactions and can automate, for example, payroll allocations to various programs or vacation accrual reports. But review any estimates against actual figures periodically, and always adjust to the actual amount before closing your books at year-end.
Review your accounting system processes.
Accounting systems can become inefficient over time if they aren’t monitored. Look for labour-intensive steps that could be automated or steps that don’t add value and could be eliminated. Often, for example, steps are duplicated by two different employees or the process is slowed down by “handing off” part of a project.
Share your accounting function.
If a few nonprofits in your area are willing to outsource their accounting function to your organization, you could share a CFO and support staff. You’d likely be able to improve the efficiency and effectiveness of your accounting function at a cost you could afford. Standard background checks would apply and carefully document your role in the vetting of the CFO and support staff.
As you review your accounting function for ways to improve efficiency, ask outside sources for their opinion. Your auditors, volunteer treasurer, banker and other financial experts can provide ideas for streamlining processes. Give us a call, and we’re here to help!
Create deadline/cutoff policies, and adhere to them strictly.
Waiting on employees is one of the single largest time wasters for an accounting department, especially considering that most accounting teams have strict guidelines in place for the rest of the business to follow regarding submitting invoices and adjustments.
Once these policies are in place, start considering whether they are working or not and whether they could work better.
Make frequent announcements if it is a chronic issue throughout the organization, or go to executive management about repeat offenders in specific departments, before this becomes a problem that management has with accounting for “not hitting their deadlines”.
Batch processing saves time… and lives.
Don’t process every check request or invoice or reimbursement request as it comes in. Decide on a certain time of the month, typically two or three specific dates, that you will process these.
Make sure to give these dates to anyone who might request a check from you – having this knowledge as available as possible to the rest of the company prevents as many “emergency” checks and reimbursements.
You have a complex and highly functional accounting program – use it!
Ok, so maybe you don’t have the top of the line “basically does it for you” program in place, but chances are you have some electronic bookkeeping in place at your organization.
Resist the urge, however strong it may be, to crunch numbers outside of this system. Even if it seems like to get the system to do what you want would take months, look into getting a trainer for the software to instruct on how to do it, or on outsourcing somebody to program the functionality. It will save you literally days and hours in the long run.
Review the functionality that your accounting system provided, or promised to provide, during the initial purchasing phase – has it delivered? Talk to your representative and figure out how to make that the case.
Conduct process walk-throughs
As an accounting manager, or even an account payable clerk (for example), you may have the ability to view the process internally and see what the perfect world will look like if everyone just followed the rules.
From the other departments of your organization, however, it can often seem like these steps are a waste of time, or that they are unnecessary to the overall process.
The real issue? It’s entirely possible they could be right!
The process left without maintenance often evolves into strange workflows of great ideas with terrible execution. Walkthrough the process itself from start to finish, as though you were a customer or other department member, at least annually.
An Annual Process Review can provide great insight into the weak points of a business or department, especially if you invite a process expert or consultant to participate who can view things objectively through the lens of process improvement through the company as a whole.
Stop wasting time on tasks that a computer can do.
There are a lot of things about accounting that require real ingenuity and decision making.
Realistically, however, there are also parts of an accounting department that computers are VERY good at. After all, we did stop using the abacus in favour of the calculator.
With the right software solution, an accounting department can allow their computers to not only automate mundane processes like routing or decision-based form control but remove paper forms from the purchase request or invoicing process entirely with electronic forms and document management.
That might sound complicated – it’s not. Think of your current process in a perfect world, and then try to visualize the parts that a computer might do for you. A computer has a very easy time enforcing rules with zero exception so that mistakes won’t be made on the approval process, and who should be making what decisions.
Likewise, double-entry ceases to be a concern when systems are linked together through the document management system – simple no-coding integration with existing accounting department software should be a standard feature.
CPAs can use a multitude of ideas to streamline and energize the financial operations of the typical corporate accounting department. Although such modifications can improve financial reporting and realize savings in staff costs, a lot of companies say they are too busy or don’t have the time to change. To overcome such resistance, Waugaman suggests, “Pick one or two items that can make the biggest difference in operations and make them priorities.” Other ideas can be implemented later when attitudes change. The alternative is to support the status quo, have disgruntled employees and publish outdated financial statements.