Often accounting departments are viewed by management, and even themselves, as necessary overhead to keep the books, process payroll, and handle the day-to-day necessary tasks of processing accounts payable and employee expense reports. Some accounting groups operate in a silo, not often interacting, collaborating or supporting their organization’s program staff and management.
Of course, accounting departments must continue to keep clean and timely accounting records and manage payroll and accounts payable, but now more than ever, with technological advances conducive to more efficient accounting processes, they should focus on adding value to the organization by providing proactive, higher level support and communications that help the organization succeed and fulfill its mission.
Several ways that accounting can add value are as follows:
Financial Reporting, Dashboards and Flash Reports
Does accounting ask what financial information means the most to you? In addition to providing monthly financial statements that comply with generally accepted accounting principles (GAAP), program directors and executives should receive internal financial reporting that helps to manage and plan their business, whether it be for-profit or non-profit where the ‘business’ is to best fulfill their mission. Accounting teams should have a thorough understanding of their programs and operations to develop meaningful, value-added accounting and financial information.
Reporting should consider the use of dashboards or more frequent flash reports (which typically provide brief snapshots on a more frequent basis of key financial and other data). Dashboards can be in the form of visual graphs, pie charts and/or tables to more easily illustrate financial information such as revenue mix, expense data or liquidity and other financial ratios information. The design of this non-core financial statement reporting should be a collaborative investment of time and effort between Accounting, program directors and executives.
Budgets are important, but it is important for accounting management to be nimble in responding to changing conditions and providing important rolling forecasts. An effective accounting team should not just focus on historical data by producing financial statements, often compared to budget. They should be proactive about considering the future by producing forecasts of financial results and, if liquidity is a concern, cash flow projections. Forecasting can be an important component to key management decisions and provides opportunities to effectively react to unexpected change. Like historical financial reporting, the frequency and specific forecasting report design should be planned organization-wide to ensure the information is meaningful and adds value.
Transparency and Timeliness of Financial Results
Organizations and their accounting departments should consider the use of the latest cloud-based technology for general ledger, accounts payable and employee expense/credit card charge systems. Migration to the use of this technology not only significantly increases the efficiencies of accounting department tasks (freeing time for value-added endeavors), but provides much increased transparency of timely accounting and expense information through the web to non-accounting personnel.
Optimizing Financial Results
Accounting personnel are the most in touch with the details of the revenues and expenses of the organization, as well as with issues such as aging accounts receivable that impact cash flow. They should consider and communicate valuable suggestions for optimizing revenue and margins, as well as controlling overhead costs. They should ensure that accounts receivable are reviewed, shared and that there are processes in place for effective collection management. Both for-profit and nonprofit organizations should also be managing their expenses and ensuring they are spending their money wisely and in a fashion that best supports their mission. The accountants should be providing advice to program directors and executives to effectively minimize waste, eliminate unnecessary charges and control overhead costs so that monies can be spent to support the key programs and core purpose of the organization.
Technical Accounting Updates
While technological advances result in more efficient accounting processes and therefore provide the opportunity to shift to value-added activities as described above, accounting management must maintain technically strong. They are responsible for staying current in their knowledge and education of GAAP and the impact of changing Accounting Standards Codification (ASC). Management must be kept abreast of new ASCs and understand the timing of changes as well as the impact to their financial statements to ensure compliance with GAAP. For example, they need to understand the consequence of any changes to their reporting of expenses by function and to other financial matters such as debt covenants tied to financial reporting.
Marcum Managed Accounting Services (MAS), collaborating with Marcum Financial Services Group (FSG), can perform an objective assessment of your accounting and finance operations to help:
- assess your current accounting systems, procedures and reporting
- evaluate resources, skills and ability to improve value added services
- recommend steps to maximize efficiencies and effectiveness
- design options for financial reporting, dashboards, forecasting and added tasks to ensure your accounting and finance teams are maximizing their value to your organization.
Marcum MAS, when providing recurring accounting services to our clients, has the benefit of an efficient team of professionals who receive significant continuing professional education and training in the latest technology. Now more than ever, our focus is much more than just providing day-to-day accounting and reporting services. It involves collaboration and partnership with our clients to be the trusted advisor. We provide guidance to our clients at the strategic level to enable them to successfully lead and manage their financial operation during a time of rapid changes and increased uncertainties.