11 ways to streamline business accounting

Businesses and accounting professionals perform a series of tasks during an accounting cycle, from recording and processing transactions to generating and reporting financial statements spanning across accounts receivable to payable to compliance. These tasks can be tedious and consume significant resources. Therefore, it is vital to identify inefficiencies in your accounting process and eliminate them gradually.

When your business continues to focus on the usual way of performing these tasks, you rob yourself of the opportunity to grow and stay ahead of the competition. With the advent of the latest technologies, there is a lot of scope to streamline the accounting process. This article compiles 11 tips that can help you run a more efficient business.

How could streamlining the accounting process benefit your business?

The accounting process can be streamlined by adopting good accounting practices that enhance visibility, accountability, accuracy, and decision-making, leading to better business outcomes. Streamlining the accounting process may seem like a daunting task, but in the long run, it can save your business money and time, which can otherwise be invested in core business activities.

Ways to streamline business accounting

1. Automation
Some accounting tasks, such as recording transactions, creating recurring invoices, and sending payment reminders, can be time-consuming and repetitive in nature. Steps like these should be identified and automated with the help of accounting software to reduce errors and the time involved in them. Automating these steps will require proper research and planning, but once automated, the overall productivity of your accounting process will be enhanced. You will not miss a deadline, and you can ensure timely receipts with your payment reminders in place.

2. Reconciliation at regular intervals
Reconciliation requires you to compare different records to identify discrepancies among them. For example, bank reconciliation is performed to verify that the business's cash book and bank statement are consistent with each other. Businesses perform numerous transactions on a daily basis; identifying and processing these transactions manually can be challenging and prone to errors. Hence, reconciliation is paramount in ensuring the accuracy of accounting records.

In general, reconciliation is usually performed at the end of the accounting period. However, it is wise to perform reconciliation at short, regular intervals, like monthly or quarterly, as it will make it easier for your accountants to close the books at year-end. Therefore, you need to ensure your accounting solution supports auto-categorizations and easy reconciliation.

3. Collaboration
The accounting process comprises a sequence of steps performed one after the other. A delay in one step will affect the flow of the entire process. Thus, seamless collaboration within the organization and with external stakeholders becomes absolute.

External collaboration
To enhance external collaboration, consider having a dedicated vendor and customer portal for seamless interaction and requests management.

Internal collaboration
Intra-organization collaboration can be enhanced by clearly defining the roles and providing appropriate access to professionals, as they reduce confusion and increase accountability.

A practical scenario
Consider a scenario where one of your clients places a purchase order. The person X responsible for approving the purchase order is absent, halting the approval process. This bottleneck can be eliminated by delegating the authority to professional Y in the absence of X, making role clarification and access crucial to streamline internal collaboration.

When it comes to external collaboration, a dedicated vendor portal helps you to instantly reach out to the vendor for supplies that are required for the client's purchase order. In addition to that, your client will also be able to track the status of their purchase order via the customer portal.

4. Outsourcing
You can save a significant amount of time by outsourcing certain accounting activities that are not in the purview of your business's specialization. Accounting tasks such as bookkeeping, tax filing, and auditing can be outsourced to a professional accounting firm, saving a lot of time for your organization and getting the work done in the best way possible. You can also outsource the entire accounting process to an accounting firm if you intend to focus exclusively on your core business activities.

5. Training
The accounting standards and regulations are consistently altered to ensure that the integrity and reliability of financial statements are upheld. It is essential that accounting professionals are regularly trained to keep up with these developments. Training programs should be designed in such a way that your accountants are educated on the recent changes in regulations on a timely basis. Technological training should be given to your accounting professionals to help them leverage the latest accounting tools and other technologies for efficient accounting.

6. Integration
Accounting software is a key part of any business's tech stack, and it is imperative that it integrates with other business solutions. The integration will allow professionals to perform multiple functions across departments. Additionally, integration aids in the smooth exchange of data between platforms, reducing the time consumed in migrating and compiling data for specific purposes. With the right accounting software, you can integrate with platforms like payment gateways, e-commerce platforms, shipping services, payroll software, and CRM platforms.

7. Compliance calendar
Businesses are required to comply with many regulations at various points of time during a year. Automated reminders play a crucial role by aiding businesses meet deadlines effectively. A compliance calendar with timely reminders for filing or reporting will help your business avoid penalties and other legal actions. It is important to update the compliance calendar at regular intervals so it is relevant to your current compliance obligations.

8. Workflow standards
Establishing workflow standards for the accounting process is crucial owing to the sensitivity of the data involved. Workflow standards are predefined instructions that direct professionals on the order and the way in which each task is performed. Standard operating procedures (SOPs) should be set up for each step, accompanied by a proper approval mechanism. This improves consistency and ensures compliance throughout the accounting process. Workflow standards also help your business control the entire process effectively.

9. Cloud-based solutions
Cloud-based accounting software will enable professionals to securely access financial data in real time from any place. Your accountants or other authorized professionals are not required to be in front of a particular device to perform tasks like sending quotes and clearing approvals. With cloud accounting software, accounting tasks can be performed even through a mobile phone.

10. Financial dashboard
A real-time financial dashboard can provide a clear picture of various business parameters. These key insights from the dashboard can be used to make informed business decisions. For example, accounts receivable data available on the dashboard will help your business identify any overdue payments and manage them accordingly.

11. Data organization
Handling data is one of the key challenges in accounting. Tracing the required information from the ocean of data to perform specific functions is a tedious task. Therefore, organizing financial data becomes vital in optimizing your accounting process. It is prudent to choose accounting software with customization features, enabling your business to store and trace data flexibly.

A practical scenario:
Consider a case where your business is managing multiple projects, and you want to add a project ID to the project details for better traceability. A custom field option will help you capture and add the project ID in the project details. Likewise, categorize your transactions with the tagging feature that can link a particular transaction to a specific tag. A tag can be anything like a branch, division, customer, or vendor. For example, an expense transaction recorded can be tagged to the relevant project for which the expense is made. This helps in tracing any financial information related to a particular project.