The best and worst part of any accounting department is that it can make or break an organization in an instant.
We've put together some research on the most common flaws and mistakes going on in accounting departments today, so that you can remove them from yours or prevent them from happening.
Hire Soon, and Hire the Right People
There is a concept in small businesses, especially, that accounting and "the books" are things that the owner can just do themselves. Unless you are operating in the smallest forms of business, however, business owners will soon realize that they are spending 6-8 hours a day crunching numbers and formatting spreadsheets instead of focusing on running their business.
At this point it becomes important to hire a full-time accounting person. It is always better to hire the "founding mother/father" of your accounting department early on, so that they are invested and a formative part of the company's culture.
Here is where the second flaw (that is often carried through until the business undergoes purposeful scaling) usually crops up. Business owners will want to hire a friend or a family member, but unless that friend or family member is proven capable of separating business and personal relationships, and they are a senior level controller, we recommend against it.
Domestic and company stress mixing is never good, especially with the person helping control your money.
Recording and Reviewing - Catch Errors and Correct Them
Asset and Liability balances, fiscal years – it all gets challenging to try and balance everything for even the most skilled of controllers.
Often the manual entry of expenses and accruals leads to recording errors that, due to a lack of resources (often in the form of employees), is not reviewed properly. This can lead to all sorts of problems like recording financial transactions in the wrong time period, misclassifying expense, etc.
Often the correction can be to utilize the existing software properly, however it's important to remember that the software may not be the problem. Rather, the accounting department may need more help in the form of employees, additional software resources or solutions, or even a complete overhaul of the department's processes and procedures.