It might not be obvious your accounting department is a key value driver. But accounting is more than “overhead.” Successful companies use every opportunity to drive value, and your accounting function is full of potential.
What’s the Opportunity?
A fine-tuned accounting department is the backbone of any organization. It gives the company structure and support, provides connections between functions, and enhances flexibility.
Conversely, a dysfunctional accounting department stands in the way of information flow and progress. If your accounting department is delivering late or inaccurate financials, delaying reports, or experiencing excessive expenses or turnover, it needs improvement. In addition, if your accounting department can’t make decisions, collect receivables, or pay bills on time, it’s costing you money.
As with many corporate challenges, it comes down to three areas: people, process, and technology. Here are a few considerations to strengthen your accounting department’s contribution to your company’s value.
People and Skills
There are three skill levels in the accounting department: accounting staff and bookkeeper, controller, and chief financial officer (CFO).
Most companies start with a bookkeeper or accounting staffer who maintains the books, produces a balance sheet, and creates a profit-and-loss statement. They then hire a controller as accounting demands and complexities increase. A CFO is a more strategic addition.
Do you have the right people in the right spots? Does your team have the skills to provide accurate budgeting, forecasting, and cash management? Can they offer the necessary input to take advantage of tax planning and credit opportunities? Review your team’s skills and talents to be sure you’re using them to their fullest potential.
In terms of accounting processes, the goal should be to maximize profit and cash flow. Among processes to consider are cash and risk management, billing and accounts receivable, inventory and purchasing, expense review and approval, and payroll. Financial reporting and analysis should be calibrated so that they meet the needs of not only the executive team but also sales, operations, human resources, and IT.
Your accounting processes should be based on best practices and be efficient, predictable, consistent, accurate, accountable, and timely. In addition, processes must include fraud protection and detection.
You can’t expect the best from any team if you don’t provide the proper tools. Accounting is no exception. If your accounting department is struggling with outdated technology, manual or redundant data entry and reporting capabilities, or too many software systems, you’re not getting the information you need, in the most efficient manner.
Use technology to automate processes in a way that saves time and money, improves consistency and quality, provides accountability, and improves visibility. Consider technology that improves your purchasing and expense approval processing, banking transactions, payroll, bank account and credit card reconciliations, and reporting.
Adding value to your business is everyone’s job. Remember that every dollar your accounting team generates or saves goes straight to your bottom line.
We can help you assess and fine-tune your accounting department’s performance. Contact us today to discuss next steps.