Ever think of your accounting department as being quick, savvy, and fast? No? You’re not alone.
Seriously– I can’t think of a bunch of more slow-moving meticulous, analytical people in the universe. (And I’m one of them, by the way.)
If there is one complaint we hear from owners is that they never get information from their accounting staffs timely.
They are frustrated because everyone in accounting is SO busy but a simple request takes F-O-R-E-V-E-R. There is no velocity in the accounting department.
In all fairness to the accounting departments we are describing, they do have a tough job. Think about it– everything flows to your financials. Accounting is often the central processing center for everything– estimates, purchase orders, invoicing customers and paying vendors, not to mention producing the financial statements. They need information from practically everyone to get their jobs done. The shear volume of work can be overwhelming but what is worse is when they require lots of follow ups to get their job done.
Here are a few ways you can increase your accounting department velocity:
Empower your accounting people: Give them authority to push back on the other departments. For example if you haven’t received proper authorization and sign-off on bills according to your policy, empower your accounting department not to pay them, and have the manager respond to the vendor. If timesheets aren’t in properly due to manager neglect, pay what they submitted and have them respond to the disgruntled employee. As the owner it is imperative that you back up your accounting department in these areas of compliance. Soon you’ll find the time the accounting department wastes with constant follow ups and corrections will go down significantly while other department’s compliance to agreed-upon policies will go up.
Define “materiality”: Your classic accounting person is going to try to tie everything out to the last penny. They are going to want to reconciled to perfection, and they’ll go back 2-3 times with a customer on a short-pay of $20-$30 dollars. Provide guidelines to the accounting department of what is considered “material” and what is not. What is not gets written off and those that are material get resolved. Period.
Review their processes: You might find that many of the current processes are grounded in the theory “that’s the way we’ve always done it,” or “that’s the way I was taught.” Those are no longer acceptable. Question every process and the business reason behind it. You’ll be surprised how much gets eliminated or streamlined if you start asking simple questions.
Make sure you have the right people in the right seats. Using the Jim Collins analogy from his book, “Good to Great” you need to make sure you have the right people in the right seats on your bus (your business.) The staff that handled your books at $500K is not the staff that is likely to be able to manage the complexity of your books at $5MM. Consider looking at the skills in your accounting department and bring in a competent CFO or Controller to help manage and oversee things.
Bottlenecks in the accounting department can definitely slow down the velocity of the information you receive from your team. Give them a break and some help by looking at them as you would any other department. Don’t get persuaded by them that there is no other way they can get information to you faster and more accurately. In our experience there are always ways. If you aren’t an accounting expert, bring in an outside firm (like ours) for a look and to give you suggestions on how you can streamline your accounting operations and increase the velocity of your accounting department.