Regardless of industry, a typical accounting department operates as a cost center, albeit a critical one that supports your firm’s core operations. It’s understandable, considering the traditional view that a finance team supports the enterprise instead of helping to build it. Being mindful of expenses and finding cost savings is one thing, but being a revenue generator is another thing entirely.
Today’s business climate demands we do more with less. Even our most vital cost-oriented operational teams are now asked to deliver greater value toward the organization’s bottom line.
Here are a few strategies you can use to create value from your accounting team by reducing costs—and even generating additional revenue.
Automating tasks reduces costs but gives back something more
Applying automation to streamline repetitive, manual tasks can save you money. For example, many vendors are keen on offering early payment discounts. Automating invoice and payment processes allows for capturing “early-bird” discounts consistently. This helps reduce your company expenses by paying less on invoices (and avoiding costly late fees on overlooked payments).
Cost savings like these are great, but perhaps its most critical impact is what it gives to your organization: time. By automating time-consuming, manual tasks, you free up your accounting staff to do more strategic work.
One use of that extra time? You guessed it: better management of your accounts receivables. With more time, you can ensure you’re capturing more timely payments and improving the collection of other receivables such as deposits, structured payment arrangements, delinquent fees or any other monetary item your business requires.
Going paperless saves more than trees
Operating an eco-friendly business is a noble undertaking where many firms excel except when it comes to the amount of paper they use. Far too many organizations continue to rely heavily on paper, despite the availability of inexpensive cloud storage bundled with practically every operating system, application and internet service. And accounting departments are power users when it comes to paper consumption.
Shifting to a primarily paperless accounts payable and receivable model serves several cost-related purposes. It lessens the equipment and ink costs associated with printing and copying. It reduces shipping, delivery, storage and other procurement costs for paper document handling. For receivables, generating invoices digitally and emailing (or posting) them to clients enhances visibility and accountability, further ensuring more on-time payments. For payables, adopting secure e-check, credit card or even virtual credit card payment policies decreases the number of paper checks you cut, shortening your payment windows and strengthening vendor relationships.
Finally, creating and storing digital records significantly speeds access to those documents whenever you need them, not to mention helping to reduce fraud and comply with tax audits. Like automation, this can save your accounting team a tremendous amount of time.
Removing data silos for insights can increase profitability
Data silos are information, files, software or data points that are accessible by one department but isolated from the rest of the organization. Data silos often result from growth, diverging functions and differing focus among various departments. As organizations grow, these silos make internal data sharing more complex, resulting in a severe lack of transparency, efficiency and trust.
Data silos in accounting prove particularly detrimental to businesses as they limit meaningful analysis, create workflow chokepoints and delay the availability of vital financial data that can hinder the organization’s decision-making process. That can lead to missing critical opportunities for additional revenue.
Resolve to dismantle your accounting data silos before they grow too large. Start by integrating departments and platforms using enterprise resource planning (ERP) software or similar solutions. These platforms allow you to collect and centralize data across multiple departments, including accounting, sales, marketing, procurement, project management and IT. Centralizing accounting data eliminates duplication, expands transparency and facilitates sharing and collaboration.
Further, once you eliminate accounting data silos, you promote expanded analysis across the organization to uncover insights that lead to increased profitability. Teams can more freely work together and make better decisions. They can identify valuable new opportunities (for example, sales determining your firm’s most valuable clients) and develop better spending and expense management habits (such as IT pinpointing duplicate processes or systems).
Cost savings are great, but what about generating some profit?
How can you generate actual additional revenue and profit? I already mentioned you might use the time saved by automating vendor payments for activities like boosting collections of receivables—that goes directly toward profit. But that’s just one example.
You can also have the accounting team focus this newfound time on strengthening relationships with your vendors. Paying vendors on time helps maintain relationships, making it easier to negotiate discounts, and discounts mean wider margins and higher profits. Beyond timely payments and discounts, positive vendor relationships help ensure fewer delays in your materials supply chain—the kind that might hinder on-time delivery of products to your customers. Keeping that revenue flowing is key to profitability.
Having extra time can allow your staff to offer other value-add services to customers. For example, offering them creative financing terms can earn you transaction fees while making payments easier for them. Or you might offer virtual credit cards with “cash back” programs to make it easier and more attractive to make timely payments. (These could also net you convenience service fees—another revenue stream.) These and other accounting-related services can boost profitability, not to mention reducing processing times, fraud and transaction costs.
The key to pursuing profit-generating activities like these, however, is giving your team the extra time necessary to offer value-added services—time that the strategies mentioned earlier help provide.
If it looks like a cost center and talks like a cost center, is it really? It doesn’t have to be! In addition to providing crucial support for other business units, your accounting team can also be a revenue generator. Through the strategic use of automation, paperless processes and cross-department data sharing—not to mention freeing up the time needed to offer more value-added services to customers—your accounting team can reduce costs and positively contribute to the bottom line.