Regular checkups are essential to good health. That goes for your business as much as your body.
When it comes to how well your company functions, your accounting system is the brains of your operation. The right system gives you easy access to the data necessary for wise decisions about resource allocation. Your accounting system should generate financial reports that indicate whether your business is heading in the right direction. If it isn’t, those reports should also provide you the information you need for a more in-depth analysis.
But much like a healthy body, an accounting system needs an annual checkup to remain in good working order. Here are three compelling reasons to schedule that checkup, followed by tips on what to look for:
Times Change. You Need to Keep Up.
Market conditions, technology, competitors, and regulations are just a few of the circumstances in your external business environment that can change. When they do change, it changes the way you need to approach your finances. Does your accounting system still prepare you for the conditions you face?
Internally, if your system produces inaccurate or out-of-date information, it’s a red flag that you’re not properly managing your books. Such mismanagement in even one area of your business can have a severe negative impact on the whole company.
You Can’t See the Forest for the Trees.
Proposal deadlines, client acquisitions, project due dates… When you’re doing what it takes to maintain competitiveness on a daily basis, it’s easy to forget to rise above the fray for a holistic view of how well your accounting system is supporting your operations. A regularly-scheduled accounting system checkup allows you to ensure that the numbers you rely on are still giving you a clear picture of where your firm stands.
You Could Be Doing Better Than You Realize.
Do you rely on manual, labor-intensive processes such as paper forms, spreadsheets, and emails to complete tedious and/or repetitive financial tasks? With accounting system process improvements in place, you could automate and streamline tasks to boost accuracy, efficiency, and consistent results.
Many firms find it useful to bring in an accounting consultant for process improvement advice:
- An outsider often has expertise beyond that available on your team.
- A consultant can bring a fresh perspective to tasks that are so familiar; you may not realize they’re a drag on your business. Your advisor can help you streamline those tasks for greater efficiency.
- An advisor can determine whether your company is doing what it needs to do to comply with Defense Contract Audit Agency regulations. Those procedures are designed to ensure that you properly track costs through the federal acquisition process.
Assess Your System Top to Bottom
Your physician conducts your annual checkup equipped with a list of vitals that she needs to assess. Your accounting system also has a set of vitals that must be in smooth working order to provide you with an accurate financial picture. Make sure your system checkup includes these important components – download our checklist here.