Imagine two companies in the same industry, serving the same markets while offering virtually the same products and services. One company is growing, while the other is struggling. Why?
There are many reasons for success and failure, but in my 23+ year career, I have seen successful companies distinguish themselves through their people, processes, and use of technology.
Accounting departments are no different! Driving profitability and cash flow with your accounting function, starts by analyzing accounting team skillsets; key accounting processes; and the use of technology.
Accounting Team Skillsets
As businesses grow and become more complex, accounting departments must evolve also. Generally, there are three levels of accounting skillsets to consider: 1) bookkeeping and accounting staff, 2) controller, and 3) Chief Financial Officer (CFO). The role and skillset of each must be understood to maximize profit and cash flow.
Bookkeeping and accounting staff enter transactions, maintain the books, and produce a basic balance sheet and profit and loss statement.
Controllers supervise bookkeeping and accounting staff while maintaining a properly functioning accounting department. Controllers are responsible for producing monthly financial reporting packages which include financial statements and basic analysis.
CFOs utilize the monthly financial reporting package along with other financial and operational data to provide advanced financial analyses, cost-saving strategies, and other forward-thinking insight.
The right mix of skillsets on a full-time or fractional basis within your accounting team is essential for maximizing profit and cash flow.
Key Accounting Processes
Maximizing profit and cash flow is also a result of focusing on key accounting processes, such as cash receipts, disbursements, purchasing, and financial reporting. Properly designed processes provide consistency, predictability, accuracy, efficiency, accountability and timeliness while also preventing fraud. The accounting department should continually evaluate and improve its processes to help drive profitability and cash flow.
Use of Technology
Lastly, the use of technology in accounting is important for maximizing profit and cash flow. Technology should be evaluated in terms of its need, use, and potential benefit. The proper use of technology should:
- Save time and money
- Increase efficiency
- Provide accountability
- Allow you to focus on your core functions
Analyzing accounting department skillsets, processes, and use of technology will help you in maximizing profit and cash flow. Today’s accounting department must actively seek ways to improve the bottom line!
Click here to view this article as featured by A2Z Manufacturing Magazine, the Southwest Edition.