How to Optimize Your Accounting Department Efficiency in Small Business

In today’s fast pace competitive business world, every business leader constantly looking for the ways to improve financial and operational efficiency at the organizational and departmental level.

In almost every organization each sector is under pressure to manage expenses in a way to produce maximum output with lesser input, similarly accounting department also have huge responsibility to prepare Financial Statements as per applicable IFRS and IAS which should be accurate, and compliance based. By increasing efficiency of your accounts department, you can better control over transactions recording and manage expenses, utilize in more profitable ways the surplus assets and cash, get chance to diversify by putting investment in different sectors and prepare more reliable and accurate Statement of financial position (balance sheet) and statement of financial performance (income statement) and meet well with stakeholders’ expectations.

Efficiency means “maximum output from the minimum input” and when we talk about a department efficiency which is a backbone of any organization like “Accounting and finance department” then we should consider all three factors:

1. Technical Skills- Financial Intelligence

2. Teamwork- Collaborative work Environment

3. Operational Efficiency- Smart Workflow

Strategies for optimizing your accounting Department Efficiency:

1. Train your Accounting Team-

Your team is your biggest asset, train them well so they feel motivated and perform better so the first step to enhance efficiency of accounting department is to train them well. They should be proficient in using the accounting software and aware from the financial standards, so it saves their time, efforts and produce accurate financial statements in compliance with local laws and international financial reporting standards. 

There are numerous ways to train them depends on your budget e.g., you can provide them access of online courses from Udemy or Coursera or arrange in-house customised training, one-on -one training, shadowing position etc. The cheapest way is career-coaching and on the job, training provide by senior managers such as CFOs/ Accounting Manager to the junior staff. 

2. Smart Accounting Workflow- Automation

Accounting is getting complex day by day not just because of Accounting and tax standards and their frequent updated versions but also the close monitoring of audit and tax authorities and heavy fines on any material mistakes. So, its highly recommended to leave the traditional manual way of recording the transactions as it is a main reason of inaccurate accounting, creative accounting, tax evasion and cause frauds through manipulation. The world is digitalized so save your time and energy also enhance productivity and accuracy by adapting accounting software in-premises or cloud-based. Through automation, your accounting staff able to generate reports on time, create invoices and save records and transactions properly, calculate profits and losses, manage taxes and file tax returns on time without error and achieve efficiency in just a few clicks. 

3. Effective Policies and Procedures-

You cannot micromanage your staff every time and cannot translate company vision and policies to everyone every minute so the policies and procedures should be written so clearly and translated to the team plus should be open and strictly follow by everyone because irregularities causes delay and wastage of resources so better make effective policies and procedures for all the main head accounts such as receipts, payments, debtors, creditors, Inventory, tax filings and other key sections as per your industry and organizational requirement.

4. Bills Payment, invoices, and receipts-

To Save time and efforts and ensure smooth operations, its recommended to do batch invoicing or receipts So establish a policy of consolidating the invoices, receipts and payments and release them simultaneously. You can set designed timeline for each activity, so it eliminates mistakes and ensures stress-free workflow.        

5. Create an Environment of Trust, Collaboration and Open Communication

As an owner or senior accounting manager, you are responsible to create an environment of trust and collaboration so you should develop close psychological association with your team, redirect them, support them, and remain open and transparent in all communications so it will enhance teamwork which ultimately make the department more efficient and boost productivity.

6. Expense Management and improved cashflow

By setting the effective expense management policies and approval controls, its quite easy for the software to determine which expenses need managers approval and which need to get approved automatically so a control place on expenses, would help to manage expenses better, and similarly on invoices and purchases too which save time and controls in place to reduce theft and fraud. 

7. Inter-departmental collaboration and Information flow

Your accounts department efficiency also dependent on the other departments financial data information as well e.g., expenses reimbursements, credit rating checking, recovery from clients etc. The information should timely flow to the accounts department to reflect into the same month accounting records, so it is better to set up an automated system of information flow so recommended to use a cloud-based ERP or a shared system where all the departments require to share the data to accounting department on time. 

Never stop improving

Ensuring and enhancing the departmental and workflow efficiency is a continuous process, never stops improving as there is no end in the race of excellence. To improve efficiency, it is recommended to set up a good governance structure, place effective policies and procedures, setting up clear management processes and consistently tracking key metrics, businesses growth, departmental and organizational excellence. 

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