Prompt: In corporate accounting, streamlining processes is key to efficiency. You can start by evaluating your current accounting workflows and identifying bottlenecks. Implementing automated solutions for repetitive tasks, such as invoicing or reconciliations, can save time and reduce errors. Encourage cross-departmental communication to ensure that financial information flows smoothly throughout your organization. By simplifying and automating processes, you’ll improve accuracy and free up your team to focus on more strategic tasks.
Response: While I don’t directly address streamlining the accounting function and processes themselves, my point of view ultimately impacts streamlining the function, increasing efficiency, and reducing waste.
An accounting system is an information system that supports the communication of a business entity’s health at a very deep level, not just superficially.
Corporate accounting supports the communication of financial information outward. A stringent environment dictates the framework within which a business needs to operate, especially for publicly traded companies. That framework supports compliance under varying regulatory constraints.
However, the ability and information needed to manage a business entity effectively come from that same accounting system, which provides information to those who lead and manage the business entity’s activities on a day-to-day basis.
So, there needs to be an element of compromise. The transactions that impact that very same accounting system are generally initiated by the business activities of non-financial employees.
When designing the structure of the accounting system that supports both external reporting needs and internal management needs, one needs to consider the organization of other elements of that system, for example, elements in an account code combination that take into consideration necessary product line reporting, departmental reporting or costs center reporting which reflect functions within a business entity, as well as the ability to include other generative elements within a code combination upon which key business reporting can find their underpinning.
The key here is the ability to combine varying aspects and elements, which I’ve mentioned above, so as not to create multiple static accounts that overpopulate a chart of accounts and ultimately lead to a cluttered general ledger.
Being able to use the accounting system for flexibility to report on operational aspects of the business helps support providing information on operational performance to “the street.”
In many organizations, where careful consideration is not given to the key business reporting needs, painfully time-consuming gyrations exist to obtain good information, which precludes agile and streamlined reporting.
Thinking about and planning to use the accounting system in a manner that allows information to flow smoothly and can be trusted requires serious consideration and a commitment to a strategic approach.
The more complex the business, which includes multi-functional support to produce the offerings being sold in the public market, i.e., in a manufacturing environment, the more need there is to plan, be explicit, set out good strong policies around usage of account categories, and what kind of transaction information they should contain. This will aid in setting up a generative and ultimately flexible structure within which you can place more confidence in the quality of the information being generated.
The above only touches the surface of potential consideration for an accounting system that produces reliable information and serves multiple functions agilely. Having good fence posts around the structuring of the accounting system and considering what reporting needs there are will reduce rework, over-processing, and many aspects of waste administratively as well as in other functional areas of a business, costs of inefficiency and poor quality that we should keep seeking to reduce and eventually eliminate.
Continuation of the original post:
The use of elements or components in an account string is clearly not an original idea that came from me. But it is an idea and a concept that I’ve embraced. I am an accountant who has worked in the managerial accounting spaces from the manufacturing plant to a division to the structure of a business group liaising with corporate FP&A and corporate accounting with the aim to soundly and clearly commuicate the results of business operations. This needed information finds its base in the way the accounting system is structured. I am also a linguist and an ESL teacher and coach. The art of teaching language finds its base in presenting generative concepts that support varying and multiple possible permutations by which to both communicate and understand a language. So it also is with accounting.
In linguistics, specifically in syntax, we embrace the concept of language or utterances of language having a surface structure that we recognize and a deep structure that supports the surface structure. That deep structure supports the ability to choose varying ways of expression, e.g. like tense (time) and how and where in a string of words and within the structure of that string of words is tense expressed.
The accounting system has a surface structure that allows the creation of financial statements, e.g. the balance sheet, the income statement, the statement of cash flows but there is an underlying structure that supports the presentation of those externally facing reports but that also supports the inwardly facing reporting that then provides the information that is paired with the financial statements to provide insights into the health of the business as well as its operating performance.
Dragonfly Language Svcs. 