How to Streamline Your Accounting Processes to Improve Your Overall Operations


Accounting is the language of business. Your financial data tells the story of where your organization has been, where it is now, and where it can go in the future. Because accounting is critical for your organization—in both day-to-day functions and in reaching long-term goals and profitability—it’s important to not only do it right, but to do it strategically so that you can make the best decisions with the information that you have.

Your business is like a living, breathing organism. As It grows, changes and evolves, your accounting practices must follow suit. Having stagnant accounting processes is a surefire way to stagnate your entire organization.

Whether your accounting processes need a few small tweaks or a giant overhaul, the starting point for your evaluation is the same: the beginning. By evaluating your processes and understanding the role of change management and digital transformation in your optimization, you can drive your organization toward improved operations and growth.

It’s hard to see the big picture when you’re working in the details. We can help you evaluate your processes and create a plan to improve your operations.

Understanding Key Metrics

Accounting starts with an understanding of your business and industry. A crucial component of that is understanding key metrics that will allow you to make solid business decisions. These fundamental accounting metrics provide detail into your organization’s financial well-being.

Determining What Information to Track

Tracking the right information is key to having accounting records you can use to make informed decisions. You’ll want to capture all transactions that occur in your business (cash and noncash) in the simplest and most efficient manner. Based on your business or industry, you may need to consider tracking your business transactions in more depth.

Below are several considerations:

  • Should I be tracking direct and indirect costs related to manufacturing or construction contracts so I am able to view the profitability?
  • Do I have different departments, product lines, divisions, programs, etc. that I should be tracking so I am able to view the profitability?
  • Do I pay commissions and should I be tracking transactions, such as revenues, by each sales representative to determine the proper calculation for those commissions?
  • Do I work in several states and should I be tracking transactions, such as revenue and payroll, by state for tax return preparation?
  • What sales tax jurisdiction do I need to track for sales tax reporting?
  • Do I need to track certain items such as meals, donations, etc. for tax return preparation?
  • There is a key difference between the numbers that are easy to track and the ones that are meaningful to track.

Oftentimes, organizations rely on information that is easy to access, rather than digging for information that is actually useful. For example, if you’re only tracking sales because those numbers are the easiest to see, you may find yourself missing a big piece of the puzzle. If you have a steady increase in sales, but no cash or profitability, you’d need to see your sales mix to understand that you are selling a lot more low-value, low-margin products.

It’s vital to be intentional in what you’re monitoring and measuring to track your success or anticipate your future success, and sometimes those numbers take more effort to see. It may take redesigning the reporting so that you can see a different output, which then entails also redesigning the input. It can be a time-consuming process, but the value is in the new possibilities and opportunities you can see for your organization.

In this simple example, you can see that by displaying your data by product type rather than by total, it's easy to evaluate where to invest more resources. If you focus on Product B, you’ll keep only $0.20 of every dollar in sales (and that's before any overhead costs). An increase in sales volume in this category would not equate to the largest increase in net income or cash flow. Perhaps it makes more sense to focus sales efforts on Product A or C, where the profit margins are higher. By aligning the details of your data input around your desired reporting output, you can see actionable information to help drive your decision making.

“Our numbers were all over the place. We didn’t know if it was our process, our inventory, our costing, or something else. We couldn’t make any decisions because we didn’t know what was going on. Our underlying business wasn’t changing, but our accounting didn’t follow a process. Now we’re standardized. The numbers mean something. They’re information; they’re not just data. We can look at that information and make strategic decisions about our business.”

Tracking Metrics with Financial Statements

Accurate financial statements are key to effectively running your organization and making smart decisions. Your financial statements can shed light on areas of your business and can help you identify areas for growth and for improvement.

The balance sheet tells you about the resources in your organization. It is measured at a point in time and can tell you things like:

  • How much cash do you have?
  • How much do people owe you?
  • How much do you owe others?
  • How much equity is left in your business after all your liabilities are taken care of?
  • How much of your business is financed by long-term debt versus financed by you or your partners?

The income statement tells you about the profitability of your organization and is measured for a certain period of time, such as a month, quarter or year. It can tell you things like:

  • What was the gross margin for the period?
  • What were your operating expenses for the period?
  • What was the net income for the period?

In addition, if you are tracking your income and expenses by profit centers (e.g. job, department, product line, etc.), you would be able to see measurements by those profit centers. This is especially valuable as it helps determine where you are making money or losing money.

The statement of cash flows tells you about the sources and uses of your cash. In other words, where did it all come from and where did it all go?

You can take your financial statements to the next level by comparing your current performance against historical performance, benchmarking yourself against your industry and peers and projecting your future performance.

The Importance of Digital Transformation in Your Accounting Processes

Tracking Metrics with Operational Analytics

It’s impossible to talk about optimizing accounting processes without talking about technology and automation. Once you have determined the most important metrics to measure, you have to have the ability to access that data. While your financial statements are a great starting point, they are a point-in-time view into your business. By relying on technology and automations for accurate, up-to-date data, you can use available resources to do more with less in your organization. And by eliminating manual processes and data entry, you’ll be freeing up your people to do higher-value work that will have a greater impact on your business.

Many accounting departments stick with what works as to not disturb the status quo. If it’s not broken, why fix it?

The answer is that improving your accounting processes can improve the way your entire business functions. Your accounting department may not even realize that the business has outgrown the value of spreadsheets or your current business management solution. Conversely, the accounting department may know that there is a better way but fear that technology and automation will eliminate the need for positions in their department.

For example, robotic process automation (RPA) can automate tedious processes and eliminate manual data entry. But behind every process is a human being, and the one responsible for those tedious and manual processes may be resistant to change for fear of losing their job. It’s important to note that leveraging technology and automation is not to replace positions, but rather allow your talent to focus on value-added activities. It is not to eliminate staff, but to enhance the roles of your team members.

Enter change management.

  • Read more about how you can leverage technology and automation to improve job satisfaction in your workforce.

Change Management in Accounting Departments

How change management is handled in the accounting department is key to successfully optimizing your processes and seeing improved operations in your organization. Whether you are implementing a new technology or outsourcing accounting roles, preparing your organization for change should be your top priority. Here are four steps you can follow to pave the way for change:

  1. Start from the top. The first way to get everyone enthusiastic about change is for leadership to also be enthusiastic about it. This starts by laying out realistic goals and expectations and sharing the outcomes you hope to achieve.
  2. Foster open communication and transparency. By outlining the outcomes you hope to achieve by implementing new processes, technology, automation or a shift in roles and responsibilities, it fosters an environment of communication. Allow your employees to offer feedback and ask questions, and then be transparent with them about your plan.
  3. Utilize your people in ways that benefit them and the business. If accounts payable once took two people and a new process or automation makes it so it only takes one person, you don’t have to eliminate a position. Find out what skills and traits your employees have and what kind of roles bring them fulfillment, and repurpose them in another area of your organization.
  4. Be patient and consistent. Change doesn’t happen overnight. Be patient with the process and consistent in your steps to move forward.
  5. Get help. Sometimes it’s easier to have guidance from an outsider. From evaluating your processes to creating a plan for change and managing that change in your organization, our advisors can help.

The Importance of Disrupting the Status Quo

If you always do what you’ve always done, you’re only ever going to get what you’ve always gotten—that is, until your system completely breaks and you find yourself in crisis mode. By starting to evaluate your processes now, you can get ahead of the crisis and start to see operations improve throughout your entire organization.

If you’re ready to see the possibilities for your organization, we can help. Inefficient processes or staffing challenges don’t have to stand in the way of your success.

“One of the main things we’ve learned working with Eide Bailly is to be comfortable with outsourcing. We had a resistance to outsourcing—we were worried about having an outsider come in and worried about the time commitment that would be required of us. But business changes and the world changes, and you really need experts in every field. The best way to get experts in every field is to outsource. Eide Bailly came in and put processes in place. They know our business, and we have the peace of mind in knowing our numbers are going to make sense, be consistent, and everything will be done on time.”

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