Becoming More Productive
Businesses should be constantly striving to become more productive. However, a review of business practices requires a planning process that many businesses do not embrace. What steps must a business undergo to become more productive with its financial records and decision making?
Before a business tries to become more productive, it must know where it is going. It must have financial goals, which should include goals for both compliance reporting (e.g. tax returns and financial statements) and financial management – how do the financial records and reports help run your business?
Then the business must determine how it will meet those goals. Start with the day to day record keeping. That will lead to monthly and annual records, including journals, trial balances and financial statements. See how the transactions flow and how better reporting might result from steps taken daily.
How the records are maintained will be a factor toward becoming more productive. Are there manual and/or computerized financial records?
Manual records take many steps, from writing a check, making a deposit, recording a sale or a purchase, to recording the transaction also by customer, totaling the transactions in a journal, posting the journal to the general ledger, taking off a trial balance, and preparing reports from the results. As you can see, many opportunities for error could occur. With computerized accounting records, each entry is recorded once and can be manipulated to provide reports. Having backups of computer records are essential
Some businesses record their transactions on financial spreadsheets instead of computerized accounting programs. While the spreadsheet can assist in eliminating the manual adding and subtracting of amounts, there may be limitations on the reports generated and the manipulation of the amounts, without spending sufficient time to create complex reports that the computerized accounting programs already have.
Part of being productive with your financial records is dealing with your attitude about the record-keeping process. Do you embrace it to manage my business, or do you only engage yourself with the records when you absolutely have to?
Business owners must focus on what is important for them. Do your financial records have too little or too much data? How detailed are your accounts? What are the costs to achieve the level of financial record keeping that you desire? Do you hire additional personnel or streamline your costs and get less timely and accurate results? Do you have to think about an entry each time you make it or do have you created standardized entries to reduce your time?
A large part of the financial productivity picture may be how you relate to your financial advisors. What is the preferred means of communication? Phone, fax, mail, e-mail, in person or a combination of all of them. When your advisor needs additional information how do you provide it? Does one of you prefer email and the other phone contact? How does your advisor work with your data- is their sharing of documents or are multiple copies of documents prepared?
In order to be more productive a business should stay on top of the technology trends as they relate to their business. Do you regularly update your accounting software, and does that make you more productive? Do you provide for training time in order to learn the latest features of the programs? There are always new features to programs, including online banking, web-based programs as recent examples. You need to be aware that technical support may not be available on older editions, so upgrading might be the only way to get vendor support. There might also be hardware issues as programs get more robust, requiring upgrades or new hardware.
How does your firm make use of the internet to be more productive financially? Some firms use it to assist in making purchasing decisions, by gathering data from vendors. Some firms do research in other areas of the business on the internet too. I recommend bookmarking frequently visited sites Vendors may provide e-mail alerts and newsletters.
Finally, firms need to plan for the future. Will your business records keep pace with your business plans? Make sure you analyze business and technology needs and create a plan for implementation in your firm.
Becoming more productive does not happen overnight, but if you consider taking some of the steps outlined, you will find your business on the road to improved financial recordkeeping and reporting.
By Joseph L. Rosenberg CPA