Whether we like it or not, the accounting department, controller position, and even the CFO are all parts of the business environment that won't be going anywhere anytime soon.
This is great news for those working in the accounting field. However, many executives can sometimes be at odds with even the people they've personally hired for this position. After all, keeping the money tracked and safeguarded can sometimes slow down mission critical purchases, and poorly designed accounting processes have been the death of more than one business.
Since the accounting team and its functions are certainly here to stay, we've decided to push out a list of tips to at least make the accounting department more efficient, more productive, and more conducive to business-wide success. This is an expansion of our first article on improving efficiency in the accounting department.
1. Be timely with reconciliation.
No, you may not have to do it now, but reconciling accounts payable and accounts receivable to your statements of financial position and your balance sheet will be much easier a little at a time, at the end of each month. The alternative (reconciling at fiscal year end all at once) certainly sounds awful.
2. Put cutoff policies in place and stick to them.
We've mentioned this tip before, but it's important to have a system of rules and cutoffs for submitting invoices, reimbursements, etc. and strictly enforce them. Business rules drive the accounting processes and must be adhered to.
3. Research is not a waste of time, ever.
Sometimes it's hard to justify sitting and reading for an hour or two on the job, but it is absolutely necessary in accounting. Laws and tax forms change, and best practices are constantly being improved on.
4. Pay your taxes. Really.
Nobody likes hearing it, but it needs to be said. Taxes need to be paid on time, early, or by the established schedule per the IRS and state and local laws.This avoids extra fees, penalties, and the potential headache of an audit going awry.
5. Seize opportunity.
This is a major mistake that many accounting departments make. The majority of an accounting department's work is cyclical, recurring, or at the very least, predictable. This forms the mindset of working on an existing path without ever challenging, leading to missed opportunity for improvement and cost reduction in the department (the senselessness of doing something "just because it's always been done that way, and the business runs fine" is evident in this mentality).
6. Align reporting within accounting.
This is such an important step in any size business. Chances are, in the accounting department, you need to produce reports for not only your own department and record keeping, but for individual departments, executives, and for use with filing and tax preparation. A standardized system for reporting and data management becomes crucial to ensure that work is not being duplicated due to formatting requests or software complications.
7. Do accounting in the cloud.
This provides not only the access to information from any location, but a centralized hub of data that can be made available to your department, executives, and other disconnected databases that may rely on manual entry and duplication.
8. Don't treat accounting like it's just compliance.
Accounting is much more than tax compliance; it helps you run your business smoother. Accounting and financial data can directly generate business insights and shape strategic initiatives, such as selecting a marketing strategy that results in the best financial outcome.
9. Don't allow clients to get away with not paying their balances.
This is the bane of receivables. A high number in the receivables column is nice, but you can't buy more materials or invest in new technologies with a promise - so don't let your clients do that to you. Stand firm and refuse future service before clearing prior orders on accounts.
10. Calculate a minimum monthly profit.
This is something businesses will often lose sight of. Annual budgets are expected, and a current statement is typically available - without goals and strong metrics to predict what is JUST about to happen though, it can be hard to tell how well you're actually doing as a company. In the accounting department, it can be helpful to present this information as concluded from your data: "We needed a minimum of $_____ gross margin for the last three months, if we maintain we'll need the same." Being clear with executives about the realism of the goals they are setting is one of the most crucial tasks an accounting department head can perform.
Never stop improving.
This is by no means an exhaustive list. There are countless tweaks and process improvements you can make with your accounting team that can go a long way towards increasing overall efficiency. Start with these 10, and then why not explore the exponential process improvement opportunities that accounting automation makes possible? Schedule a demo with us today for a free accounting process improvement consultation.