by Deb Ward, MBA

While many leaders recognize the importance of leveraging best practices, they may not realize the critical role that accounting processes play in building the foundation for a successful future. The benefits of optimized accounting processes aren’t limited to the back office. A top-performing accounting and finance function can drive value and performance throughout your entire organization. Not convinced? Here are a few scenarios:

• If you’re considering an accounting or payroll system change, start with a process assessment to help you understand current stakeholder pain points and future business requirements. These requirements will provide the foundation for evaluating potential systems. Plus, fixing poor processes prior to undergoing a system transition can cut your implementation timeline in half. You may even find that your current technology is sufficient, and existing features and integrations are just not being leveraged. 

• If you are preparing to sell your private company, optimizing your finance, accounting, and payroll processes can increase your company’s valuation. In the tightening M&A market, buyers have increased scrutiny and they expect sellers to “know their numbers.” Sellers that can back up their story with timely and accurate financials are more credible and attractive. Optimized accounting processes signal a strong management team and can provide sellers with an edge.

• If you are experiencing turnover in your accounting, finance, or payroll teams, you are likely losing knowledge. Well-defined responsibilities and processes allow for a streamlined onboarding process and set new resources up for success.

• If you dread tax or audit season and are habitually ill-prepared, improving your accounting processes can support a more timely, accurate, and value-add month-end close. Documented policies and procedures based on industry best practices make audit and tax season much less painful.

The Steps to Process Optimization

Back-office process optimization starts with assessing your current accounting, finance, and payroll processes to identify pain points. Taking a targeted approach breaks down your process evaluation into more manageable chunks. Here are the six steps you need to take:

1. Gather existing process documentation, policies, and checklists.
2. Interview process stakeholders and owners to identify current gaps and opportunities. Opportunities typically focus on role clarity, efficiencies, effectiveness, internal controls, downstream value, and system/automation utilization.
3. Prioritize identified opportunities based on strategic objectives and financial impacts. Implement “quick win” improvements (i.e., positive impact, low effort).
4. Design/redesign processes and incorporate implemented “quick win” improvements.
5. Communicate redesigned processes and workflows that clarify responsibilities and provide a defined baseline for continuous improvement.
6. To continuously improve, compare your new baseline to industry best practices and obtain stakeholder input. Create a project plan and implement “big impact” process improvements (i.e., high positive impact, high effort).

Once a company commits to improving its processes, this approach can be leveraged to evaluate core accounting activities end-to-end (e.g., Purchase to Pay, Order to Cash, Hire to Retire, Record to Report / Month-end Close).

The Human Side of Processes 

Teams perform best when tasks, processes, and expectations are well-defined and communicated. Process and role clarity set the stage for effective accountability and support performance management. 

Consider year-end bonuses. If they are not based on achieving specific individual, team, or company performance targets, then owners are missing an opportunity to define individual goals that increase collaboration and support the company’s strategic objectives. Plus, when bonuses are tied to achieving or exceeding goals, they are more meaningful as a reward.

With the structural changes that accompany hybrid and remote work, both underutilization of employees and employee burnout is top of mind for leaders. Clearly defined roles, processes, and goals provide the necessary foundation to allow for the increased agility required to support these new models. Further, process optimization streamlines employee onboarding, creates capacity for professional development and team building, and can even boost job satisfaction. 

It Helps to Have a Coach

Back-office process optimization drives operational performance throughout your organization. Outside expertise can bring insights into industry best practices and provide the resources to lead improvement efforts while your teams focus on their day-to-day activities.

When you’re ready, a business process improvement advisor can coach you through creating a stronger process foundation to help unlock your company’s full potential.