Delivering a core function that lies at the heart of the company, the finance and accounts department always has to be efficient, not just for the sake of streamlining business operations, but also for other objectives, such as meeting regulatory standards and building external goodwill. Making errors and creating delays in their work is not an option for this department.
At the same time, companies are also asking this department to invest in technology and cut down on their staff. Businesses these days believe in running lean. So how can the finance department meet these competing demands and still run at peak efficiency? Some best practices are explained below.
Talk to as many members of the team as possible, even the junior-most accountant. You will be surprised at the kind of insights they can give since they are the ones who are involved in the day-to-day processing. They often have some good ideas for eliminating unnecessary work, getting activities completed faster, and finding new ways of collaborating with other teams. Listen to these ideas and if they are good enough, implement them.
Cross-train team members, so that at no point in time are you faced with personnel shortage. It is never a good idea to have all the knowledge housed with a few individuals. It should be shared with the whole team. What would happen if those few individuals were to suddenly leave or fall unwell? There would be a serious knowledge gap. Avoid such situations by conducting regular process training, ensuring back-ups for all roles, and ensuring all essential functions are well documented.
Use cloud computing technology because this not only makes your data safe, but it also allows multiple people from multiple locations to access the data and work on it. Companies can even provide work-from-home facilities if they have all their data stored in the cloud.
Set deadlines and make adhering to them mandatory. Indiscipline and lackadaisical work ethics are two of the biggest time and money wasters for companies. Financial statements have to be submitted on time. Compliance policies and internal controls have to be met. Senior executives depend on financial data to make decisions. Create a work calendar and make sure that all team members meet the deadlines come what may.
Take advantage of batch processing. Do not process every single invoice and every receipt that comes one at a time. Create a system where they can all be gathered and consolidated, and processed in one go. This will save time and effort.
Buy accounting systems that are easy to learn. Many accountants are not necessarily technical geniuses. The last thing you want is to hand them complex financial technology that confuses them. Invest in technology by all means, but invest in a system that is easy to learn and use.
Process metrics enable comparison of activity to previous periods, as well as set a benchmark for the team to work towards. Metrics should be easy to comprehend and access. Some metrics that can be used are accounting ratios, cycle time, number of documents in process, and so on.
In an age of real-time reporting, timely preparation of financial statements enables the pinpointing of areas of concern before they escalate, and capitalizing on opportunities. With accurate financial reports available on a periodic basis, and not just at the end of the financial year, educated decision-making and improved compliance are assured benefits. Planning the preparation of financial statements, allocating work between the team, and setting up a culture of collaboration so that information is available across departments with ease thus become critical.
Related Reading: Importance of Accurate Financial Statements for Business
Reduce manual labor as much as possible and automate tasks that are suited for it. Even a simple macro in Excel can save the department thousands of hours in labor. Once again, junior-level employees often have bright ideas that can save the department much time and effort and the young generation is quite tech-savvy. Encourage them to develop software tools and find ways of speeding up the existing processes.
The accounts and finance department does not function in isolation and they often depend on other divisions for their data. Find ways in which the data can be submitted on time. If there is friction between various departments and the finance team, find ways to solve these issues. Let the finance manager explain concerns to the other managers and let them explain theirs. The company has to ensure that data flows smoothly between the various divisions.
As the role of the finance and accounting department transforms into one that is a think-tank that can have a strategic impact on the business, outsourcing certain non-core functions to a specialist Finance and Accounting outsourcing services provider has its benefits. It improves the productivity of the internal team while ensuring the quality of output is high on accuracy.
The performance of the finance and accounts department has to be constantly monitored, as they have access to essential data that can turn around a business. Whenever you feel that the finance team is lagging in their performance, take action quickly, and make sure that they get back on track again.