Best Practices
- Accounting & Finance

Best Practices – Accounting & Finance

Overview
Decision-makers, such as Directors, CEOs, GMs, and Executive Members, often finalize strategic plans that involve significant changes to core business activities. These changes impact operations at all levels, from high-level segments like customers, products, and markets to lower-level areas such as system efficiency improvements and risk management enhancements. While managers are proficient in their daily tasks, achieving greater efficiency or extracting more value from existing systems and departments can be challenging. This is where best practices come into play. Best practices refer to improvements over existing systems, tailored to the specific needs of an organization.

Scope of Best Practices
Best practices encompass a wide range of improvements, from minor operational tweaks (e.g., adopting blanket purchase orders or procurement cards) to major overhauls (e.g., streamlining purchasing, spending, and accounts payable functions). They also extend to enhancing reporting systems, enabling more precise and timely information for management decision-making. Automation of functions like bank account deductions, commission calculations, and employee expense reports further reduces transaction errors and improves efficiency.

Importance of Best Practices in Strategy Execution
Best practices are critical to the successful execution of a company’s strategies. Without them, strategies are likely to fail due to inefficiencies. By improving overall efficiency, best practices unlock additional resources (e.g., time, capacity, and workforce) that can be redirected toward strategic initiatives. Additionally, efficiency improvements free up cash previously tied to operations, providing more financial resources to support new strategies. Thus, best practices are a linchpin for corporate success, even when not part of a grand strategic vision.

Our Expertise in Accounting Best Practices
While our services do not cover all possible best practices, we specialize in those applicable to the accounting department, which is highly procedure-driven and offers numerous opportunities for improvement. Our focus areas include automation, task elimination, simplification, outsourcing, error detection, and proofing. Accounting functions respond exceptionally well to best practices compared to other corporate functions.

Key Areas of Best Practices

Accounts Payable Function

The accounts payable process involves matching supplier invoices, purchase orders, and receipt notices, which is labor-intensive and prone to errors. Best practices in this area include:

Using procurement cards and consolidating suppliers to reduce matching tasks.
Directly inputting goods receipts into computer systems to minimize paperwork.
Authorizing payments based on receipt notices in certain industries.
Our team specializes in restructuring accounts payable functions to implement these best practices, though companies must assess resource availability before implementation.

Billing Function

We introduce best practices to enhance billing efficiency, categorized into:

Accuracy: Ensuring error-free links between shipping and billing departments.
Efficiency: Simplifying invoicing operations, such as replacing month-end statements with improved invoices.
Delivery: Issuing invoices electronically or at the delivery point to expedite customer receipt.

Budgeting Function

Budgeting is crucial for performance targets, resource allocation, and strategy support, yet many organizations struggle with its implementation. Our team assists by:

Gaining management support and simplifying the budget development process.
Introducing best practices like step-costing, activity-based budgeting, and capacity level definitions.
Ensuring budgets are integrated into daily operations for better financial control.

Cash Management Function

Our best practices aim to optimize cash flow, ensuring minimal cash is tied up in working capital while maximizing funds available for investments.

Collections Function

Overdue accounts receivable often stem from invoice errors or delayed follow-ups. Our best practices include:

Reducing invoice error rates.
Implementing diplomatic yet effective collection strategies.
Simplifying collections tasks to minimize overdue receivables.

Credit Function

Many companies lack a dedicated credit function, leading to uncollectible debts. Our best practices include:

Tightening or easing credit policies as needed.
Recommending tools and factors for credit assessment.
Designing comprehensive policies and procedures to minimize bad debts.

Commission Function

Commission expenses are significant in sales-driven organizations. Our best practices focus on:

Streamlining commission calculations without negatively impacting sales team morale.
Ensuring fast and secure commission disbursement.

Costing Function

We specialize in improving costing accuracy and efficiency through:

Ensuring accurate data (e.g., labor routings, bills of material).
Preparing detailed cost reports.
Implementing advanced costing systems like activity-based costing (ABC) and Just-In-Time (JIT).

Filing Function

Best practices in filing aim to reduce or eliminate non-value-added tasks by:

Using electronic documents and reducing paper usage.
Destroying outdated documents to free up storage space and reduce clerical workloads.

Financial Statements Function

Creating financial statements is often time-consuming and complex. Our best practices streamline the process by:

Automating month-end cutoff processes.
Avoiding unnecessary tasks like bank reconciliations.
Ensuring timely and accurate financial reporting.

Internal Audit Function

We transform internal audit functions from system reviewers to active business partners by:

Revising the role of internal auditors.
Improving departmental efficiency through workflow software and task-sharing.

Inventory Function

Best practices in inventory management improve transaction efficiency, record accuracy, and reduce inventory investment. Close collaboration with purchasing, warehousing, and engineering departments is essential for success.

Payroll Function

Payroll is often a high-workload, error-prone area. Our best practices include:

Streamlining payroll processes to reduce workloads.
Minimizing errors in vacation accruals, tax deductions, and pay calculations.
Improving payroll team morale and credibility.

General Function

We also recommend best practices in areas like:

General management concepts (e.g., value stream mapping, production cell layouts).
Taxation (e.g., assigning tax staff, liaising with authorities).
Employee training and reporting systems.

Conclusion

Best practices are essential for improving efficiency, reducing costs, and ensuring the successful execution of corporate strategies. Our team specializes in implementing these practices within accounting and finance functions, delivering measurable improvements in accuracy, efficiency, and resource allocation. By adopting best practices, companies can unlock significant value and position themselves for long-term success.

Let us together build a flourishing business

When connected with us, you aren’t growing your business alone. We have your back and put in our best to contribute to the growth of your entire team and organization. So, if you are looking for the right consultant that’ll help you overcoming business and operational challenges, and bring in more conversions and revenue, we are right here!

Best Practices- Accounting & Finance