An inefficient accounting process creates a negative domino effect that reduces productivity across different teams within your organization. Inefficiencies might delay the release of payment to suppliers and partners, salaries of your employees, and may cause mistakes in your accounting books. Errors in your books distort your company’s financial situation and might lead your team to make poor decisions. These decisions might reduce the profitability of your business and have a negative impact on performance. When you improve accounting processes¸ it enables you to rectify the mistakes mentioned earlier or completely avoid them.
What causes inefficiencies in your accounting processes?
It helps your team to find ways to improve when you identify the causes of accounting process inefficiencies.
Time-consuming and Monotonous Tasks
Manual data entry and updating of your accounting books is prone to mistakes. An inexperienced employee handling your books might miss corrections they need to make or omit entries that should be included. These are costly and might lead to penalties when it’s time to file taxes. Frequent mistakes need regular corrections. This consumes time and delays financial decisions.
Lack of feedback causes problems for the person updating your accounting books. If they lack experience and skills, they might think the books are error-free and ready for reports and reviews. It’s important to give feedback so they’ll know if they need to correct any mistakes or omissions during initial input and data entry.
Use of Outmoded Tools
Outdated software, cybersecurity measures and encryption, and tools make your accounting processes inefficient. Your financial data might be vulnerable to hackers. The tools you used years ago may no longer deliver the output you need within your deadlines. In such cases, it’s time to upgrade your software, cyber security, and accounting tools.
Poor Delineation of Work
If your accounting team lacks clearly defined roles, they’re likely to make mistakes and miss their deadlines. You might ask for information from the wrong person which delays the financial decisions you need to make. Another situation you might encounter is that two or more people are doing redundant work that one person could accomplish. A clear delineation of roles and responsibilities improves productivity and efficiency. It also solves escalation problems your team might encounter because they know who to approach.
Building silos for your accounting team and processes prevent everyone involved from seeing a unified view of your company’s financial situation. This also delays important decisions, budget allocations, and marketing campaigns’ financial assessments.
Now that you know the potential causes of inefficiencies, you can start identifying ways you can improve accounting processes. These are techniques you can implement to achieve your target improvements.
Keep Your Employees Trained and Ready
Employees that lack proper training and/or certification in accounting and bookkeeping are bound to make frequent mistakes. Update the skills of your accounting staff to ensure that whenever they update your books, they don’t make mistakes. Training allows them to gain the skills they need to do all sorts of accounting and bookkeeping tasks. It enables them to identify errors and/or omissions they need to rectify. If you need them to do more skilled and specific work, enroll them in certificate programs. The more you train and certify your employees, the better they’ll be at the accounting job you assign to them.
You have the option to outsource some of your company’s accounting and bookkeeping tasks. This alternative is a cost-effective choice if you don’t want to hire full-time employees. Outsourced service providers come with pros and cons, that’s why you need to find an ideal partner to get the results you want. Read reviews and get recommendations so that you get good value from the team you hire.
An accounting outsourced partner allows our team to focus on their core skills and profitable projects that benefit your business. They can manage your financial data and update your books. They can correct any mistakes they find and deliver reports you might need to make decisions such as budget allocation and efficient use of resources. An outsourced team can also assist you set up the cloud-based tools you need to access your accounting books at your convenience.
Standardization is the Key
Providing your accounting team with some flexibility to do their tasks empowers and engages them. However, you should create standards they follow whenever they update and manage your accounting books. It enables you to backtrack and find the main causes of a problem that arose in your accounting processes. Standardization also makes it easier for your team to identify mistakes, escalate a problem to the right people, respond appropriately and immediately to a crisis, and accomplish their tasks efficiently. Designate a team leader to implement the standardized processes you created.
Update Your Accounting Tools
One of the most effective ways to improve accounting processes is to upgrade your accounting tools and software. Doing so reduces your reliance on manual data entries, corrections, and updates. The tools you use such as QuickBooks Online, Xero, or others can do most of the heavy lifting for its users. The latest software provides first-rate security and encryption so that your financial data is safe from cyber attacks and hackers. It also allows you to access your books in the cloud. This means you can retrieve the information you need for reports, audits, and generation of income statements at your convenience. You can also invest in project management software. This allows you to monitor the progress of your accounting team and keeps everyone updated about deadlines and required deliverables.
Get feedback from your accounting team. They have first-hand experience with the process you implement. Their input provides you with insights into areas for improvement and possible solutions. They can assist you in creating a cost-effective strategy that improves your accounting processes.Improve accounting processes with the best practices mentioned above. Doing so boosts the efficiency and productivity of your accounting team. Consider Robookkeeper’s outsourced bookkeeping services. Our team has the know-how and experience to update your books and make sure the information in them is error-free.