The General Accounting Processes and Procedures You Should Be Doing
At the center of any financially profitable and stable company is a robust accounting process. There will be four primary functions that need to be taken care of consistently and portray accurate information: reviewing reports and other information, approving staff work, reconciling the bank statements, and preparing reports. There will be an accounting supervisor on the accounting team that is responsible for managing accounting and administrative staff related conflicts including absenteeism, and workload balance.
Their role is to oversee general processing to ensure timely and accurate delivery of financial information. By overseeing payments, receipts, treasury management, and transaction processing, it will make for an impressive, streamlined process including making required tax filings and regular payments easier. Some of the other accounting processes that will be needed consistently are:
|Reconcile Bank Accounts||Process and review monthly, quarterly, and yearly accruals|
|AP & AR||Month end processes|
|Payroll processing and oversight||Administer sales, commissions, and compensation Plans|
|Review account fluctuations||Implement internal control activities|
|Balance Sheet Reconciliations (AMEX & Credit Card Reconciliations)||Find areas for cost savings and greater efficiency|
|Maximize accounting system efficiency||Assist in the design and preparation of budgets for review by management|
|Customize your chart of accounts for optimal reporting||Process & Review Transactions (sales, payments, accruals)|
Process and & Procedures
1. Accrual Method
The accrual method provides flexibility to help a company shift their earnings to help reduce their tax liability. The revenue and profit are not tracked until it occurs. This method of accounting is typically used to for medium and large sized businesses.
2. Cash Accounting
This method of accounting is common in small businesses and track everything as it is paid or received in comparison to accrual accounting, working similarly to a personal checking account. There is less flexibility, but this process is simple and easier to manage.
3. Books and Receipt Tracking
Potentially one of the most important accounting processes is bookkeeping and record tracking. It is crucial that a record of every transaction is kept as well as any income- required by law. This is necessary for many reasons, one being tax write-offs, determining gross and net revenue numbers, and more. It is important to keep things organized in a ledger. There are so many great options available now for accounting software systems to streamline this process for you like QuickBooks. A system implementation can benefit your financials in more ways than one.
4. Fixed Expenses
Understanding the minimum costs that a company must pay is important for the overhead structure. Fixed expenses need to be set. Fixed expenses are things like office space, insurance, utilities, etc. A good accountant will know that overhead costs are not always constant. They will be sure that projections are put into place to help ease the accounting process.
5. Cash Flow and Cash on Hand
Another extremely aspect of accounting Is managing the cash flow and cash on hand. Most businesses require a certain amount of cash to operate and cover daily expenses, any expenses that come up that were not expected, which is bound to happen. Every ounce of cash needs to be tracked, because it plays into the profit and loss statements required by a business.
6. Temporary Lines of Credit
A business will typically at some point need a line of credit to cover expenses. In most cases, credit is allocated against invoices to cover operating costs until the payment is received. It is important for the accountant to track and utilize a line of credit to meet expenses until the invoices are received.
7. Inventory Management
Inventory management is the process of ordering, storing, and using a company’s inventory. Since a company’s inventory is one of it most valuable assets, it is extremely important that inventory costs and margins are tracked correctly.
8. Payroll Accounting
Payroll is a significant role of the accounting team. Any sort of blunder with payroll can leave businesses with angry employees. Payroll does not just include salaries, it includes taxes, and any other deductions like matched savings, insurance, and more. A lot of companies accounting departments work hand in hand with HR, which is why it is so important to be on the same page.
A payroll software, such as ADP, will make a substantial impact on this process as well. Typically, what an outsourced firm finds is that someone is completing payroll in the company that shouldn’t be, such as a Controller or low-level manager.
9.Reconciliation in Accounting
It is not unusual for there to be multiple ledgers and accounting books within a company to track expenses, invoices, and so on which is why reconciliations are so important to bring everything full circle. Depending on the company and transaction volume, reconciliations are done weekly, monthly, or quarterly. The final reconciled numbers are the ones that will be used for formal reports and for IRS reporting.
How NOW CFO Can Help
Our financial consultants can be sure that you have all the above accounting processes and procedures set in place to have full financial visibility and success. Some of the smaller processes often get overlooked or pushed to the side, and it can cause more problems that business owners realize until damage is done whether that Is being behind on books, or expenses not being paid on time. Let NOW CFO help you stay on track and have a solid accounting department and processes.
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