Or – how to become an irreplaceable business partner to your CEO.
Why do accounting departments exist? The accounting department can be a processing machine producing mountains of data and reports that get little to no attention OR they can serve as business partner to senior management.
But how do you make that transition to the irreplaceable business partner?
It starts with innovation. Most people think about inventing a specific product when they hear the word innovation. That is not necessarily the case. It can also mean changing a process – even something as basic as how an entity receives mail, pays bills or records revenue.
Innovation – a new idea, more effective device or process; the application of better solutions that meet new requirements, unarticulated needs, or existing market needs (Wikipedia, 2015)
Consider these examples of innovation:
- NetFlix innovated Blockbuster out of business with online streaming.
- Amazon innovated a new way to interact with customers with the Prime and Subscribe and Save programs.
- New technology in police cars that carry canine officers has the ability to sense when the temperature in the car is too high, triggering the window to automatically roll down and starting a fan to keep the dog cool.
Companies have implemented lots of new ways to process a piece of paper and save steps, time and money … small changes like these add up and allow the accounting team to provide a better product to stakeholders.
Where do we start to transition from a process machine working too many hours … to a business partner to senior management? The key is to move the work time from “process and reporting” to “advisor and special project work.” To do this, you must shorten the month end process and change the annual budgeting process to a rolling monthly or quarterly process.
The CEO must support this change and as an accountant, you will need to pitch the change by thinking through the emotional drivers that will appeal to the CEO. If your CEO is the type who is uncomfortable with the financial side of the entity, he or she may ask for more data than they actually need. It’s your job to help them understand the best way to guarantee their success is to know the answer to key questions and have the answers to these questions laid out in a meaningful dashboard format.
A great place to start is with the laborious process of Accounts Payable. The paper associated with Accounts Payable and Expense Reporting can be overwhelming.
Here are 11 actions you can take to streamline your company’s accounts payable process:
- If possible, use an automated purchasing system so that purchases are approved at the beginning of the process. This minimizes time on the back end. The system should be set up so that employees that can order a specific type of product and then send to the appropriate approver.
- If you do not have an automated system, think through your process with the goal of moving the approval process to the beginning of the payment process – rather than at the end.
- In all cases, maintain a list of vendors and their websites with the logins and passwords, securely stored where only authorized users can access. This is especially important with PayPal, who is relentless if you lose the login and password for their site.
- In all cases, set up an Accounts Payable email address that routes to at least two accountants. It should go without saying – but I will anyway because I see it all the time – You do not want vendors sending emails to a specific person. When that person leaves, it creates chaos with the accounts payable communication.
- If possible, with your technology, set up a process where vendors upload invoices to the purchasing or accounts payable system, with the general ledger codes already noted.
- If this is not possible, ask the vendor to send invoices to the accounts payable email address. From there, the invoice can be matched with the purchase order, approved or sent to the cost center owner for approval.
- If you do cannot automate the receipt of invoices, except for nonprofits that must maintain original invoices for grant purposes, scan paper invoices and save invoices emailed with a naming convention either in a cloud-based storage or on a shared drive. Set the naming convention to assist with location of invoices later for research. Something like: <invoice date_vendor name_cost center>; think through what information you will need when you research a payables question. If you are the lead of the accounting department or a leader – do not set this naming convention without the input of the person doing the work.
- Process payments on a regular basis. If you are processing invoices when the cost center owners request it or vendors call – you are flushing money down the toilet. This is not a good practice. Get your employees and your vendors on board by communicating the payment pattern.
- Consider implementing an e-Payment process, either through your accounts payable software or using a third-party vendor who specializes in e-Payments. Utilize the controls that are built into these types of products, don’t bypass them if they seem inconvenient, they exist to protect the company from fraud.
- Process all invoices for the month by the last business day of the month. This is essential to maintain a tight monthly schedule. So you may say – I will not have all the invoices – OK – but you generally get 12 invoices a year and it really does not matter if each and every one is in the month it covers. For the month you implement the change, you may need to record an accrual of expense you will reverse until you get the pattern of expense working correctly.
- Reconcile Credit Cards on a monthly basis. You can use Expense Management Apps from your phone similar to “Expensify” to assist management with keeping up with receipts and expenses.
If you can implement these changes in your AP environment, you have made a great start to free up time for the transition to a trusted financial advisor to the CEO. The next part of this series discusses changes to the month-end process that will continue to advance your progress from “process and reporting” towards “advisor and special project work.”
Mindy Barker & Associates (firstname.lastname@example.org) works with companies to help maneuver the many questions of strengthening accounting processes and practices through process improvements, as well as other decisions that face growing companies.