Accounting teams are critical to keeping an organization running. Without them, employees and vendors don’t get paid, business leaders lack visibility into performance, and cash doesn’t move where it needs to go. These teams may not be at the forefront of business, but they are just as important.
Yet accounting teams often receive less attention when it comes to improving their processes. That is understandable. Much of their work happens in the background, and when things are going well, most people in the organization rarely hear about it. When employees do hear about the accounting team, it is often because something has gone wrong.
Accounts payable and accounts receivable teams are central nodes in an organization. They interact with multiple functions to keep work moving, while also operating under strict deadlines. They may be responsible for closing the books, managing invoices, tracking assets and handling countless transactions. When processes become inefficient, the resulting workload can contribute to burnout and increase the likelihood of errors.
This was seen first hand working with an Accounts Payable team within a large public transportation organization. The organization managed major infrastructure projects involving hundreds of vendors, in addition to the everyday purchases required across the organization. A relatively small AP team was responsible for managing these transactions.
One of the biggest challenges was the number of handoffs between AP and other parts of the organization. Much of the work involved basic follow-up and reminders, but there were also error corrections and efforts to make sure different steps were completed on time. Invoices arrived through different channels depending on the vendor, and many were still submitted on paper, making them difficult to track.
The AP team also had challenges working with the departments requesting products and services. For smaller purchases, the original purchaser might not remember the transaction or could have misplaced a receipt. At the other end, employees often needed approval before making relatively small purchases. These delays affected not only the AP team, but also the departments waiting for products and services and the vendors waiting to be paid.
The first step was understanding how the process actually worked.
There was considerable variation in how employees completed the same tasks. Each person had developed their own nuances and standards. Some employees might wait several days for an approval before following up, while others would follow up immediately. This created confusion for the rest of the organization when approval was expected. Departments also occasionally forgot that an invoice was waiting for their approval, creating additional delays.
The team was so inundated with work that it had little opportunity to step back and identify the root causes. If your clients are facing similar challenges, there are several actions you can take to help them improve their processes:
- Define the Problem: Identify what you are trying to solve before jumping into solutions. The problem could involve process speed, error rates, employee turnover, vendor relationships or something else. Without a clearly defined problem, teams can spend considerable time addressing superficial issues.
- Map the Workflow: Work with accounting staff and upstream and downstream stakeholders to visually document the key steps in the workflow. Start at a high level and add detail where necessary. The goal is to understand how the work is actually done without getting bogged down in minutiae. Along the way, identify key challenges and opportunities.
- Design the Future State: Build a streamlined target process designed to eliminate non-value-added steps, reduce unnecessary decision points and minimize manual touchpoints. Look for opportunities to remove the “swirl”, the follow-ups, rework and unnecessary steps that do not add value to the business or its customers.
- Pinpoint the Obstacles: Identify the roadblocks that could prevent the team from reaching the desired future state. These might include outdated policies, communication breakdowns or siloed teams. Prioritize the obstacles that have the greatest impact and understand their underlying causes.
- Develop Improvement Ideas: Determine actionable solutions to address the root causes of the problems. Do not limit the team too early based on budget or capacity. First determine what would improve the process, then evaluate how those improvements can realistically be implemented.
- Execute, Pilot and Iterate: Prioritize improvements based on impact and effort. Start with changes that can create meaningful results without overwhelming the team. Treat improvements as experiments that can be tested on a small scale, evaluated and refined. Establish accountability for moving the changes forward or adjusting course when the results are not what you expected.
By working with your clients in using this approach, even at a high level, will provide something many organizations lack: a shared understanding of how work actually gets done.
People often believe they know the process because they understand their part. However, they may not understand what happens before or after their particular step. Mapping the current and future states gives the organization a common benchmark for improvement.
It also creates an opportunity to surface ideas that employees may have been carrying around for years. The people closest to the work often know what could be improved, but they may not have had the time, structure or support to act on those ideas. Leaders can help by creating an environment where improvements are treated as experiments rather than permanent commitments that must succeed on the first attempt.
Not every improvement requires a major technology implementation. Some of the biggest opportunities may involve communication, accountability, policies, leadership or simply clarifying who is responsible for what. Where technology is appropriate, automation and AI can also be used to reduce manual work or improve how information moves through a process.
The important thing is to resist the temptation to start with the technology or the solution. Before deciding what to change, first understand what is happening today. Once the current process is visible, you can identify the problems, design a better future state and determine which improvements will actually move the organization toward it.
For CPAs and other advisors working with clients, this can be a valuable area to explore. You already have visibility into your clients’ financial processes. Asking a few additional questions about how the work gets done can uncover opportunities to reduce errors, improve efficiency and make better use of the people and technology they already have.
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About the author: Kevin Saboori is the founder of Optima Workflow Consulting LLC and has over 10 years of professional experience helping businesses improve their operations. Kevin has worked across multiple industries to include financial services, healthcare, aerospace, public service, retail, maritime and non-profits. As a consultant he has worked within these organizations to improve processes related to supply chain, accounting, HR/recruiting, facilities, and IT. If you have questions or want to connect, he can be reached at ksaboori@optimaworkflow.com
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