Is Your Company’s Accounting Process Optimized? How To Tell?
Many positions like the CFO and the accounting sector of a company is a less fun but extremely important aspect of running a business.
It is a necessary evil that must be paid due attention to your organization to run smoothly and on the deficit line’s right side.
Neglecting to ensure proper efficiency management in the accounting department could spell the loss of huge amounts of money for your company; even worse, the loss of the company itself.
Optimization Ideas For Your Company’s Accounting Processes
The importance of proper and prudent accounting processes cannot be overstated, and the accounting department is under pressure to perform this function, so here are a few items to get you started on fully optimizing this process:
1. Performing pre-close activities
The month-end close at many establishments is usually a very busy period with activities like manually inputting, gathering, collating, and analyzing data into the company’s database.
This frenzied process usually involves overtime for accounting and finance professionals. This is because unlimited hours are spent on gruelling activities like routine data collection from separate data sources and analyzing them critically.
This process requires a lot of work and professional experience to be performed correctly. So, most organizations are gradually adjusting to spreading this process throughout the whole month.
Computer automation and advance in cloud technology have now brought about a much better and far less strenuous method of performing this function, the ‘Continuous accounting,’. This enables access to the company financial data in real-time.
Adopting this process can prove to be a gamechanger in how you operate and how your company is run, taking it to the next level.
2. Assigning process ownership and standardizing account processes
Process standardization is essentially the establishing of a certain level of job quality in the accounting department. It involves pointing out what is expected of every accounting and Finance professional working in the company to keep the organization running effectively.
This is a critical driver of performance, usually becoming a prerequisite to well-performed and successful automation. Global process ownership and end to end process management usually goes hand in hand with shared services implementation. These processes have to be handled with the greatest care to ensure proper day to day functioning of the company.
3. Automating and Integrating accounting processes and systems
Automation has become a vital part of the most successful organizations in this era. It reduces staff workload and increasing the efficiency of the accounting department tenfold.
This is because the processes which required an entire department could now be done by one or two persons. It is also a hundred times quicker with far less probability of errors or miscalculation.
Studies show that as Cloud-based tools become more available. More companies are using different commercial ERPs to perform their general accounting.
With all its advantages. It is recommended that the accounting team make an effort to first focus on standardizing, understanding, and streamlining its processes. This can be done as a manual unit. It will be reflected in the final productivity and maximizing the potential returns.
4. Instituting dependable data governance
Every accounting personnel will tell you that the most important thing in their job is correctness, accuracy. Either loss or gain, it is vital to calculate how much is going out and coming in as that is the primary job of an accountant.
Ensuring a clean and consistent data collation process in general accounting is paramount for the company to confidently produce an accurate account statement. This means a well-represented financial transaction report.
Documents like the finance data definitions and the Chart of Accounts need to be correctly implemented to reduce the possibility of errors in journal entry line-item processing and faster annual close.
5. Leverage emerging technologies and tools for general accounting
Several groundbreaking technologies have been released recently. These technologies aid in the smooth process of general accounting with emerging tools like Blockchain, Robotic Process Automation, and cognitive computing.
Blockchain is simply a peer-to-peer distributed ledger architecture that serves as a cost-effective solution for businesses to track and trade products of value without the need for a middleman. RPA, on the other hand, is a server-based automation mechanism that combines process steps with business rules or decision models requiring little to no human oversight.
While cognitive computing is a finance-based technology that involves self-learning computers that utilize data mining and machine learning to replicate and simulate human behavior.
All these tools and more pay for themselves with their input in the increase in efficiency obtained by acquiring them.
6. Streamlining and centralizing general accounting processes
How an organization decides to structure the way it delivers and the processes to support the business model’s requirements, its other departments, and key stakeholders is a vital aspect of financial management strategy.
By combining common or repetitive processes from several business units. Centralizing them into a single location called the shared service centre, shared services are created.
This centralization makes general accounting a much simpler process. It serves as a hub to glue everything together.
Ensuring that your accounting processes are running as efficiently and effectively as possible is a successful organization’s trademark. The ideas proposed on this list are not exhaustive, there are several other ways to help make your accounting professionals‘ lives easier, but these are just some methods to get you started.
Never stop improving on what you have presently, and you will surely excel at whatever you do.