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15-Oct-2020 By - team

Can you be more efficient at accounting?

In any company, the accounting department will always have a huge responsibility in managing business finances: incoming and outgoing cash, financial statements, all managed by the department. When your accountants are slow at work, there will be consequences that could result in losses to your company. As a business owner, it’s so important for you to encourage your staff to be able to work more efficiently. Check out these useful tips.

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Tips how to make your Accounting Efficient

Here’s a list of things your accountant should do to help you grow your business. Check out these useful tips.

Business plan

Your accountant should spend time with you to prepare a flexible business plan that sets key goals and courses of action for future profit growth. He or she should be proactive in helping you find opportunities to improve key areas in your business. Your accountant is responsible for managing your cash flow, maximising your profits and helping solve any business issues that you may have through honest and practical advice.

Your accountant should help make your business recession-proof, safe from the pressures on prices, high inflation and low-interest rates. He or she should produce regular forecasts to make sure you avoid financial difficulties and that your plans are fully funded all the time.

A business has many moving parts, and it could be difficult to know where to focus. Your accountant should help you determine what’s important, set personal, professional and financial goals and give you tools to track your progress. Your accountant should also help you set up your accounting software so you can check your KPIs anytime, anywhere. He or she should be able to troubleshoot issues, test solutions and reset KPIs for you as needed.

Cash flow management

Even profitable businesses fail because they run out of cash at the wrong time and can’t pay suppliers or staff. Businesses can’t last long no matter how profitable if payments are slow or expenditure is too high. Your accountant should know that revenue and costs come and go. They should help you forecast your cash flow and come up with strategies to manage it by organising cash reserves and a spending plan to make sure there’s always money in the bank. You’ll develop an easier relationship with your suppliers and staff.

Cost reduction strategy

Your accountant should analyse all your operating expenses and determine which ones are high based on industry benchmarks. Saving dollars by analysing your operating costs will directly translate to more profit for you. Your costs have a huge impact on your profitability so you should not neglect to keep a close eye on them.

Your accountant should implement an effective cost reduction strategy based on benchmarking intelligence. He or she should help you improve the management of your contracts, reduce overheads and waste and boost productivity across your organisation. Your accountant should find out how you can utilise your labour more efficiently. If you can save on wages and labour costs such as superannuation and work cover, your profit will grow. He or she should also calculate the return rate for your marketing and advertising spend to see if it generates enough sales and profit for the business. Your accountant should think about storage, utilities, and staff cost strategically to identify unnecessary costs in your business. Your accountant should find out if you can negotiate a better deal with your suppliers.

You need a detailed budget but creating one consumes a lot of time and energy. Don’t work off a vague set of numbers that are full of rough estimates and assumptions. Your accountant should be able to produce an accurate, rigorous budget that you can be confident of. He or she should show you the real cost of doing your business, how much you can reinvest and what you can pay yourself.

If your budget blows out, your profits dwindle away. Your accountant should have a deep understanding of your business and market position to help you set achievable and reliable revenue and budget targets. He or she should be able to identify your costs, implement and monitor a realistic budget that’s aligned with your goals and forecast your sales.

Create deadline/cutoff policies, and adhere to them strictly.

Waiting on employees is one of the single largest time wasters for an accounting department, especially considering that most accounting teams have strict guidelines in place for the rest of the business to follow regarding submitting invoices and adjustments.

Once these policies are in place, start considering whether they are working or not and whether they could work better.

Make frequent announcements if it is a chronic issue throughout the organisation, or go to executive management about repeat offenders in specific departments, before this becomes a problem that management has with accounting for “not hitting their deadlines”.

Debt collection system

Your accountant should develop an effective debt collection system for you to make sure that your business does not suffer losses because of bad debts. Bad debts eat away profits so your accountant should fix and improve your debt collection policies and implement better terms of trade to maximise your profits and improve your cash flow.

You don’t need to chase your debtors, but unpaid invoices are inherent in the business, and you can’t just ignore the problem. Your accountant should take care of that for you. He or she should set up invoice systems that send automatic reminders to your customers when bills are due or overdue. He or she can even call them if they do not respond to emails. If invoices still remain unpaid, your accountant may arrange for debt financing where a business will pay for these invoices and chase the payment themselves.Financial Charts And Graphs

Loan management

It’s not easy to apply for a loan as it involves art and science. Your accountant should be able to pull together your numbers and help you pitch loan applications. Lenders want solid financials, and credible forecasts and your accountant should create a compelling presentation with graphs and charts to sell your business. He or she should be able to use powerful tools that loan officers trust.

 

Your accountant should also help you tell a good debt from bad debt and find the least expensive borrowing strategies with low interest and repayment flexibility for your business. He or she should take care of refinancing as well. Your accountant should look at finance restructuring and help you save interest on your loans should there be cheaper options. You can boost your profit if you refinance an existing business debt and save interest. He or she will advise you when your spare cash should be used to pay loans or be reinvested in your business by considering the figures, looking at how your debt is structured and developing the right strategy for you.

 

Launching a new business can be exciting as well, but it takes more than just a good idea. You need to know and convince investors and lenders that it can make money. Your accountant should help test the idea, identify all startup and operating costs and produce credible sales forecasts. He or she should know which lenders are most suitable so you can approach them for finance. He or she should be able to work on your pitch so you can impress the lenders.

Automation

Your accountant should automate your business accounting, so sales and expense data can flow directly to your accounts. He or she should set up the invoicing systems that tell you what has been paid and what hasn’t. A good cloud accounting software can even send reminder emails to those who haven’t paid you.

Your accountant should help you automate cash flow dashboards, KPI tracking and accounts payable and set up mobile accounting apps to let you manage your finances anytime, anywhere. This will allow you to check your business performance, know where you stand and make sure you’re on top of your expenses even when on the road.

Your accountant should also set up an inventory system, identify the cost of holding inventory and develop strategies to save you money. He or she should help you avoid spending a lot on storage, losing money writing off damaged or obsolete goods or losing revenue because you run out of stock. Your accountant should help you manage your inventory properly, check your sales data to predict stock needs and even set up an automated tracking of stock levels and ordering of items as they run low.

Your accountant should help take away other unnecessary distractions by automating things such as staff scheduling and time recording, POS, payments, customer relationship management, payroll and invoicing. This practice can take away the stress, lower costs and ensure everything runs smoothly

Engage with your team

Be visible and converse with your team, walk the floor and talk with your team. Too often, it is easy to be locked away in an office with the door closed. Have relevant conversations with your team members and manage them by walking around, not waiting for them to come to you.

Batch processing saves time… and lives.

Don’t process every check request or invoice or reimbursement request as it comes in. Decide on a certain time of the month, typically two or three specific dates, that you will process these.

Make sure to give these dates to anyone who might request a check from you – having this knowledge as available as possible to the rest of the company prevents as many “emergency” checks and reimbursements.

Weekly job targets

Have targets visible – for example, write weekly targets on a whiteboard visible for all team members at all times. Each day, address with team members what you need to do in order to get these jobs out the door. Most accounting firms finish 80% of a job and then take an age to get it out the door.

Conduct process walk-throughs

As an accounting manager, or even an account payable clerk (for example), you may have the ability to view the process internally and see what the perfect world will look like if everyone just followed the rules.

From the other departments of your organisation, however, it can often seem like these steps are a waste of time, or that they are unnecessary to the overall process.

The real issue? It’s entirely possible they could be right!

The process left without maintenance often evolves into strange workflows of great ideas with terrible execution. Walkthrough the process itself from start to finish, as though you were a customer or other department member, at least annually.

An Annual Process Review can provide great insight into the weak points of a business or department, especially if you invite a process expert or consultant to participate who can view things objectively through the lens of process improvement through the company as a whole.

You have a complex and highly functional accounting program – use it!

Ok, so maybe you don’t have the top of the line “basically does it for you” program in place, but chances are you have some kind of electronic bookkeeping in place at your organisation.

Resist the urge, however strong it may be, to crunch numbers outside of this system. Even if it seems like to get the system to do what you want would take months, look into getting a trainer for the software to instruct on how to do it, or on outsourcing somebody to program the functionality. It will save you literally days and hours in the long run.

Review the functionality that your accounting system provided, or promised to provide, during the initial purchasing phase – has it delivered? Talk to your representative and figure out how to make that the case.

Stop wasting time on tasks that a computer can do.

There are a lot of things about accounting that require real ingenuity and decision making.

Realistically, however, there are also parts of an accounting department that computers are VERY good at. After all, we did stop using the abacus in favour of the calculator.

With the right software solution, an accounting department can allow their computers to not only automate mundane processes like routing or decision-based form control but remove paper forms from the purchase request or invoicing process entirely with electronic forms and document management.

That might sound complicated – it’s really not. Think of your current process in a perfect world, and then try to visualise the parts that a computer might do for you. A computer has a very easy time enforcing rules with zero exception so that mistakes won’t be made on the approval process, and who should be making what decisions.

Likewise, double-entry ceases to be a concern when systems are linked together through the document management system – simple no-coding integration with existing accounting department software should be a standard feature.

Customer and revenue analysis

Your accountant should help you identify which customers are most valuable to your business by looking at your complete customer database and analysing the profitability of each customer. You might be surprised to know that the ones who give you the least headaches may be the ones who give you the most margin and profit – so don’t ignore them.

Product/service and price analysis

Your accountant should review any underperforming product or service lines in your business. He or she should review margin levels and find out which ones should be eliminated because they are poorly contributing to your bottom line.

Your accountant should review your pricing, determine if your prices are in tune with market expectations and maximise your current price levels. If a price increase is due, it might just significantly boost your profit.

Setting price points is critical to the success of your business. If your price is too high or too low, you’ll be out of the game. Your accountant should help you set competitive price points based on benchmarking intelligence while keeping enough meat in your bottom line.

Tax planning

Your accountant should offer proactive tax planning to save money off annual tax bills. You would need that money to reinvest into the business and achieve the income you want. Your accountant should use strategies to identify the most tax-efficient structures for your business.

Major global and local trends are shaping the accounting industry, and these are already transforming the way accountants work. These megatrends create opportunities to improve productivity for the sector significantly. A key challenge for accounting firms and finance functions will be to identify their future value proposition and transform, so they remain valued by business, government and the community.

Whilst technical skills will remain important, and there will be an increased focus on higher-value work to provide greater critical insight and strong relationship building. Dealing with the uncertainty of the future requires a unique mindset. Organisations will need to seek and retain employees who can demonstrate strategic thinking, business acumen and leadership capabilities and contribute to a diverse and inclusive workplace.

Fundamental changes are likely to be needed to many operating models to embrace the opportunities of new technologies and maximise the outputs and efficiencies of highly skilled employees. Regulatory settings need to enable organisations to operate most efficiently. And education institutions will need to prepare the future workforce for the new ways of working. Productivity increases in the accounting sector can also have a positive effect on other sectors of the economy, multiplying the impact.

 

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