Good Accounting Practices Must Be a Top Priority

Office staff doesn’t know enough about our accounting system, or accounting in general. The accounting department says they’re overwhelmed. If anyone in that department is out sick, they get really behind. Space is very limited in accounting, and they’re dealing with a lot of interruptions. We could be doing a better job with the numbers side of the business. Any suggestions?

Thoughts of the day: Pay attention when accounting says they’re overwhelmed, as their performance is essential to a healthy business. Putting accounting in an area where they can’t be easily disturbed is a really good idea. Look for opportunities to involve people from around the company in accounting functions. The more your people understand what makes the numbers work, the more they can help ensure a profitable year.

The more interruptions in accounting, the worse things get. Mistakes get made. People have to go back to the beginning of what they were doing before the interruption and start over. Things get lost. Priorities get interrupted. You don’t want any of that when it comes to managing the financial side of your business.

While it is helpful to have people in accounting interacting with the rest of the company, there’s a time and a place to do that productively. Identify space in the building where the finance department can be set up as a working unit. Having a door to limit access to the finance department can cut down on disruptions and keep out people who don’t belong in there or would be a distraction. Make sure that records are kept locked up, as you don’t want sensitive information leaving the department. Give finance their own printer so that the checks and reports they print remain within the department.

Make sure that accounting is well staffed and well trained. When they have problems staying on top of tasks such as invoicing, collections, managing inventory, reporting and analysis, that can spell big trouble for the company.

Look at seasonal swings in the business where the accounting workload might increase or decrease significantly. Don’t wait until the last minute to hire temporary staff. Line up assistance from an outside agency to help with short bursts of workload. Consider turning to your accounting firm for additional analysis help in peak season. Only hire people whose background checks come back pristine — don’t take risks with your money.

Assign analysis to a top person in the finance department. Ask that person to set up key measure reports that can be easily populated and graphed by staff. Expect weekly, monthly and quarterly reports on the finances of the business. Some of the things you want to look at include: gross profit and net income, amount in accounts receivable and its relationship to invoicing, comparison of accounts receivable to accounts payable, amount of cash on hand, cash flow report, number of overtime hours, and amount invoiced. The list can seem endless. Agreeing on a standard set of items to track and the format in which they are reported with simplifies things for everyone.

Other people in the company can help the accounting department get its job done. Entering data that goes into invoices can be done by sales and operations personnel. They can also make calls to collect outstanding accounts, keep a watch on overtime and help price out materials. Define roles and expectations including turnaround times, so that everyone is on the same page.

Look for people from around the company who gravitate to financial tasks. It makes a lot of sense to recruit internally, especially for such a sensitive area as finance.

Ask the accounting department to set up training programs to teach employees from other departments about what makes the company profitable. The more employees understand their role in driving profitability, the better. Make sure they get reports on how they’re doing so they can measure progress and fix problems.

Looking for a good book?Accounting for The Numberphobic; A Survival Guide For Small Business Owners”, by Dawn Fotopulos.

Share

Leave a Reply

Your email address will not be published. Required fields are marked *