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Turn Over a New Cliché: Adopt Best Practices
Turn over a new leaf. Make a New Year’s Resolution. Make a fresh start. Get your
ducks in a row. All familiar clichés, but their message is valid: At this time of year,
you probably feel like renewing your commitment to running a more successful,
productive business.
There are numerous ways to do this, but you might consider adopting the concept
of best practices (if you haven’t already). Most industries have them, primarily
larger businesses. Best practices are a set of operational guidelines that are
expected to produce a favorable outcome. Run your business using these
techniques or methods, and you’re likely to be more successful.
Accounting has best practices. While they’re not carved in stone, sticking with some
tried-and-true, common-sense procedures will likely lead to increased efficiency.
Perhaps adopting some or all of them will make a difference in your business.
QuickBooks can help.
The Three I’s
Let’s look at the three stages you’ll encounter when you decide to apply best
practices to your company.
Identify.
What problems are you trying to solve? Where are your bottlenecks? Are
collections a problem? Cash flow? Timely, accurate payroll? Have you seen a
reduction in your customer base? Are your bills being paid late? Having trouble
keeping up with inventory?
Bring your employees in on this process. They’re on the front lines, and will have
insight into where your systems are breaking down. They’ll be pleased to be
asked, and they may have ideas that will evolve into best practices.
Figure 1. When you’re formulating ideas that could evolve into best
practices, use your best resource: your employees.
Implement.
Turn your ideas into policies, and formalize them. Make a big deal out of
introducing them to all staff related to accounting, and explain the rationale
behind them. They’re intended to improve your company’s financial bottom
line, which should translate into a positive outcome for everyone. Don’t
turn your presentation into a critique of past performance; emphasize the
constructive nature of the changes. Put it in writing, too.
Here are some examples of best practices that other businesses have
implemented.
· Invoice at the time of service/shipment, instead of once or twice
monthly.
· Set a specific time interval to deal with collections, like once a week.
If you’re running QuickBooks 2011, you can use the Collections
Center. Previous versions have numerous helpful reports, like A/R
Aging Detail, Open Invoices, and Collections Report.
Figure 2. QuickBooks 2011 features the automated Collections Center.
· Estimate your income tax obligation monthly, not just quarterly.
When payments come due, there won’t be any major surprises.
· Make sure everyone who works with accounting has a backup
person who can fill in. Consider having us do the training.
· If you don’t have a merchant account—which QuickBooks
supports—get one, and encourage customers to pay in this fashion.
Pay your bills the same way wherever possible. Use all of the
technology that makes sense for you.
· When it’s logistically possible, have employees who incur billable
time use a timer. A few minutes lost here and there adds up.
QuickBooks has a built-in timer; remote employees can use
Time Tracker.
Figure 3. Have employees time billable activities whenever possible.
· When was the last time you looked at your pricing structure? Are you
building in enough profit? Evaluate your selling ratios on a schedule.
Run inventory reports regularly.
See? It’s not rocket science. It’s a matter of emulating the practices of the
most successful businesses. You might network with other companies to see
how they handle this formalizing of processes. Talk to us, too.
Insure.
Don’t leave it at that. Evaluate the effectiveness of the new best practices by
scheduling follow-up meetings with employees . What’s working, and what
isn’t? Do you need to tweak your methods?
This step is absolutely critical. You might want to appoint a compliance officer
who follows up with individual employees and departments. If your business is
small and informal, you could bring in lunch one day a month for follow-up –
and for the development of new best practices.
Not just for mega-companies
You may already know something about best practices, but have always assumed
that the concept was designed for big business. While it may be more of an
imperative for large companies, even a sole proprietor with a bookkeeper can
benefit. It’s really just a matter of putting the most effective work processes into
place and maintaining them. Implementing best practices can be a good first step
towards a more successful 2011. Call us if you have any questions.
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