As a company grows, so do its accounting needs. No matter the size of the company there are key points that every accounting department has to hit in order to be successful.
A successful accounting department is one that operates as quickly as any other department in the company, but also one that provides decision makers with accurate financial data on their business. More than just record keeping or check writing, a successful accounting department is one that provides the real-time financial information needed to operate in today’s competitive marketplace.
Whether your accounting team is in-house, external, or a blend of the two, these are best practices that separate successful accounting departments from those that want to be successful.
- Get Timely Information
Successful accounting departments gather key financial information in a timely manner. In today’s day and age transactional information can be accessed almost instantaneously and incorporated into the accounting system quickly.
Without up-to-date financial knowledge, budgeting and other financial forecasting actions cannot be relied upon to be accurate. Additionally, out of date financial information can make investing or decision making a risky proposition. It’s one thing to learn that your plans exceed your budget, but another entirely to learn this through a check bouncing on the technology or service you’re investing in.
2. Get Accurate Data
Accurate data gathering is essential for a successful accounting department or anyone who wants to call themselves a competent accountant. Without accurate financial data, you will not be able to create actionable business decisions.
When a company is making strategic decisions based on an inaccurate budget forecast or a faulty cash-flow statement, the consequences can be huge and can hinder company performance (or even reputation) for some time.
3. Process and Procedures
Timely information gathering is the goal for a successful accounting department, but processes and procedures are the tools that will bring this success.
Having clear, appropriate Handling procedures ensures that responsibility for information gathering is clearly defined and divided among the department’s accountants. Having the proper Reconciliation procedures ensures that all information entered into the company’s master ledger or database is accurate. Finally, having the right Review procedures is a failsafe against inaccuracy, ensuring that no moves are made based on the faulty financial information.
4. Systems and Financial Controls
Any rock-solid accounting department takes steps to control the accuracy of their financial data and reporting system. Having a controller or accountant supervisor overseeing accountants as they move financial data through the accounting cycle, helps to account for human error. That being said, the accuracy of a company’s accounting data should never hinge on a particular individual.
People make mistakes, and when the person who is supposed to be the “failsafe” makes a mistake, then this can have disastrous consequences. This is why it’s important to have multiple points of review for a company’s financial data, and why it’s important for controllers and accountants to reach a consensus at various stages of the accounting cycle.
5. Strategic Decision Making and Execution Based on Financial Data
Financial data is essential for budget and tax purposes and is necessary for strategic decision-making and execution. Acquisitions, investments, and other strategic purchases should only be made when based on good financial data, and the consequences can be devastating for companies who do not.
Apart from showing decision makers the resources they can invest towards growing their company, successful accounting departments will analyze company finances for opportunities to reduce costs and free up, even more, resources for growth opportunities. Strategic decisions should always be made with great care, based on both historical and up-to-date financial information. By combining both historical and current data, you can create strong predictors of future performance and trends.