Rose Report: Issue 16
Financial Process Standardization: Key to Accounting Success
When it comes to identifying and resolving breakdowns within an accounting department, it’s crucial that organizations understand the key processes involved in running a smooth back office.
There are three basic types of accounting processes. Individual transactions are one-time transactions such as the approval of a payable, the issuance of an invoice, or the posting of a cash receipt. Batch transactions occur when an accounting department processes multiple transactions as a group; examples include payroll and check runs. Data management, which occurs simultaneously with individual and batch transactions, include such processes as updating general ledger accounts, adding new vendors, customers, or employees, and making changes to an employee’s master file.
In order to maximize efficiency and accuracy, financial process standardization should take place across an organization. “Without a written and agreed-upon policy, differences in how partners and staff handle work and processes can create inconsistencies in what is being done for clients,” writes Brock Philp on web site accountingweb.com.
But most companies, particularly small to mid-sized firms, don’t have standardized policies in place. Smaller companies often can’t afford to have the same controls as larger companies—their small staffs are working hard to run and grow the business, and instituting standardized policies gets pushed to the back burner. As a result, these processes happen by default—the person doing payables enters a new vendor, the person processing HR paperwork makes changes to an employee’s file. And they all happen without approval or review, which leads to mistakes, delays, and gaps in communication where key staff are not aware of important changes within their organization.
That’s where RFSWorkflow comes in. A cloud-based accounting software, RFSWorkflow uses best practices to standardize all accounting processes. Furthermore, it builds in manager approvals, which ensure proper communication between the accounting department and management.
Of course, one size does not fit all, which is why approvals can be turned off to accommodate different organizations. As a company grows or its needs change, approvals can be turned back on. But even if a company does not use all of the software’s functionality, electronically managing accounting processes still has many benefits. It reduces a company’s reliance on any one employee, and, since all financial documents are stored online, allows employees to work remotely if necessary.
And as Ted Needleman writes in Accounting Today: “Accessibility, while important, is far from the only attraction that computing in the cloud provides. Scalability, savings on infrastructure, and security are also frequently cited among the benefits of this approach.”