Increasing Efficiency in Your Accounting Operations
Revenue growth and overall transactional volume and complexity often outpace staffing budgets in accounting departments at startups or other high-growth companies. We are all familiar with having too much to do with not enough work-hours. In this article, we will examine tips to help keep financial reporting and accounting operations running smoothly during those busy times.
Eliminate unused reporting
Accountants love repetitive tasks. It’s in our nature. Packages of reports are our work product and the production of a month-end board book or set of financial reports is proof of our value to the organization. That said, financial reporting tends to expand beyond need. Use turnover in management as an opportunity to examine the following questions:
- What does each report accomplish? Is anyone using this specific data?
- Is the level of detail (and ultimately time to produce the detail) really needed?
- Does anyone actually read and rely upon this report?
- Can these sets of reports be simplified and combined?
Eliminating reporting or steps to reporting can return hours to the accounting department every month. As a leader, don’t be afraid to question the need to spend precious resources on creating reports that nobody uses.
Understand the “why” of processes
This tip goes hand in hand with the elimination of unused reporting. Review the daily, weekly, and monthly task lists to determine the purpose of every process of the department. Items designated as “because that’s how we’ve always done it” will become the list to assess and restructure. Once you’ve identified tasks with little or no value, dig deeper and ask the following questions:
- Is this an important process for other departments? Can it be reassigned to the department that actually uses the information?
- Is there a simpler way to obtain this data or skip this step entirely?
- Is there any way at all to automate the process? (See the next tip.)
If the only answer after further evaluation is the dreaded “because that’s how we’ve always done it,” then don’t be afraid to eliminate the process altogether.
Ironically, lack of bandwidth is the primary reason that automation techniques are not explored in the first place. Not only do some automation tools come with a hefty price tag, but there is also a significant time investment upfront to research and deploy solutions.
Here are some suggestions to get started with a low barrier of entry:
- Never manipulate accounting system data in a spreadsheet if your accounting system can do it natively. Most systems have some degree of KPI calculation and custom reporting. Exhaust all native options before export and manipulation in Excel. Which leads to …
- Does your accounting system have native capabilities that you aren’t aware of? Automation enhancements can be hiding in plain sight. The place to start looking is directly in your accounting software platform. Most software has functionality far beyond its everyday use and is usually low-cost or entirely free.
- Begin with searching the help documentation, but also look to online user communities for ideas.
- YouTube has a plethora of how-to videos showcasing capabilities of myriad platforms.
- Ask a consultant with specialty in your system—many firms are willing to answer a simple set of yes/no questions at no charge.
- Is there a software solution available to automate the specific task(s)? Bonus if it integrates with the accounting system. This option requires a larger investment of research time and capital, but usually yields a high return. Due diligence and a thorough cost-benefit analysis of each potential solution are an absolute must. Some automation examples include:
- Electronic customer invoicing portal versus a print-and-mail invoicing process
- Procurement or accounts payable automation platform versus traditional purchase order to accounts payable to check printing process
- Customer relationship management (CRM) integration versus manually managing customer data in the accounting system
- Employee expense management system versus manual entry by accounting team
- Can Excel or other spreadsheet applications provide options for parsing data? If for whatever reason you can’t employ one of the first three options, are there functions or other tools available in a spreadsheet application that automate at least some of the process? YouTube and Google are your best friends when it comes to learning how to do more with spreadsheets. When developing any semi-automated process in a spreadsheet application, be sure to consider the ongoing user. Make the task easy to replicate with as few steps as possible.
Most important of all, do not procrastinate any longer for fear of the front-end time commitment. In nearly every automation case, the leader walks away saying, “I should have done that sooner.”
Consider outsourcing short-term projects, repetitive tasks, or areas with gaps in experience. “Let someone else help” isn’t always the first instinct of accounting leaders but is a great option for getting things done with a limited number of employees on the accounting team. Hourly rates can look intimidating, but it is important to remember that third-party firms have experience and industry knowledge that could allow for a lower total cost than additional headcount.
Again, a thorough cost-benefit analysis and self-evaluation are needed to determine if outsourcing or a managed services model is the right fit for your accounting organization. When making the comparison, consider more than just salary:
- How long does it take to find the right employee?
- How long does it take to get new employees up to speed?
- What is the cost of fringe benefits and do we want to carry the inflation risk?
- What happens if employees go on extended leave?
Store documents electronically
There are real benefits to electronic documents beyond saving a tree and saving physical space. This seems like a simple tip, but don’t underestimate what going paperless can do from an efficiency standpoint. When coupled with cloud storage, the latest optical character recognition (OCR) technologies make it possible to find important information in seconds rather than hours. Sharing of electronic documents is quick and simple and can be very secure as opposed to sharing a physical document, which can be cumbersome and completely insecure.
As organizations experience rapid growth it becomes difficult to focus on mission-critical tasks. Overall volume, complexity, and compliance create exponential growth of the task list of the accounting department. Here are some additional ways to stay lean as things get busier:
- Maintain a uniform and logical chart of accounts across the organization. Make sure that classes and subclasses of Assets, Liabilities, Equity, Revenues, and Expenses are numbered logically using the first digits. Relate capitalized items from the balance sheet to corresponding expense accounts using the last digits. Uniformity greatly simplifies the process for business line expansion and/or system migration.
- Simplify pricing whenever possible, which should result in less labor-intensive billing practices. Your customers will likely thank you too.
- Analysis of results are important, but overanalysis eats up team bandwidth. Strike the right balance when making ad hoc data requests.
- Simplify workflows, but not to the detriment of internal controls. Cut unnecessary approvals considering materiality thresholds to expedite processes.
- Don’t accept all special project requests. Be a team player, but have a full understanding of the time commitment before moving forward on tasks that are not directly relatable to accounting and finance.
- Solicit help from other administrative team members. Administrators have the skill set to assist and the best knowledge to help the accounting team. If there is any pre-accounting analysis needed on items, do not hesitate to ask. Examples include asking that the benefits administrator calculate the expense by department on an insurance billing prior to it being sent to Accounts Payable for processing or asking the marketing team to calculate shared costs among a set of locations before month-end allocations are made.
- Are lead sheets, tracking logs, or other backup documents being kept that pertain to accounting records? In most cases, reporting in your system of record already exists or can be built to replicate these tracking documents.
This article is a selected piece from By the Books: FORVIS' Complete Guide to Small Business Accounting & Finance, which we are excited to release in April 2023. Subscribe to our Small Business list to get future updates and articles and be the first to receive the full guide.