Efficiency. We all want it in the workplace. And there’s no area where efficiency is more important than in accounting. Here are eight suggestions for making the accounting function at your organization more efficient without spending a bucketful of money.
1. Put cutoff policies in place. Create policies for the monthly cutoff of invoicing and recording expenses — and adhere to them. For example, require all invoices to be submitted to the accounting department by the end of each month. Too many adjustments — or waiting for different employees or departments to turn in invoices and expense reports — waste time and can delay the production of financial statements. Moreover, making late adjustments can impair any financial analysis that’s underway.
2. Keep it timely. You may be able to save considerable time at the end of the year by reconciling your bank accounts shortly after the end of each month. It’s a lot easier to correct errors when you catch them early. Also reconcile accounts payable and accounts receivable data to your statements of financial position.
3. Design a coding cover sheet. An accounting clerk or bookkeeper needs a variety of information to enter vendor bills and donor gifts into your accounting system. Speed up the process by collecting all of that information on one page. A coding cover sheet should list your organization’s general ledger account numbers so that the employee entering data doesn’t have to look them up each time.
The cover sheet also should indicate if the invoice is to be paid by check, electronic transfer or credit card, and provide a place for the appropriate person to approve the invoice for payment. Use multiple choice boxes to indicate to which cost center the amounts should be allocated. The invoice or copy of the donor’s check can be attached to the cover sheet for reference.
4. Batch items to process. Don’t enter only one invoice or cut only one check at a time. Set aside a block of time to do the job when you have multiple items to process. Some organizations process payments only once or twice a month. If you make your schedule available to everyone, fewer “emergency” checks and deposits will surface.
5. Insist on oversight. Make sure that the individual or group that’s responsible for financial oversight (for instance, your CFO, treasurer or finance committee) reviews monthly bank statements, financial statements and accounting entries for obvious errors or unexpected amounts. The value of such reviews increases when they’re performed right after each monthly reporting period ends.
6. Resist crunching numbers outside of your accounting software. Many organizations underuse the accounting software package they’ve purchased because they haven’t invested enough time to learn its full functionality. If needed, hire a trainer to review the software’s basic functions with staff and teach time-saving tricks and shortcuts.
Become more efficient by avoiding any calculations or financial report presentations in Excel® or other spreadsheet programs. Stick with your accounting software and print reports directly from it. This also will reduce input errors.
Consider performing standard journal entries and payroll allocations automatically within your accounting software. Many systems have the ability to recall transactions and can automate, for example, payroll allocations to various programs or vacation accrual reports. But review any estimates against actual figures periodically, and always adjust to the actual amount before closing your books at year end.
7. Review your accounting system processes. Accounting systems can become inefficient over time if they aren’t monitored. Look for labor-intensive steps that could be automated or steps that don’t add value and could be eliminated. Often, for example, steps are duplicated by two different employees or the process is slowed down by “handing off” part of a project.
8. Share your accounting function. If a few nonprofits in your area are willing to outsource their accounting function to your organization, you could share a CFO and support staff. You’d likely be able to improve the efficiency and effectiveness of your accounting function at a cost you could afford. Standard background checks would apply, and carefully document your role in the vetting of the CFO and support staff.
As you review your accounting function for ways to improve efficiency, ask outside sources for their opinion. Your auditors, volunteer treasurer, banker and other financial experts can provide ideas for streamlining processes. Give us a call, we’re here to help!