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Five Common Drains on Your Accounting Function

BlogPost3-thumbnail-imageFIVE COMMON DRAINS ON YOUR ACCOUNTING FUNCTION

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  1. Your staff complains that they don’t have enough time to simply process day-to-day accounting transactions.
  2. You are rarely able to access basic reports in your system with real time information.
  3. When you ask for information or reports of any nature it takes days or even weeks to receive it.
  4. Your network drives and employee desktops are clogged with Excel spreadsheets.
  5. The monthly reports are not timely, are not directly generated from the system, and /or provide very limited data.

It is time to get into the 21st century! In years of performing operations reviews I have consistently seen organizations operating like “SALY”- same as last year. Unfortunately, it’s now 15 years later and it’s time to change!

Many of you might argue that you “HAVE “to work outside of the system, and for a select few, I might agree. However, the majority are refusing to move outside of their comfort zone and replace the antiquated accounting process. What causes this?

It’s simple really. Your accounting team has chosen to work outside of the system. What does this mean exactly? You spend months trying to decide on a software package that best suits your business and after the financial investment and training all seems to be working like a champ. Six months after implementation the accounts payable clerk is trying to generate a specific subset of data through a report and cannot figure out how to make the system generate it. Instead of calling support, he exports the data and begins to manipulate it in Excel. This is the beginning of the entire organization shifting to a mindset known as “The system CAN’T do it.” Hence, the new trend becomes to export the data to Excel and utilize Excel as the software.

Believe it or not, this problem spreads with each passing month, ultimately resulting in turnover of low level AND key employees, and is virtually impossible to reverse without external intervention. Eventually, the Company does not pay for software updates or outside support because the accounting team has decided “it’s not worth the money”. The result? Instead of using current, efficient software, the accounting team has now “replaced” the software with Excel and designed new processes and procedures “outside of the system,” not to mention the months of wasted time they spent learning the system in the first place. This leads to:

  • Inefficiency! – There is no time to process day-to-day accounting transactions when you are working outside of they system.
  • Lack of Financial Information – Though much of the transactional data might be in the software, it has not been pulled together because that is how the software is being used. Reporting is being done in Excel so there is no timeliness, visibility or drill down capability, and the nature of the reports are very limited.
  • Every Man for Themselves – Each employee is working with his own silo of information that he has exported, manipulated and saved to his hard drive. There is no consistency in the numbers, and there are hundreds of spreadsheets located on hard drives, networks, and flash drives that are difficult to index.
  • Errors – Excel is not error proof, and so many of these spreadsheets become overly complicated with users that are not overly sophisticated. Links get broken, formulas don’t make sense, and data is not updated as it should be.
  • Stacks and stacks of PAPER – Because processes are not being followed in the system, accountants have this built in need to generate their own audit trail of everything that is being done- files, binders, reports- you name it. It’s NOT necessary- not in today’s digital age.

Solving this problem in your organization should be the highest priority. Unfortunately, most business owners don’t even know it exists. Ask your accounting team a few simple questions to see if you need to dig a bit deeper:

  • Were all of the reports that I have received in the last three months generated directly from our software or Excel? If even a small majority originated in Excel, you need to investigate.
  • How current is the update on our accounting software? If the answer is more than six months ago, you have an issue.
  • Can you email me a copy of the income statement right now that is up to date? If the result is no, you have a problem.

Once you have identified that you have the problem, you can move on. Consider reaching out for help.