The 5 best practices every accounting team should have

Your accountant and accounting team play a vital role in keeping your business running smoothly. They ensure everyone who needs to get paid and that the business has enough cashflow and money to stay operating. Regardless of what business you are in, how you do your accounting will always be critical to its
success.

The accounting team is also responsible for providing accurate financial data and reports that business leaders need to make critical decisions. Having accurate financial data gives you a clear understanding of how your business is doing. This data is used to make decisions like, do we have enough money to expand the business or do we need to cut costs to maintain cash flow.

As your company grows, so will your accounting and reporting needs.

Whether your accounting team is in-house or outsourced or some blend of the two, it needs to function at optimum efficiency and be able to scale to meet the changing demands of the business. The most efficient and effective accounting teams always follow a set of best practices to ensure work is completed to the highest possible standards.

1. Data Accuracy

Accounting and financial reporting is all about accuracy. Without accurate financial data, you are not able to make informed and actionable business decisions. Whatever system or accounting software you use you need to ensure that those responsible for entering data are well trained and adhere to a clearly defined data entry process and information handling procedures.

Proper reconciliation procedures will also be in place, ensuring that information into the master ledger is accurate. Reconciliation is the process of verifying your accounting records with external records, such as bank statements, supplier invoices, credit card statements and other documents. The numbers should match. Ie the cash balance on your balance sheet should match the ending balance on your bank statement. As a dedicated task performed by your accounting team it should happen at the end of every month.

2. Automate where possible

Efficient accounting teams will automate as much of their work as possible. With the right software solution, an accounting department can automate a range of repetitive and mundane processes. As well as improving accuracy, by eliminating human error, it can speed things up and deliver more timely financial reporting. In the past, accountants would spend a substantial amount of their time doing tasks manually, such as cash management, data analysis, and reporting.

As well as being error prone, these tasks take time and effort, making it costly in human resources. Automation saves time, allowing you accounting team to focus on more strategic and higher value analysis of the business. This means greater productivity and enhanced decision making that generates greater value for the business. With today’s digital technology and cloud based solutions, small and medium-sized businesses can increase their productivity without spending a lot of money.

3. Cultivate a culture of learning and personal development

Accounting is a field in which practices, rules, laws, and tools are constantly changing. The best accounting teams ensure their members stay up-to-data on the latest developments in the field and associated fields like taxation, insurance and finance. Staying up to date is a challenge, but one of the most effective things to do is to build a culture around learning and personal development.

A learning culture encourages team members to continuously seek, share, and apply new knowledge and skills to improve individual and organisational performance.It’s critical to the career prospects of those within the team and the success of the organisation.

4. Strict adherence to ethical and professional behaviour

Ethics are important in many aspects of business, but particularly so when it comes to your accounting. If nothing else, being unethical can get you into serious trouble with the law and the tax department. But it will also damage the reputation of the accounting team and the business that it serves. Customers and suppliers will avoid doing business with a company that cannot be trusted or be trusted to do the right thing. Employees will lose faith in the business and feel demotivated.

5. Regular review of processes and procedures

A critical best practice is to review your policies and procedures to ensure the accounting system is keeping pace with trends and the demands of the business.This should be done at least annually. A regular process review can provide insight into any weak points concerning the business or the accounting system you have in place.

Many businesses, unfortunately, do not document their accounting procedures or policies, or apply them consistently. This can cause inconsistencies as well as significant errors with the accounting system, impacting the entire operation of the business and its ability to adapt to change. Every company should start out with an efficient and documented process and series of procedures for managing its accounts. Then revise and adapt as the
business grows and evolves over time.

FAQs

What does an accountant need to know?

An accountant should have a good knowledge of preparing financial statements and accounting reports. It will be helpful to plan a budget and make the required decisions for the next financial year.

What does a financial statement include?

A financial statement includes a balance sheet, profit and loss account, and cash flow account.

How can the accounting department be efficient?

It can be efficient by timely reconciliation and tax payment, seizeopportunities, cloud-based accounting, aligning accounting reporting, and streamline the compliance accounting structure.

What are the best Key Performance Indicator (KPI’s) Practices?

Client retention rates, revenue growth, leverages, and lifetime value of a client are the best KPI’s practices.