It seems that no matter what you do as an accounting leader, you will still run into the issue of accounting mistakes, errors and rework. This includes mistakes from the beginning to the end of the process, and while it’s all too common, it’s still a huge pain for CFOs, Controllers and the like.
New resources and tools have made accounting easier for companies, but it hasn’t eliminated the potential for human (or even technological) errors. Some mistakes are minor, and others have a major impact on the business’s financial health. As an accounting executive, your job is to ensure that these inaccuracies are few and far between, but even better – why not remove these mistakes at the onset? Read on to learn which accounting mistakes could jeopardize your organization and how to fix them.
Mistake #1: Using Outdated Technology
Utilizing outdated technology is frustrating to say the least – you pour hours (or days) into a task that could have been completed in less time. On top of that, using archaic technology leaves your company vulnerable to security risks – and in the finance and accounting industry, that’s a risk you can’t afford.
Invest in accounting software
Anyone who’s utilized Excel knows that it sucks hours out of your workday inputting data into spreadsheets. With cloud-based accounting software, those monotonous tasks become a thing of the past – from recording transactions and storing cash flow statements to generating reports and issuing invoices.
Read More: Head In The Clouds: Why Using a Cloud-Based Accounting Software Improves Productivity
Digitize your receipts to avoid accounting archiving mistakes
If you’re having a hard time remembering where you store your receipts – shoved in a drawer somewhere, left on the floorboard of your car, or at the bottom of a trashcan – it might be time to make the switch to a digital platform. Accounting software, such as QuickBooks, allows you to take a snapshot of your receipt and upload them to the expense – an easy way to keep on top of your receipts.
Accounting Mistakes #2: Lack of Documented Processes
Having a distinguished, documented process in place is not a nice-to-have, it’s a need-to-have. Your team members are a goldmine of information and knowledge. But if those employees leave, they take that insight with them. That’s the trouble with tribal knowledge – it can disappear without a trace and leave you scrambling to pick up the pieces.
Categorize your expenses
We can’t emphasize this enough – categorize your expenses. If your ERP doesn’t automate this task for you, color code them. Bold them. Do whatever you need to do to make YOUR life easier. There’s nothing more irritating than having to manually go back through and assign a transaction a category after your already input all your expenses (seriously, just ask a bookkeeper). Categorizing your expenses saves you from a headache and most importantly, saves you time.
Write down your processes
It’s no surprise that small to mid-size companies struggle the most with documenting their processes. In fact, only four percent of businesses say they ‘always’ document their processes. But what happens when a coworker is sick, takes a vacation, or resigns from their position? They take that knowledge with them, and the company is left scrambling to find a replacement or offloading that work to another employee (who now must train on those responsibilities on top of their own). Documenting your processes is not just a nicety – it’s crucial for an organization’s growth. In fact, here are four ways to log your accounting procedures:
Identify the knowledge keepers
Work to know what they know
Become a knowledge archivist
Make it all accessible
Read More: Future Proof Your Finance Department: How To Document Your Processes
Focus on ongoing training and accountability to stay far away from many accounting mistakes
When you hire a new team member, it goes without saying that training will be involved within the first few weeks of their start date. However, training is a continual cycle and in the accounting department, a way to take your company to the next level. Engaging in ongoing training ensures that accounting professionals stay up to date on best practices and regulations.
Read More: Top 10 Techniques To Make Training A Strong Part Of Your Company Culture
Mistake #3: Taking Too Long to Close the Books
A study done by CFO.com found that the average amount of days it takes to close the books was 6.4. That’s six days of being under stressed-induced pressure while crossing your fingers that the end results are errorless. And according to a poll done by Accounting Today, one in four accounting professionals said they were ‘very confident’ their last close was error-free – that means that 75 percent of those polled thought otherwise.
Reconcile your books weekly
Reconciling your books – the task itself may seem boring and a time-sucker, but if you’ve never had money go ‘missing’ from your company, thank your bookkeeper. By reconciling your books on a weekly (or daily, depending on the size of your business), rather than on monthly basis, you can ensure a fail-proof way to safeguard your financials.
Improve communication among team members
In today’s remote world, it’s imperative that leaders foster a work culture that’s centered around an open line of communication. Project management software and apps like Trello, Asana, and Monday can help you and your team keep track of collaborative projects, while communication platforms like Slack and Microsoft Teams allow for direct messaging.
As daunting as it may seem, getting organized starts somewhere. To start, make sure all your files, records, and data are stored in a specific place (and we don’t mean shoved in a drawer somewhere or scattered across your desk). One place you might consider organizing your documentation is in the cloud – file storage sites such as Dropbox and Google Drive can help ease the overwhelming task of storing your files without having to dig through paperwork to find what you’re looking for.
Accounting Mistakes #4: Relying on Automation Alone
Automation has disrupted the finance and accounting world in ways we could have never imagined. And although it’s given accounting professionals some of their time back, it also begs the question of ‘at what price?’. Automation is a luxury that can’t stand alone – the driving force behind automation is a team of humans who back the work. In fact, according to Glen Parrillo, VP of Finance and Controller at AccuWeather, “… where a lot of organizations struggle is the assumption that all automation if good automation, and that’s just not the case.”
Find out what your technology can actually do
CFOs and other accounting executives spend much of their time focusing on low-impact tasks instead of business-critical strategies. And while automation helps you streamline those basic tasks, it falls by the wayside without people to man the technology, . Understanding what your team can and can’t automate affirms that you aren’t relying solely on tech when what you really need is more talent.
Hire people who actually know that technology to avoid accounting technology mistakes
You’ve upgraded your accounting software, but your current team members are clueless on how to navigate this new technology. Instead of focusing on the time-consuming task of training your employees on how to utilize this software, why not recruit new hires who have experience handling this program? Seems simple enough, right? But now you have to go through the process of finding, hiring, and bringing them into the fold of your company (a painstaking process that eats up your time and takes away from your other responsibilities). Partnering with an outsourcing company that matches you with the right person can be a more efficient and economical way to reach this objective.
Read More: The Automation Era: Will Accounting Teams Become Obsolete?
Why partner with Personiv
If you feel too stretched with your accounting processes, it might be time to consider another route. By partnering with a virtual accounting support provider, you can alleviate your accounting mistakes while also saving time and money.
Get in touch with one of our experts to see how we can help you simplify your accounting process and avoid these mistakes.