Outstanding accounts

The accounting department is still too often law unto itself, setting its own deadlines and failing to provide service to its customers – both internal and external. well-managed accounting centre can transform an organisation into an efficient, effective and more responsive enterprise.

In seven years of running better prac-
tice exercises for the accounting function, we have accumulated wealth of good ideas. Suggestions for making the accounts department centre of management excellence, like any other management function, are based on participants’ experience. Here are 10 of the best ways to introduce best practice to the accounts department.
* Take your accounting team off site once every six months for one-day meeting. The agenda could include refocusing back to corporate goals, the finance goals, internal client feedback (eg results from telephone survey), followed by discussion and setting of team and individual KRAs. The commitment is more binding when an individual agrees to be responsible for KRA in front of colleagues.
* Develop an “account management” culture within the accounting function. The client base should be spread among your accounting function “advisers”. One participant espouses the benefit of an “account management culture” within the accounting function. The accounting team is then driven towards creating value for internal clients and ensuring they have one-to-one meeting at month end to discuss the numbers.
* Introduce more regular performance feedback for your accounting staff – ‘better practice’ is now four times year. Make quarterly forms paperless exercise. One manufacturing participant has found that it is helpful to have quarterly formal appraisals of their accounting teams with quite specific measurement criteria which go across the company. Measures need to slot into one of five categories:
* top line
* EBIT (earnings before interest and tax)
* service quality
* long-term contribution
* human resources.
One government participant has way of ensuring that all performance assessments are performed on time. The six-monthly bonus cannot be divided up until all assessments have been completed. The peer pressure ensures managers meet their commitments.
* Electronic commerce can revolutionise your accounting, especially your accounts payable and receivable. Invest time to understand the ramifications. One insurance company developed “partnership relationship” with suppliers to process the company’s annual 9000 windscreen claims and 9000 related payments. It now has no claim forms and only 12 payments. Instead national glass company does all the work for it. It provides the call centre, checks to ensure ‘car’ is an active policy and then provides weekly activity schedule and electronically processes monthly invoice.
* Use the supplier’s GST number as the unique supplier’s code. As one participant pointed out, the accounts payable staff can now search on, say, the first five digits and select from list of five or six unrelated suppliers. Using the first five letters of their name brings up like-named suppliers, making it harder to pick the correct one.
* Tighten up month-end processing by setting goal, initially five working days with preliminary results going to the CEO by the second working day. Then progress to deadline of the third working day for the finance report. It takes three working days for one government participant to complete its monthly reports. The accounts are closed off on the last working day. Accruals are handled two days before month end with standing accruals for payroll etc. The focus of commentary is on the year-to-date so accrual precision is not necessary. Budget managers are required to provide their commentary in five working days. The final commentary is sent to the CEO by email and is available to all staff.
* Make your monthly finance report work for you by introducing clear performance indicators and graphics. Better practice is where tables, graphics and highlight commentary are on the one page (see example). Clever graphics can summarise the situation much more clearly than detailed paragraphs of commentary. The accompanying commentary need only focus on the key points and the actions and decisions to be taken and made.
• Complete user satisfaction survey for the accounting function. Perform one of these once year and link it to the coming year’s action plan. The process states commitment to undertaking the actions. The surveys need not take up major staff resources. Make it electronic and focus at least half the effort on working with the comments. Companies such as ours can undertake this and simultaneously ensure third party confidentiality. Customers who know their comments will be in confidence give freer and franker feedback.
• Look at replacing your Excel budgeting models with something more robust. Participants are reporting gains from using Microsoft ACCESS, ESSbase, Adaytum and other standalone systems. One regional council participant has set up budget database, online, using Microsoft ACCESS. The database accommodates budget phasing, funding calculations and non-financial data. All users are entering directly into ACCESS. One participant in the education sector uses the Adaytum budget programme which provides robust consolidated environment.
• Generate an “accounting systems newsletter” to cover the “gems” that are found in the system from time to time. participant who has recently input new accounting system has instigated regular update newsletter to the key users. This update traps all those “system gems” that you discover by accident, which makes your life much easier. Not surprisingly, they have greatly advanced the use of their system.

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