Accounting processes are the core foundation of any business’s financial performance, whether it involves conducting reconciliations, closing books, processing journal entries, managing payroll, and much more. While such processes might not be too resource-intensive or complicated for small businesses, large companies have to deal with various subsidiaries or business units, making accounting processes resource-draining and complex. That said, these businesses continue to strive and work to automate, standardize, and streamline their general accounting processes as much as possible so that work can be done seamlessly.
Nonetheless, accounting mistakes can significantly impact your business’s financial health and ability to grow. In fact, without effective accounting processes and practices, you will end up losing money, suffering tax penalties, and facing fraud. Because of this, businesses, large or small, need to invest time and money into streamlining and optimizing their accounting processes for quicker results. With that in mind, let us look at a few tips that will allow you to manage and optimize your routine accounting processes and procedures more effectively.
Hire an accounting or finance professional
You might be a seasoned business owner, but chances are your knowledge of finance and accounting isn’t comprehensive enough to optimize and streamline your accounting processes. After all, accounting doesn’t only involve paying your taxes and employees on time. It is also about bookkeeping and managing cash flow.
Hence consider hiring an accounting or finance professional as soon as possible. These professionals have the experience and knowledge necessary to manage your business books, especially if you have a lot of money going in and out of your business. Furthermore, they will answer any accounting or finance-related questions you might have. As a business owner, you may not be aware of what is managerial accounting and how it differs from financial accounting. Your accountant will help you understand as this is crucial separate routine processes you need to optimize.
Leverage accounting software
These days, numerous accounting tools and software exist that businesses can utilize to assist their accountants. These software and tools ensure that computation and figures are as accurate and reliable as possible. Similarly, they will allow you to reduce processing time while ensuring that you always remain on top of your business’s financial activities.
That said, there are various types of accounting tools and software ranging from cloud-based accounting tools to on-premise systems. All of these provide your accountant with different functions and features to cater to their accounting needs. However, before going with accounting software, consider researching your options in advance and familiarizing yourself with their advantages and disadvantages. Doing so will allow you to choose software that will better suit your business and its accounting needs.
Standardize your accounting processes and procedures
Without the correct procedures and guidelines, your business’s accounting department will be overwhelmed with heaps of data every day. However, consider standardizing your accounting procedures and processes to guide your accounting staff accordingly to avoid such a thing from happening.
Process standardization plays a vital role in ensuring your accounting workflow’s efficiency. It will provide you the ability to guide your accounting staff and ensure productivity in the process. Similarly, process standardization will provide you with a clear picture of your accounting processes’ weaknesses and strengths and the areas you can improve. That way, you’ll be able to create better accounting strategies and minimize errors.
Focus on document management
As our world quickly evolves and moves toward the digital era, companies are going paperless. Meaning, they can digitize essential files and documents instead of storing piles of paperwork inside their file cabinets or on top of their desks. Furthermore, digitizing allows you to manage your financial records correctly, back them if required, or store them for future usage. Plus, such a thing will provide your accountants the ability to access financial records and documents anywhere and anytime.
With the help of an efficient document management system, you’ll be able to reduce the amount of energy and time your accounting department spends managing paper-based financial documents. Likely, doing so will allow you to leave a transparent and open audit trail. Furthermore, it also reduces the work and preparation required to create financial reports. However, the most significant benefit of a document management system is that it eliminates the risks of misfiling or misplacing receipts and invoices.
Utilize the batch processing method
No matter the size and nature of your business, your accounting and finance department has to deal with receipts and invoices every day. However, processing and filing them one by one will eventually eat up a lot of time and effort in the long haul. Hence, another tip for managing your accounting process more effectively is to utilize the batch processing method.
Such a thing includes consolidating all your receipts and invoices and processing and filing them at a particular time. By employing this method, you will be able to save a lot of effort and time instead of working on every single receipt or invoice that comes your accounting department’s way. Moreover, it will also let you review all your receipt or invoice entries before you add them to your books so that no check and balance errors exist in the future.
Automate your accounting processes
Because of the rise of AI and machine learning, automation programs and software are becoming increasingly popular nowadays. In fact, according to a Journal of Accountancy study, around 80 percent of accounting experts think that AI can increase productivity and provide a competitive edge to your company.
That said, many accounting programs and software offer automation features to reduce the workload put on your accounting department. For instance, you can automate computation by getting rid of manual data entry. Doing so will enable your accounting department to perform more efficiently. Likewise, you can utilize automation to manage sales and taxes, create invoices, and save financial records.
Dealing with your business’s numbers can be a significant challenge. Some business owners might even feel intimated by it. After all, a single error or mistake can make or break your company. However, with the appropriate tools and strategies, you can make the whole accounting process a lot less complicated than it looks. So, whether you hire an accountant, standardize your accounting processes, or utilize automation, now is the right time to focus on your accounting department and ensure that everything runs smoothly and efficiently!