Prioritizing your Accounting Needs

Any good accountant will tell you that their to-do list is unfinished. Why? The best accountants know that there’s always something that can be improved or verified or updated and they do their best to stay on top of everything, but every company has finite resources to allocate, and their time is limited as well. 

An accountant making a list of accounting priorities.

​Maturity in business acumen comes from knowing what to prioritize for the greatest return. Whether you are handling it in-house or outsourcing your accounting activities, knowing where to devote limited resources is crucial for good decision making.

​But how do you know where to start? What’s the most critical thing that absolutely needs to be done first? What will offer significant benefits down the road when more resources become available? And what would be nice to do eventually, but isn’t essential? And what should you avoid doing entirely?
Obviously, there’s not a single right answer to these questions because every organization has different business needs. However, there’s a framework that you can use to make these kinds of decisions, regardless of individual circumstances, so you know what to do now, soon, later, and never. 

​Do It Now
Knowing what to prioritize first hinges on knowing how the business is doing financially. Statements and financial reports should be up to date and Key Performance Indicators (KPIs) should be analyzed on an ongoing basis to provide an accurate real-time picture of how the business is doing and what its most pressing needs are. Understanding this landscape should make it easy to identify threats related to business stability and long-term sustainability.

If there’s a cash flow problem, mounting debt, or other financial issue that threatens to derail the company, that must be addressed first. Like triage in a hospital, the most life-threatening matters must be dealt with first and then everything else can follow.

Even though they might not seem as dire, this includes compliance matters as well. Unmet compliance and regulatory requirements can also cause serious damage in the form of financial loss, legal repercussions, or reputational harm, which puts them at the top of the list of things to address. 

For some companies the most serious risks may be related to technical infrastructure around their internal controls or accounting software. Companies with weak (or nonexistent) internal accounting controls can open themselves up to fraud risk, while companies with outdated or poorly protected accounting systems may be ripe for data loss or a breach. Ensuring that the proper controls are being implemented and maintained is crucial, while data backup and protection are crucial components of managing any company’s finances in today’s heightened environment of cybercrime.

As your infrastructure is updated or replaced, ensure that all current staff and new hires have the training and development resources needed to keep up with the changes. Invest in your people as much, if not more than, your systems and technology. Remember, without the right people to use it, even the best technology will fail to do what it’s intended to accomplish.

High Priority:

• Financial stability
• Compliance and regulations
• Internal accounting controls
• Accounting software and data protection
• Training and development

Do It Soon
Cost analysis and budgeting are hot topics among business leaders and, in so far as they can affect short-term cash flow, they are certainly important to prioritize. However, they are typically not as pressing as the business viability issues already mentioned. Once the business and its operations are effectively protected from financial and legal risk, management can focus on effectively managing expenses and budgets. Where costs need to be reduced the goal should be to do so without compromising quality or customer focus.

These costs and their associated budgets will help to inform financial forecasts and projections as a part of ongoing business modeling efforts to help the business better anticipate its future financial needs. Knowing what to reasonably expect in the way of inventory, revenue, and profitability aids in ongoing strategic financial planning, making it a key component of overall organizational management.

Medium Priority:

• Cost analysis
• Budgets
• Forecasts and projections

Do It Later (Maybe)
Once you have shored up the business with high priority items and strengthened the business with medium priority items, it’s time to evaluate what kind of return lower priority items can have on revenue and profitability. Generally, this is where organizations will explore new software options, evaluate the possibility of outsourcing business activities, more closely examine the return on sales and marketing costs, and analyze individual product lines or markets to determine where changes may need to be made.

The types of business changes evaluated in this step will vary greatly from one company to another, but the overall focus here is on examining current business operations to look for places where improvements can be made to increase capacity, scope, efficiency, profitability, and so on. This can cover a wide variety of areas, which will be unique to each business.

Low Priority:

• Software
• Outsourcing and staffing
• Sales and marketing
• Products/services

Don’t Do It at All
It might surprise you to hear that there could be items on your to-do list that you shouldn’t do, but there may very well be some. First, if you have any items that are an accounting manager or the business owner’s pet projects that are not related to driving revenue, they need to be removed. Obviously, you shouldn’t just ignore them, and passive aggressively put them off indefinitely. However, you should have an open and honest conversation with your superior and explain why your time and the company’s resources would be better spent doing other activities instead. Don’t simply say, “No, I’m not doing that.” – say, “Let’s do this instead” and explain where your time can be better spent. Present the top priorities that you have identified to them and make the case for why those deserve all your undivided time.

Similarly, chasing the latest fads simply because other companies (maybe even some of your competitors) are doing so can be a waste of time. The great part about accounting is that you don’t need to jump on the latest and greatest thing to be effective in your work. Now, that’s not to say that you should keep doing things the same way forever, but you also don’t need to be an early adopter of every new software version release or app integration when it would likely be a better use of you time to let someone else work out the bugs for you. Rely on what you use that works well and adopt new technologies once you have a business case to do so, not simply because you can. Before you make a change, know what you hope to accomplish and then evaluate the change through that lens to determine if it was successful and adapt as needed.

Avoid:

• Distracting pet projects
• Chasing the “latest and greatest” fad

​When you need help prioritizing your accounting needs, contact us! Our team of US-based consulting accountants has the experience needed to come alongside your business to help determine what you need to improve and advise on how to make those changes. As your full-service accounting partner, we can meet all your bookkeeping and accounting needs or supplement your existing accounting team by handling overflow or project work. Find out more about the outsourced accounting services we offer today!