The last decade has seen an unparalleled push for greater efficiency. Increased automation across all business sectors has ushered in a focus on “faster” and “cheaper.” And while these are certainly important pursuits amidst rising labor and materials costs, they certainly should not be a company’s only focus. Chasing faster and cheaper almost always comes at the expense of “better,” which is a shame because “better” can actually go a long way in achieving both.
Rework will always take longer than simply doing it right the first time, that is obvious. But what is less apparent is how much rework actually costs. The added in expense of going back and redoing accounting work that could have been completed accurately the first time is steep, both in terms of speed and labor hours and money (when fines or penalties are incurred). Accountants that labor over arduous month, quarter, or year-end close processes for far longer than they should understand this cost better than most.
According to a Gartner survey, “94% of controllers put high energy and resources into closing company books but could curb deadline pressure and the risk of error by revamping the structure, operations and behaviors underlying how their team completes the closing.” In other words, improving their close process could make the process faster, saving labor hours and improving accuracy. Changing their methodology to place a greater emphasis on “better” could subsequently help controllers achieve “faster” and “cheaper.”
Instead of pushing through existing accounting protocols to get them done faster, use these tips to truly improve accounting functions:
Delegate Bookkeeping Tasks
The difference between bookkeeping and accounting can be summarized in the following way: bookkeeping generates data about what an organization has done and is doing and then accounting turns that data into information to help the organization decide what to do next.
Tasking your accountants or your controller with basic bookkeeping tasks is a waste of their potential to add value to the company. Instead of having more senior-level accounting personnel focus on things like AR, AP, payroll, and reimbursements, ensure that these bookkeeping tasks are being delegated to let them focus their efforts on critical functions like obtaining funding, overseeing financing, and managing cash flow.
Focus Efforts on High-Risk Work
Unlike bookkeeping tasks, which should be kept out of an accountant’s purview, accountants should be allowed to allocate a greater proportion of their time on more complicated or nuanced functions to maximize business impact. However, it is important to realize that not all accounting work needs to be done with the same frequency. Hilary Richards, Vice President of Advisory at Gartner explains which areas deserve more time when she says, “A controller can streamline closing by trimming the frequency of ‘low-risk work’ and subjecting steps in the closing process to ‘materiality thresholds’ that remove tasks altogether.”
Like anyone else, accountants and controllers have a finite amount of time to dedicate to the tasks on their plate. Asking them to be responsible for too many functions will result in either missed deadlines or inaccurate work, either of which can have serious consequences. By removing tasks altogether or reducing how often routine tasks need to be completed, higher-level accounting staff can devote more time to the kind of functions where there is a higher fraud risk or greater potential for error to better protect the company.
Other high-risk functions where senior-level accounting staff should focus their efforts include the kind of work that can have serious financial implications if it is done improperly. Federal and state tax filings, for instance, carry significant risk if they are mishandled (either leaving money on the table by not claiming available deductions or putting the organization at risk to be audited by overclaiming deductions). As a result, this is one area where improving processes can significantly pay off because being selected for an audit can chew up considerable time and resources among your accounting staff.
Use Automation for the Right Reasons
There is nothing wrong with using automation. In fact, automation is one of the most effective back office improvements you can make to add business value across your accounting functions. However, like any other tool, it is easy to overlook its potential and think about its benefits too narrowly.
Sure, automation can speed up processes and reduce costs. In fact, these are typically the main reasons companies decide to implement automation technology. However, automation also improves accuracy, reduces business risk, and provides scalability when used as part of a continuous improvement effort. In short, automation allows companies to be better. By reducing reliance on human labor companies can reduce the potential for fraud, errors, and omissions. Any discussion around improving accounting processes should include the utilization of technology, especially automation solutions, to achieve more accurate, timely, and complete financial processes and reporting.
Lean on Outsourced Accounting Solutions
For labor-heavy functions that do not lend themselves well to automation outsourcing them to an accounting services provider is a shrewd way to improve your accounting processes without requiring the investment needed to hire in-house personnel. Fractional accountants can offer the same level of performance your accounting team is capable of providing for as much or as little time as you need them. Whether you utilize a fractional accountant to provide temporary assistance while you revamp your accounting processes or on an ongoing basis to handle overflow work, leaning on an outsourced solution can help balance the workload as you work towards better.
Bringing in an experienced CFO or controller to improve your accounting processes is the best way to affect the kind of positive change that drives an organization forward. If you need CFO consulting services or fractional controller services, please reach out to us. We would be happy to pair your company with financial leadership to suit its unique needs.