Tips to Improve Accounting Department

The accounting function is the financial lifeblood of any organisation. The accounting department is more than a group of number crunchers — they’re responsible for multiple duties in tracking revenue and expenditure, maintaining compliance, generating financial reports, budget full administration, and even providing advice on the best financial strategies for the organisation.

When your accounting department is functioning well, it ensures operational integrity, and financial visibility, and promotes the possibility for sustainability of the business over the long-term.

However, like any core function of the organisation, accounting can have its own set of challenges — outdated systems, ineffective processes, failure to communicate, or, not enough mentoring and skilled resources can inhibit productivity and accuracy which ultimately impacts overall business performance.

Key Questions to Ask Before Making Improvements

When seeking to guide change, the first step is to self-reflect. Here are questions the leadership team should reflect upon:

• Are we using up-to-date accounting systems or just spreadsheets?
• How long does it take to close our books every month?
• Do other departments trust and collaborate with the finance team?
• Are our reports accurate, time-effective and meaningful to the decision-makers?
• Do we have enough controls to safeguard ourselves against fraudulent or untruthful reporting?

The above questions can help lead you to identify real pain points and set you up for achievable goals for improvement.

9 Actionable Tips to Improve Your Accounting Department

1. Define Clear Responsibilities and Roles

Confusion and inefficiency arise when team members are performing overlapping duties or do not have a clear understanding of their roles. A well-defined accounting team improves workflow, and accountability.

Suggestions:

• Develop job descriptions for each accounting role.
• Assign duties based on skill set and direct business needs.
• Have a checks and balances in place enabling fraud and oversight avoidance.

2. Regular Training and Upskilling

As accounting standards, tax laws, and technology change frequently in an evolving landscape, continuous professional development can help ensure your team is current and capable.

Suggestions:

• Support initiatives for certifications like ACCA, CIMA, CPA, or AAT
• Develop training sessions internally or online.
• Facilitate CPD (Continuous Professional Development) opportunities.

3. Invest in the Right Technology

Using outdated software or insufficient manual processes continues to slow your accounting team down, and therefore increases the potential for human mistakes. New accounting platforms can assist in automating repetitive tasks, provide access to current data, and make compliance seamless.

Suggestions:

• Transition to a cloud-based accounting platform such as Quick-books, Xero or Zoho Books.
• Utilise integrated software applications that link a payroll tool, invoice tool, or expense tracking.
• Automate as much as possible between reconciliation and reporting.

4. Standardise and Document Processes

Inconsistent processes lead to mistakes and inefficiencies. Making workflows documented processes can help to ensure there are consistent guidelines and address the daunting nature of onboarding a new team member in to a consistent workflow.

Suggestions:

• Create SOPs (Standard Operating Procedures) for all significant accounting functions.
• Use checklists when doing monthly and year-end closing.
• Review and update processes regularly.

5. Improve Communication and Collaboration

The accounting department does not work in a vacuum. It relies on regular communication with sales, HR, procurement, and management.

Suggestions:

• Make use of collaboration software (Slack, Teams, project management apps, etc.).
• Schedule regular meetings with multiple departments.
• Encourage transparency and feedback within your team.

6. Define KPIs and Measure

You need to measure your way to improvement. Setting indicators of performance will help you track efficiency, accuracy, and turnaround times.

Some KPI’s:

• Days to close monthly accounts

• Number of accurate invoices processed
• Days Sales Outstanding (DSO)
• Budget versus actual difference

7. Improve Internal Controls

Weak internal controls can slow down the process or lead to financial misstatements or fraud. Improving internal control mechanisms will help to improve data integrity and stakeholder trust.

Suggestions:

• Separate duties (i.e., approval and payment).
• Audit trails and approval workflows.
• Involve regular internal audits.

8. Develop a Culture of Continuous Improvement

Encourage your team to question the methods in which they perform their work and challenge them to help improve them. Encouraging a questioning culture will encourage innovation and our need for continuous improvement.

Suggestions:

• Quarterly review and brainstorming meetings.

• Recognise and reward improvements that will lead to efficiencies.

• Keep up to date on industry trends and best practices.

9. Collaborate with External Experts

A third-party perspective may uncover inefficiencies or identify solutions that those within your organization cannot see.

Tips:

• You could hire an external consultant for process audits or software implementations
• When the work is non-core and cost-effective (i.e. payroll or tax filings) offload whatever you think is practical
• You could attend industry conferences or networking events.

How to Implement These Improvements?

Knowing what to do is the easy part, the hard part is figuring out how to make it happen — which will require planning, communication, and ultimately execution.

Here’s some guidance on how you can get going:

• Prioritise – Understand that you can’t fix everything all at once. Focus on 1-2 areas (for example, automation, training).
• Strategise – Identify owners, establish timelines, and measure results.
• Communicate – Help the team understand the changes that will occur and what the change means to them.
• Test – Consider testing and implementing new tools or workflows with a small, friendly group first.

How to Measure the Success of Your Improvements?

Your improvements will provide visible outputs. It is best to identify a few key performance indicators (KPIs) and track your performance against those KPIs over a defined period of time.

Your KPIs might be:

• The time taken to close the books each month.
• Time and accuracy taken to process invoices.
• Error rate on financial statements.
• Employee satisfaction or turnover rate of employees in the accounting department
• External audit findings, or compliance reports.

Tracking these will help you justify your investment and demonstrate the influence and impact of your improvements.

Conclusion

Improving your accounting department requires more than a few tips – it all starts by asking the right questions, addressing root problems, and providing your staff with tools and training.

Start small. Pick one or two areas to improve. Create momentum. And always have an eye on the broader goal of making finance a proactive, strategic function within your organisation.