Business owners have developed a universal jargon of a sort since the onset of the pandemic. In their conversations with polar-industry-opposites and peers alike, they’re talking about forecasting for choppy waters and headwinds, running tighter ships, and navigating uncharted waters. In the face of unrivaled challenges, it seems business owners have been tasked with “GPS-less” chart-plotting, guided only by stars. And if you’re waiting around for the tide to change, you may never get to sail! It’s time to develop new strategies to stem the tide. Start by taking stock of your existing day-to-day operations. You may discover missed opportunities to improve efficiency and reduce risk inside your accounting department.
To help business owners leverage these opportunities, we’re continuing our independent and objective view of business accounting – from stem to stern – in the second part of our two-part series. Part II focuses on personnel. Check out Business Accounting, An Independent & Objective View Part I for John Geraci’s insights on process.
Gather all hands on deck…
Good communication is always good business, but it’s especially critical when some or all of your employees are working remotely. It’s paramount to check in with employees at all levels to ensure they remain engaged in their work. Your management team should endeavor to lead by example and encourage collaboration across departments, not just in accounting. And circulate updates as soon as you can when you update your policies, procedures, and processes, such as those for payroll, financial reporting, vendor disbursements, and accounts payable.
Consider researching the cloud-based workflow, time, and expense tracking solutions available to you as well. When your workforce isn’t all together in the office, these solutions can improve process efficiency and give your personnel better visibility across tasks and procedures.
Ensure the crew knows the ropes…
Ensure you provide the proper training and resources for software applications and job duties for your accounting personnel. And make sure they have access to continuous learning opportunities for changing technical and regulatory professional standards, such as those offered through the AICPA as well as your state and local associations.
Break up training into small, digestible chunks of information, videos, or sessions. A University of California, Irvine study found that, on average, an employee generally spends around 11 minutes on a project before being interrupted by another task or request, so your employees are used to processing data and tasks in short bursts. Countless studies have been done on the average human attention span. While the outcomes vary significantly, studies do show that all-day presentations aren’t as effective in terms of maintaining attendee engagement.
The pandemic has reminded us all that now is an ideal time to educate or refresh personnel on cybersecurity matters. In August 2020, Google reported their systems had “detected 18 million malware and phishing Gmail messages per day related to COVID-19, in addition to more than 240 million COVID-related daily spam messages.” There are more opportunities out there today for phishing attacks, malware, and other cybersecurity threats.
Avoid sailing into a storm…
Segregate your accounting duties by execution, authorization, and recording, so you have checks and balances in place. For example, the person approving expenses should not sign expense checks. According to the Association of Certified Fraud Examiners (ACFE) 2020 Report To The Nations on Occupational Fraud and Abuse, 14% of all occupational frauds came from within the accounting department, and check and payment tampering accounted for 27% of those cases. These kinds of internal control weaknesses are easily prevented by delegating and segregating duties appropriately. You can also reduce the risks associated with human error, as well as the time and resources used, by automating manual processes like bank reconciliations, accounts payable, accounts receivable, and payroll.
As you look for opportunities to cut costs in the short term, keep in mind that certain expenses are worth it in the long run. Investing in staff training in addition to high-quality, knowledgeable personnel is essential. Saving now by hiring a lesser trained individual for a pro-level position might prove problematic later in the event of a tax or financial reporting non-compliance issue.
You don’t have to take the helm alone…
LGA’s business advisory, outsourced management accounting, tax, and audit & assurance teams are here to help companies at any stage of the business lifecycle, regardless of financial standing. Our professionals can be your markers as you’re red-right-returning to the harbor. If you’re ready to take an objective view of your personnel and process, I’m ready to help. Contact me today to get started.
by Jim DeCesar, CPA
Jim DeCesar is a principal with LGA. He works with businesses of all sizes to diagnose issues, establish processes, address risks, and achieve their financial goals. Jim’s public accounting and private industry experience allow him to provide clients with services ranging from financial and operational risk assessment, internal controls and process mapping, financial planning and analysis, tax analysis, and business strategy.