Over the years, we’ve been part of quite a few accounting teams and overseen a few different accounting operations. We’ve been a big fish in a little pond and a little fish in a big pond. And we can tell you, there’s more than one way to implement an effective solution. Of course, there is also more than one way to do it wrong—either by inattention to detail or by following the orders of business owners who may not have a good view of the best accounting decisions for their business and who may not be willing to trust their accounting team. However, for the purposes of this article, we wanted to focus on two broad internal approaches for which we’ve been a part of and from which we’ve found success.
Person-Driven Approach to Accounting: The easiest in-house accounting solution is to hire one or more skilled CPAs with experience in your type of business accounting and industry practices. With few exceptions, this approach will require higher accounting costs. Most skilled accountants command a hefty salary to oversee accounting operations of any notable size. As such, this approach is only as good as your recruitment and hiring practices.
Assuming you make a solid hiring decision, the return on investment with person-driven accounting means that business owners and managers can focus on their actual business. The annals of failed businesses are crowded with stories of owners who spent too much of their time fixing error-riddled accounting operations that are constantly threatening to miss their deadlines. It’s not just the time. It’s also the effect on your motivation and mental space.
Read more about skilled professionals and person-driven accounting.
System-Driven Approach to Accounting: With this type of solution, you’ll invest more of your time and money in software, setting up the system on your own, and creating training manuals so that less specialized employees can handle the business accounting. Turnover and opportunity costs are the biggest risks with this type of approach. If an employee quits, no-shows, or is delinquent, then you may end up losing a big chunk of revenue either through direct loss or by neglecting other aspects of the business. Again, more businesses than you might think fail by getting overwhelmed with secondary concerns that may include accounting solutions and financial oversight.
In a best-case scenario, you find a dependable, entry-level employee who learns your system and ends up staying with the company for a long time. If your company has a substantial number of total employees, offering benefits becomes more cost-effective and can become an important perk to retain this type of low-cost accounting labor.
Read about the value of process-driven solutions from an experienced accountant.
Create Stability Now with an Eye to the Future
As companies grow, their accounting teams are responsible for managing an exponentially increasing amount of data related to billing, payroll, tax compliance, and general accounting. In this sense, business executives need to be aware that the best approach this year may not be the best approach two, five, or ten years down the road. Not just because of the business itself but also because of the rate that accounting and payroll technologies are evolving. This doesn’t mean you shouldn’t work to establish a system that you can count on year after year. Rather, the stability comes in knowing what works about your accounting team and data management resources. And how this team and resources can adapt to respond to new demands, industry standards, and specific business needs.