In all organizations, the accounting department has the greatest responsibilities; managing the incoming and outgoing cash, producing financial statements, and even future predictions on the financial health of the company! If the accounting department were to become less effective, although not overnight, the consequences could be significant including losses for the organization. As a responsible business owner or manager, you need to be able to spot these inefficiencies and remedy them, helping to ensure that your accounting department is running smoothly and efficiently. Let’s take a closer look at some of the most common inefficiencies we’ve spotted over the years and what you can do to turn them around.
Top 5 Inefficiencies in Your Accounting Department and How to Remedy Them
- Software: Examine your current accounting software. Beyond the debits and credits how does your accounting software efficiently allow you to: enter data, export data, or integrate with other programs you maybe using? Does your current software address your industry specific reporting requirements? Most importantly how current is your software – are you running a solution that no longer receives upgrades or perhaps is antiquated in its feature set? These are just a few essential questions you should be asking about your current solution that will help identify where inefficiencies may exist. If your staff doesn’t have access to tools that meet today’s business requirements, it is almost certain that their day-to-day tasks are taking them much longer than necessary compared to a modern system.
- Automation: Many accounting staff are averse to change – “we’ve always done it this way” is often the answer to the “WHY DO YOU?” when asked. However, it is important to recognize that just because history says so, doesn’t mean antiquated process are still serving you well. Consider how you can automate repetitive tasks such as certain data entry. For example, paying the same vendor every month – having to rekey all the same information can be a thing of the past. Recurring payments should be automatically set up, allowing staff to deal with only exceptions for each payment. Shaving minutes off of each recurring payment entry can add up to saving hours within a month. Day end, certain reports, aging calculations and more are also day-to-day tasks that you should be able to automate resulting in more time for your accounting staff to conduct more strategic, meaningful work. The team will be transformed more to advisors than data entry clerks.
- Access to data: How easy is it for your accounting staff to generate a report? A financial statement, an aged trial balance, or even a custom inquiry such as “which inventory items are slow moving and tying up working capital”? The ability to generate simple reports should be just that, simple. You don’t need to know how to write code or Crystal Reports, nor should you have to rely on an expert to generate a new report every time you have a simple question. You need to be able to answer that “I just have a quick question” …well, quickly. Having the ability to conduct fast queries, and to generate reports with meaningful and insightful data makes a huge difference. Information at your fingertips needs to exist in order to maximize efficiency. That will transform your organization from looking at the past to predicting and planning for the future.
- Establish effective policies: Lack of discipline and formal policies in the finance department is one of the biggest money wasters for an organization. Therefor, it is essential for your company to create policies and procedures, especially regarding payments. Policies that require your accounting department to process payments in a timely manner can maximize discounts that vendors may provide for prompt or early payment. Pay attention to your customer payments. AR is one of the areas that shows the greatest inefficiency in most organizations. Friendly reminders before invoices become past due should be treated as “customer care” ensuring that the customer is satisfied with their order/product/service and that they have all the necessary documents and a convenient way to pay the invoice on time. Emailing AR statements that automatically include a copy of the past due invoices, establishing secured credit card payment methods or ACH/EFT are also ways of making your receivable collection more efficient. By complying with established policies, you condition your customers on how to easily pay you as well as enabling your accounting staff to better mange your cash flow.
- Invest in your people: Proficiency = Efficiency. Ensuring that the people in your accounting department are well educated is one of the most important steps in creating a more efficiency. Your staff need the skills in order to adapt to both financial procedures and any accounting software that they’re using. It is common that staff fall into work-arounds when they don’t have a complete understanding of a systems capabilities so regular “refresher” training is essential. Training shouldn’t be limited to just once per year. There are many different types of training available and finding the best delivery method or combination of methods for your team is important. This could be in-house training on company policies and procedures, external seminars with full day training on your software, or online webinars, either live or pre-recorded. Even one-on-one training with a consultant can prove to be very beneficial. Training should not be limited to new staff members but rather extended across all levels of sonority in the accounting department. Cross training is also an excellent way to cover potential gaps when staff are away and will minimize service or process disruption. Make sure there is room in your budget to allow for training in your accounting department and then select the type of training that is best suited for your people.
Identifying inefficiencies and addressing them will not only serve your company best from a financial management perspective, but also for your employees’ mental health and well-being. Creating a comfortable and pleasant work environment also means making sure that your staff are not feeling overwhelmed. When your accounting staff is faced with manual and mundane tasks or feeling undervalued due to lack of room to thrive or grow, you can unknowingly create an unsatisfying work place. When you empower your staff with tools that take away those mundane, time consuming tasks, you give them room to grow and think creatively. Richard Branson said, “Take care of your employees and they will take care of you”. At North49 we are there to help your business investigate the right Sage product for you. From Sage 300 to Sage Intacct, we’ve got the right solution to help your accounting department become a more effective and strategic part of your business.
About North49
North49 is a Sage Authorized Partner and Sage Development Partner. We help our customers to improve, automate, and streamline their processes to become more effective and strategic in managing their business.
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