How can accounting grow your small business?
The accountant is an important part of every organization; after all, poor financial management is often the reason for a company’s failure in the first three to five years.
Unfortunately, the accounting department, which includes Accounts Payable and Receivable, is also one of the most complex parts of any company. Accounting is rife with sophisticated and interrelated processes, as well as multiple stages of engagement and permission from other departments and supervisors.
This is an issue that should be handled at all times; remember, your financial department is what helps you get the money your company deserves for all of your hard work and high-quality service or product!
Why put them off working on a new initiative to better their department by debating about “cost vs. value”?
Efficiency. In the workplace, we all desire it. There is no field in which efficiency is more crucial than accounting. Here are some ideas for improving the efficiency of your accounting department without investing a lot of money.
The accounting department in any firm will always have a significant role in handling business finances: incoming and outgoing cash, financial statements, and so on. When your accountants are late with their duties, it can lead to financial losses for your firm. It’s critical for you to urge your employees to work more effectively as a business owner. Take a look at these helpful hints.
Train your staff
The first step is to ensure that those in charge of your accounts are knowledgeable. They should be able to adapt to your company’s financial operations as well as any accounting software. As a result, conducting training to improve the effectiveness of your financial team is highly advised.
You can provide a variety of training options, including in-house seminars, external conferences, one-on-one training, and more.
Cross-training is also necessary to fill up the gaps in your accounting department, particularly when one accountant is unwell, on vacation, or unexpectedly leaves. When this occurs, another person who has been cross-trained can temporarily take up the financial chores.
Create efficient policies
Financial management indiscipline is one of the top money wasters for businesses. As a result, it is critical for your organization to establish payment procedures and deadlines. Request that your finance department process all payments, including salary and contracts, as soon as possible.
You must also keep track of your customers’ payments. Before your customer’s or clients’ invoices become past due, ask your team to send them reminders. Your finance staff will be able to simply manage your firm cash flow and present complete financial statements each month if they follow set standards.
Improve departmental collaboration
Your finance and accounting departments cannot function independently, and they frequently rely on financial data from other departments. Manually requesting data from each department takes a long time.
Allowing all departments in your firm to use a shared system to boost productivity is recommended. A cloud-based ERP software can assist your organization in integrating all departments, allowing your finance department to receive entire data from each department in seconds.
Process payments in batches
It’s inefficient to process every single invoice or receipt that arrives one by one. Make sure your finance department consolidates and processes all invoices at the same time to save time and work. As a result, urge all of your employees to submit their invoices or reimbursement claims at the same time so that the finance department can handle everything at once.
Automate manual tasks
Manual accounting, which takes a long time in this technology age, should have been abandoned. Provide an accounting system that automates your finance department’s complex tasks in order for them to perform more efficiently.
In just a few clicks, your finance department may generate reports, calculate profits and losses, make invoices, record and save transaction information, handle taxes, and much more. Your financial team may focus on other vital tasks by automating a lot of manual work.
When it comes to managing your finances, consider the benefits of professional guidance from an experienced accountant for comprehensive services tailored to your needs.
Communicate well with your team
Your finance staff will have clarity on what they should do if your accounting department’s expectations are communicated from the start. Explain to them the policies and processes that your organization has created so that they will always follow them. Be open to their suggestions and ideas, especially if they are true financial experts.
Upskill your finance team
It is critical to ensure that the employees in charge of your accounts are knowledgeable. They must be able to stay up with internal procedures as well as any accounting software that your organization has deployed. As a result, conducting training to improve the effectiveness of your financial team is highly advised.
You can provide a variety of training options, including in-house seminars, external conferences, and one-on-one training. While your accountant is on leave, cross-training will be quite beneficial in allowing other staff to temporarily perform financial chores.
For those interested in a more nuanced approach to financial planning, consulting with a reputable financial advisor may provide valuable perspectives.
Ensure that policies and procedures are followed
Financial department indiscipline is one of the largest money wasters for businesses. As a result, it’s critical for your business to establish policies and procedures to ensure that financial transactions are carried out in compliance with your company’s norms and standards. Request that your finance department process all payments, including salary and contracts, as soon as possible.
Pay close attention to your receivables. Before your customer’s or clients’ invoices become past due, ask your team to send them reminders. Your employees will have an easier time managing your company’s cash flow and ensuring the accuracy of financial reporting at all times.
Integrate your accounting department with the rest of your organization
Your finance and accounting department does not work in isolation, and they frequently rely on financial data from other departments. Manually requesting data from each department is a time-consuming process.
Allowing all departments in your firm to use a shared system to boost productivity is recommended. A cloud-based ERP software can assist your organization in integrating all departments, allowing your finance department to receive entire data from each department in seconds.
Take advantage of batch processing
It’s inefficient to process every single invoice or receipt that arrives one by one.
To save time and effort, have your finance department aggregate all invoices and process them at the same time. As a result, it’s preferable to urge all of your employees to submit their invoices or reimbursement claims at the same time so that the finance department can handle everything at once.
Reduce manual processes
Manual methods consume a significant amount of time and energy. Provide an accounting system that automates all of the complex operations so that your finance department can perform more efficiently. In just a few clicks, your finance department may generate reports, calculate profits and losses, make invoices, record and save transaction information, handle taxes, and much more. Your financial team may focus on other vital tasks by automating a lot of manual work.
Improve team communication
Your finance staff will have more clarity on what they should do if you communicate your accounting department’s expectations up front. Explain the policies and processes in place so that they will always follow them. Listen to their thoughts and opinions; they may have some good suggestions for reducing superfluous work, completing tasks faster, and cooperating with other teams in novel ways.
Put in place cutoff policies
Establish monthly billing and expense recording deadline policies, and be sure you adhere to them. For instance, make certain that the accounting department has received all of the bills before the end of each and every month. Time is wasted when there are too many changes made, or when waiting for invoices and cost reports from multiple employees or departments, which can lead to delays in the preparation of financial statements. Making modifications at the last minute can be detrimental to any ongoing financial study.
Maintain the punctuality
If you reconcile your bank accounts as soon as possible after the end of each month, you will reduce the amount of time you will need to spend doing it at the end of the year, which will allow you to potentially save a significant amount of time. Errors can be corrected much more quickly and easily if they are discovered early on. It is important to reconcile the data from your payables and receivables with the information in your financial statements.
Create a cover sheet for coding
To be able to input vendor invoices and donor gifts into your accounting system, an accounting clerk or book-keeper will need a variety of different pieces of information. In order to complete the process in a more timely manner, compile all of the information into a single document. The account numbers for your general ledger should be written down on a code cover sheet so that the person who is responsible for entering data does not have to keep looking them up each time.
On the cover page of the invoice, there should also be a spot for the appropriate person to sign off on the invoice before it is paid, regardless of whether the invoice is going to be paid with a check, an electronic transfer, or a credit card. Make use of multiple-choice boxes in order to decide which of the cost centres should be given the funding. For your convenience, you might choose to affix a copy of the invoice or the check the donor wrote to the cover sheet.
Batch items to process
When inserting or cutting checks or invoices, you should only do it one at a time. When you have a lot of knowledge to take in and absorb, set aside some time for it. There are certain businesses that only process payments once or twice a month. If you make your schedule public, there will be fewer checks and deposits that are considered to be “urgent.”
Insist on supervision
It is important to make sure that the person or group in charge of financial oversight (for example, 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 are done immediately after the end of each monthly reporting period.
Avoid doing any number crunching outside of your accounting program
Because they do not spend sufficient time learning how to use their accounting software, many businesses do not benefit to the fullest extent possible from the investment they have made in it. If you feel it is necessary, you should employ a trainer to go over the fundamental aspects of the software with the staff and suggest ideas and shortcuts that will save time.
If you want to save some time, you should avoid using Excel® or any other spreadsheet tool for any computations or presentations of financial reports. You should keep using your accounting programme and printing out reports from it. This will result in fewer errors being made during data entering.
You might want to think about using your accounting software to automate repetitive journal entries and payroll allocations. A great number of systems have the ability to recall transactions and to automate processes such as the distribution of payroll to many programmes or the reporting of vacation accrual. However, you should regularly compare any predictions you may have made to the actual data, and you should always adjust to the real amount before you close your books at the end of the year.
Examine the procedures in your accounting system
Accounting procedures have the potential to lose their usefulness over time if they are not managed correctly. Search for processes that can be automated or that do not offer any value and should be removed from the process. Steps are frequently repeated by two distinct people, which either speeds up the process or causes it to drag out because of the “handing over” of a component of the project.
Your accounting duties ought to be split up
You might be able to share a chief financial officer and other support employees if a couple of the other businesses in your neighbourhood are prepared to outsource some of their accounting work to your company. It is highly likely that you will be able to improve the efficiency and effectiveness of your accounting department with only a minor increase in expenses. Normal background checks would be performed, and the documentation of your job in the CFO’s office and the vetting of support staff would be done correctly.
You should solicit the ideas of various different sources while you are doing an analysis of the accounting function to find ways to increase its efficiency. It’s possible that your auditors, volunteer treasurer, banker, and/or other financial specialists will suggest that you streamline processes.
Create and stick to rigorous deadline/cutoff policies
One of the most time-consuming components of accounting is waiting for personnel, which is especially problematic given that the majority of accounting departments have established specific processes for the rest of the firm to follow when filing bills and making adjustments.
After these guidelines have been implemented, do an analysis of their usefulness and areas in which they could be improved.
Before it becomes a problem that management needs to take responsibility for, make frequent announcements or have conversations with top management about repeat offenders in certain regions if it’s a problem that keeps happening throughout the organisation.
Batch processing helps people save time and lives
Don’t rush to process each and every check, invoice, or request for a refund as soon as they come in. Make a decision on which month you will process these items, and do it at least two or three dates in advance.
Be sure to advise everybody who might need a check from you about these dates; making this information accessible to the rest of the firm reduces the number of “emergency” checks and reimbursements that need to be written.
Use your complicated and very functional accounting program!
Even if you don’t have a top-of-the-line “essentially does it for you” tool, chances are you have some electronic bookkeeping in place at your company.
Resist the impulse to crunch numbers outside of this system, no matter how powerful it is. Even if it appears that getting the system to accomplish what you want will take months, consider hiring a software trainer to show you how to do it or hiring someone to program the capability. In the long term, it will save you literally days and hours.
Examine the capabilities that your accounting system promised during the initial purchase phase and see if it was fulfilled. Speak with your congressman about how to make that case.
Conduct process walk-throughs
As an accounting manager or even an account payable clerk (for example), you may be able to see the process from the inside and imagine what the ideal world would look like if everyone followed the rules.
From the perspective of other departments in your company, these stages may appear to be a waste of time or unimportant to the overall process.
What’s the true issue? It’s totally feasible that they’re correct!
When a process is not maintained, it might result in weird workflows with great concepts but poor implementation. At least once a year, walk through the procedure from beginning to end as if you were a customer or another department member.
An Annual Process Review can give you a lot of insight into a company’s or department’s weak spots, especially if you bring in a process specialist or consultant who can look at things objectively through the lens of process improvement across the board.
Stop wasting time on chores that can be completed by a computer
There are many aspects of accounting that necessitate actual creativity and decision-making.
However, in reality, there are several aspects of an accounting department that computers excel at. We did, after all, abandon the abacus in favor of the calculator.
With the correct software, an accounting department can use electronic forms and document management to not only automate monotonous procedures like routing or decision-based form control, but also to completely eliminate paper forms from the purchase request or invoicing process.
That may appear hard, but it isn’t. Consider your current procedure in an ideal environment, and then try to imagine what a computer could do for you. A computer can easily enforce rules with zero exceptions, ensuring that errors in the approval process and who should be making what judgments are avoided.
Double-entry is eliminated when systems are linked through a document management system; simple no-coding interface with existing accounting department software should be a standard feature.
CPAs can use a range of tactics to help a company’s accounting department improve and optimize its financial processes. Many businesses argue they are too busy or don’t have the time to implement such adjustments, despite the fact that they can improve financial reporting and save labor costs. “Pick one or two areas that can make the biggest difference in operations and make them priorities,” Waugaman advises. As views change, other proposals can be implemented. Supporting the current quo, with disgruntled employees and outdated financial figures, is one option.