Are Accountants Overhead?

Posted on May 8, 2015 By

If you read any accounting or cost accounting book, the accounting department the accounting department is overhead.  In other words, this is an expense to support the organization; but doesn’t directly contribute to the company’s revenue generation.

What is the result of this?  If there is a chance to shrink the accounting department, through technology or redundancy, management will usually not hesitate to reduce the accounting personnel.  With technology always increasing; it’s always something on the horizon.

For instance the first large decrease came when payroll companies, like ADP, were able to effectively replace entire payroll departments.  Previously, clerks had hand calculated payroll taxes, paychecks and benefits.  Today, for a few hundred dollars a month, payroll checks are automatically calculated, deposited into employee’s bank accounts, and this is effortless.  It doesn’t even makes sense for most companies to hire payroll employees to manually calculate payroll.  ADP and other payroll companies have become the industry standard for so long; I’m sure most of the readers have no memory of the previous system.

I mention that because this is not a blog on how to prevent technology from making it’s way into the accounting department; but how to work with it.  For instance, many banks can provide downloads of actual bank transaction a few minutes after it happens.  How does this fit into the current traditional accounting department?

Let’s look at some of the technical issues:

  • Bank downloads can be directly put into the transaction ledgers.  Many online accounting software packages promote this as a feature.  Banks provide this as a CSV file, so it’s not hard to imagine that this feature can be programmed for your mid level accounting software.
  • Checks and Wires can be entered directly into the online bank account.  Checks and payments are then directly mailed from the bank to the vendors.  This sounds like it eliminates a day of work for the accounts payable department, doesn’t it?  What about control?  You can enable a second person to approve the payments.

So, lets take a look at that.  You can download bank transactions and you can input the checks to be sent by the bank.  Sounds like a closed loop, doesn’t it?  Small businesses have already transitioned to this business model.  Large or Mid-sized businesses are behind the curve.

  • Scanned Documents vs. paper files.  Scanned documents are easy to make now.  High powered scanners can now rip through 50 documents a minute.
  • Purchase a scanner that doesn’t require 8 by 11 inch paper.  Scan Snap, cell phone scanners, and just a taking a good picture can all be used.
  • Set up multiple scanning stations, if needed.  If you see a bottleneck, you can also give ‘appointments’ to departments so they know when to schedule a scanning session.
  • Ripping out staples in Accounts Payable documents takes time.  Use clips instead to fasten all the approvals together.  Stapling, unstapling, and then restapling is a huge time waster.  Just stop stapling.
  • Say goodbye to the post it notes.  An up to date Adobe PDF reader has a tool for affixing notes and signatures to it.
  • Consider scanning an invoice when it arrives.  Sending it the AP department, getting the approvals, and writing the checks all without handling one piece of paper.
  • Talk to your vendors about sending electronic invoices.  They probably already have that capability, you just need to ask.
  • Find a way to recycle the filing cabinets.  Your company may not need rows and rows of them.  Gone are the monthly storage fees.

Workflow issues:

  • Set up a workflow tracking system.  It would be easy to misplace an electronic invoice if you relied on email.  Drop box or a solid network are more reliable.
  • Create unique approval stamps so that no one can copy and paste approvals on to AP invoices.
  • Bill.com has set up their entire company around this process.  Consider hiring them to handle it for you.
  • The department will rely more on check lists than it did in the past.  As you lose paper, people need reassurance that tasks have been completed.  Make a checklist to ease the transition.

Are there any other areas that might benefit from technology?  Accounts Receivable?  Are you sending out einvoices to your customers, for instance?  Sending out estatements would save a lot of paper for most large companies.

  • Create a process for streamlining the statement printing.  Some old accounting systems do not allow for estatements to be printed, fyi.
  • Create a quality control diva who double checks that all the customer payments have been applied.  Heck, you will need more checklists more than ever now.
  • Create Attention lines that describe the purchase, due date, and your company name.  Many people search for invoices in their email.  Make it easy for them to find yours.
  • Create file names that make it easy to find in a database.
  • I suggest at least two email or dropbox locations to send the statements to your customers.  It’s easy to ignore emailed notifications.  Will they bother to tell you if one their AP people has left the company?  Maybe or Maybe not!

What about Financial Statement Disbursement?  I’ve spent many an hour photocopying and sending financial statements to company owners.  What do they do with the paper copies?  Are they really incapable of understanding how to use a PDF?  Really?  Maybe they might be more flexible than you think they are. 🙂

  • Consider creating a word doc with excel embedded in it to create more professional looking financials.
  • Education on using the Notes and Signatures now available on most Adobe Readers.
  • Consider attaching some the raw data, so they can look at it.  For instance, the sales from the top ten customers.  Kick up the data you provide by a notch.

So, now that I’ve given a few ideas on how to enable technology in your accounting department, I’m sure you have a few more.  Rather than burying your head in the sand, try embracing technology.  It’s how you go from being a drag on earnings to being the accounting hero who has modernized the company.

If you disagree with me, I suggest you try calculating a hundred employee paychecks by hand, filing out the manual tax reports, making the tax payments.  Get back to me after you do that. 🙂

 

Laura Dodson
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Laura Dodson

Laura Dodson, CPA is a Seattle Financial Planning & Analysis consultant.She has attended Western Washington University, Pierce College and Bates Technical College. She has written four accounting instructional books. She has worked for small family businesses, mid-sized businesses and a Fortune 500 company.She founded and operated Blue Stone Accounting LLC for five years.She currently runs Paper Butterfly Forge LLC.
Laura Dodson
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