Regardless of the industry, a typical accounting department functions as a cost center, even though it is a critical center that supports the core operations of your business. This is understandable, given the traditional view that a finance team supports the business instead of helping to build it. Being aware of expenses and finding savings is one thing, but being a revenue generator is another.
Today’s business climate demands that we do more with less. Even our most vital cost-focused operations teams are now being asked to deliver greater value to the organization’s bottom line.
Here are some strategies you can use to create value from your accounting team by reducing costs and even generating additional revenue.
Automating Tasks Reduces Costs But Brings Something More
Applying automation to streamline repetitive manual tasks can save you money. For example, many vendors want to offer early payment discounts. Automating the billing and payment processes enables consistent capture of early-bird discounts. This helps reduce your business expenses by paying less on bills (and avoiding costly late fees on missed payments).
Cost savings like these are significant, but perhaps their most critical impact is what they give your organization: time. By automating time-consuming manual tasks, you free up your accounting staff to do more strategic work.
A use of this extra time? You guessed it: better management of your accounts receivable. With more time, you can ensure that you capture payments faster and improve the collection of other receivables such as deposits, structured payment agreements, late fees or any other monetary item your business has. need.
Dematerialization saves more than trees
Running an eco-friendly business is a noble endeavor where many companies 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 that comes bundled with virtually every operating system, application, and internet service. And accounting departments are savvy users when it comes to paper consumption.
Moving to a predominantly paperless accounts payable and receivable model serves several cost-related purposes. It reduces equipment and ink costs associated with printing and copying. It reduces shipping, delivery, storage, and other procurement costs associated with managing paper documents. For accounts receivable, digitally generating invoices and emailing them (or posting) to customers improves visibility and accountability, ensuring more on-time payments. For accounts payable, adopting secure payment policies by e-check, credit card, or even virtual credit card reduces the number of paper checks you cut, shortens your payment windows, and strengthens supplier relationships.
Finally, creating and storing digital records dramatically speeds up access to those documents whenever you need them, not to mention reducing fraud and compliance with tax audits. Like automation, this can save your accounting team a significant amount of time.
Removing data silos for insights can increase profitability
Data silos are information, files, software, or data points accessible by a department but isolated from the rest of the organization. Data silos often result from growth, divergent functions, and different directions between different departments. As organizations grow, these silos make internal data sharing more complex, resulting in a serious lack of transparency, efficiency, and trust.
Data silos in accounting prove particularly detrimental to businesses as they limit meaningful analysis, create bottlenecks in workflow, and delay the availability of vital financial data that can hamper the decision-making process. organisation. This can lead to missing critical additional revenue opportunities.
Resolve to dismantle your accounting data silos before they grow too big. Start by integrating departments and platforms using enterprise resource planning (ERP) software or similar solutions. These platforms allow you to collect and centralize data from multiple departments, including accounting, sales, marketing, purchasing, project management, and IT. Centralizing accounting data eliminates duplicates, increases transparency, and facilitates sharing and collaboration.
Additionally, once you eliminate silos of accounting data, you promote extensive analysis across the organization to uncover insights that lead to increased profitability. Teams can work more freely together and make better decisions. They can identify exciting new opportunities (such as sales determining your company’s most valuable customers) and develop better spend and expense management habits (such as IT identifying duplicate processes or systems).
Cost savings are important, but what about generating profits?
How can you generate real extra revenue and profit? I mentioned earlier that you could use the time saved by automating vendor payments for activities like increasing debt collection, which goes straight to profit. But this is just one example.
You can also ask the accounting team to focus this new time on building relationships with your vendors. Paying suppliers on time helps maintain relationships, which makes it easier to negotiate discounts, and discounts mean wider margins and higher profits. Beyond timely payments and remittances, positive supplier relationships help reduce delays in your materials supply chain that could impede timely delivery of products to your customers. Maintaining that revenue is the key to profitability.
Having more time can free up your staff to provide other value-added services to customers. For example, offering them creative financing terms can save you transaction fees while making it easier for them to pay. Or you can offer virtual credit cards with “cash back” programs to make timely payment easier and more attractive. (These could also earn you a convenience service fee, another revenue stream.) These and other accounting-related services can increase profitability, not to mention reduce processing times, fraud and transaction costs.
The key to pursuing profit-generating activities like these, however, is giving your team the extra time needed to deliver value-added services — time that the previously mentioned strategies help provide.
If it looks like a cost center and speaks like a cost center, is it really? It doesn’t have to be! Besides providing crucial support to other business units, your accounting team can also be a revenue generator. Through the strategic use of automation, paperless processes and data sharing between departments, not to mention freeing up the time needed to deliver more value-added services to customers, your accounting team can reduce costs. and contribute positively to the bottom line.