Most business owners and executives spend little time thinking about accounting until an issue arises. When financial reports are regularly issued late, consistently include errors, or compliance deadlines are routinely missed, it is a sign of severe problems in the accounting department. Without access to accurate and updated financial information, it is nearly impossible to make informed decisions. Market expansion, growth opportunities, and cost management become difficult to evaluate without the proper information. Beyond this, the inability to meet compliance deadlines, including state and federal tax returns, can create unwelcome problems. When this happens, it is important to ensure it does not become a chronic issue. To help clients, prospects, and others, WhippleWood CPAs have summarized the key details below.
Workflow and Data Issues
The more data is prone to errors based on workflow and processes; the more problems can arise.
- Struggles with reconciliation: If you’re regularly struggling to get the numbers to match during reconciliation, this can be a sign of an inconsistent system or errors in data.
- Manual entry: Reconciliation errors can stem from manual data entry, which is more prone to mistakes when compared to automated solutions. Modern automation tools can streamline accounting processes, reduce errors, and save time and money.
- Inaccurate statements: Issues with reconciliation and problems due to manual entry can also result in inaccurate and unreliable financial statements that can’t be used for solid decision-making.
- Outdated software: Creaky software that’s hard to use or fails to integrate with newer tools can mean your business is not compliant with the latest regulatory standards or the latest accounting practices. Having to navigate around old tools can also add unnecessary time and effort to what should be easier processes. This can be made even worse if you haven’t made the leap from paper to digital.
- Unclear processes: Is the workflow well-defined, or is the approach left up to each staff member? Without a clear process, it is only natural there will be inconsistencies across the accounting department.
Visibility Issues
It is not possible to address issues that cannot be seen. Visibility problems in accounting systems can occur due to several reasons: legacy software, lack of time to conduct proper reporting, or failure to get the right reporting tools in place. If uncertain about the state of finances at any point in time, that lack of visibility can make it hard to make key decisions about the direction of the business. The more interconnection and automation available with reporting tools, the easier it is to see the state of finances and gather informed insights.
Security and Compliance Concerns
Older accounting systems can also open the door to security and compliance issues, whereas newer software may have built-in capabilities that update to meet the latest regulations. Instead of constantly being reactive to new regulatory changes, a strong accounting system will help businesses be proactive.
Operations Challenges
Turnover, outgrowing the current team, and delays in timing can all be significant operations challenges keeping your accounting systems from functioning optimally.
Turnover on an accounting team can lead to deteriorating or lost processes as one team member leaves and another comes aboard. Employee turnover can also bring operations to a halt as a new staff member is onboarded, or cause lapses in quality as someone new gets up to speed.
Even if you have a strong team, there may come a time when you outgrow your current staff, but not enough to rationalize hiring another full-time person. Or you may find that you’re outgrowing the ad hoc accounting team you’ve put in place of people who may not specialize in what you need as the business continues to scale.
Do these challenges sound familiar? If so, it may be time to invest in new tools, add more people, or augment the current team with outsourced accounting. Choosing outsourced services can be a viable option for businesses in transition. Specifically when dealing with the gap between the current team’s capacity and needing additional assistance. With outsourced accounting, it is possible to have several specialists available to help with bookkeeping CFO-level decisions and all duties in the middle.
Contact Us
The challenges created by a broken accounting process can be stressful and time-consuming to resolve. That’s why many Denver companies rely on outsourced accounting solutions to address the problem quickly and effectively. If you have questions about the information outlined above or need assistance with a tax or accounting issue, WhippleWood CPAs can help. For additional information, call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.