10 Inefficiencies in Your Accounting Practices (and How to Fix Them)
Accounting is a necessary function for nearly all businesses, but that doesn’t mean your accounting expenses are fixed. In fact, most organizations are spending more time and money than necessary on their accounting practices. So where do these inefficiencies come from? And what can you do to repair them?
Inefficiencies in Your Accounting Practices
These are some of the biggest inefficiencies that are likely lurking in your accounting department:
- Doing everything manually. Last century, it was a practical requirement to do everything in accounting by hand. But these days, if you’re still doing everything manually, you’re doing something wrong; there are abundant automation technologies designed to streamline efforts, reduce the need for human labor, and practically eliminate mistakes in some areas. AP automation, for example, has the power to completely automate some of the most important functions of your accounts payable department. By integrating this type of automation technology, you’ll be able to give your human accountants more time to focus on more important responsibilities, you’ll expedite processing, and you’ll save both time and money.
- Still using paper processes. Similarly, if you’re still using paper processes, you’re probably wasting time and money. Printing, packing, and sending a paper invoice is time consuming and expensive for both the sending and receiving party. These days, almost everything can be done digitally, so it pays to digitize everything you can. Granted, some of the hardware and software necessary to fully digitize your accounting practices is going to cost money as well, but it’s generally worth the investment.
- Using outdated/obsolete software. If you’re still relying on software that was originally developed in 1997, you’re not pushing your productivity to the maximum. Outdated and obsolete pieces of software tend to be slow, buggy, and incredibly inefficient. That doesn’t mean you need to upgrade your accounting software every year, but you should be willing to transition from legacy systems to more powerful contemporaries.
- Not providing education and training on the job. Your accounting department is only as good as the people running it. That’s why it’s important to provide education and training on the job. Having an accounting degree shows that a person is already familiar with the fundamentals of best accounting practices, but it’s still important to acclimate each new hire to your business environment. Better trained, better educated individuals are going to be much more productive and reliable in your business.
- Providing no path to upskilling. Upskilling refers to the process of giving people access to new knowledge and experiences that they can use to grow as professionals and potentially take on new responsibilities. This is important not only for developing your workforce but also improving employee morale. There are several paths to upskilling, such as dedicated training sessions, mentorships, and even cross training. What’s important is that you have at least some paths available to your employees.
- Having overly complicated workflows. Workflows are designed to establish consistency in your business processes. If those workflows are overly complicated or confusing, they’re only going to make employees frustrated. It’s important to develop workflows that are simple, streamlined, and intuitive; otherwise, they won’t have the intended effect.
- Allowing poor communication. Occasional poor communication is a feature of humanity, so you’ll never be able to completely eliminate it from your accounting department. But if poor communication seems more common than good communication, it’s a sign that something’s wrong. Confusion about responsibilities, forgotten advisements, and unresolved conflicts can all cause major disruptions in your department, so make sure you iron out any potential communication issues quickly and proactively.
- Addressing tax law changes ineffectively. Tax law changes can completely disrupt your approach to accounting, so it’s important to have processes in place to address these tax law changes immediately and smoothly. Your business should be able to understand new laws and update processes and individuals without delay.
- Failing to establish a SSOT. A single source of truth (SSOT) is necessary for your accounting department professionals to operate independently with the same set of facts. If you’re currently using many different platforms, it’s time to centralize things.
- Neglecting employee retention. One of the most crucial, yet most overlooked variables for the success of an accounting department is employee retention. Keeping your best employees improves consistency, productivity, and even employee morale. Make sure you keep your best accounting employees satisfied to reduce both immediate and ongoing costs of turnover.
Keeping Your Accounting Department Lean
Efficient, productive accounting departments empower their organizations to achieve higher profitability and sustain momentum for longer. That’s why it’s so important to keep your accounting department as lean as possible.
These aren’t the only inefficiencies that might be hiding in your accounting department, but they should give you a great start in cleaning things up.