So what exactly is devolved accounting and how can it improve your bottom line? Fundamentally, it really means extending the responsibility of financial matters beyond the accounting department and introducing a self-service culture when it comes to accessing and/or processing finance-based data. This certainly reduces the administrative burden for the finance team but it also speeds up the accounting process resulting in greater efficiencies across the organisation. Here’s a pick of the common challenges you may recognise in your own organisation that could be solved more efficiently by adopting a devolved approach.
• Valuable finance resources are being tied up on non-essential tasks. Many finance departments can spend days of valuable time collating customised reports for senior management, budget holders and so on. Why not introduce ready-made customised reports that can be sent out automatically via email at pre-set intervals? Or, you can allow managers to access reports themselves at any time of the day.
• Staff unable to help themselves to the latest information wherever they are. Typically non-finance staff may struggle with navigating and finding pertinent information in your company’s finance system. Through the use of information portals available with modern finance systems, users can find, view and take action on information that is relevant to them on an easy to use web page. Browser-based systems allow users to do this when away from the office too.
• Slow authorisation and the need to go green. For those with geographically dispersed sites or departments, purchase orders or other important financial documents can be approved immediately rather than be delayed because they are waiting in somebody’s in-tray to be signed off. By introducing electronic approval, employees can raise a PO themselves and email it to the relevant person to authorise. If there’s no answer, they can then chase approval easily without having to send items through the internal or conventional post. It can also help reduce your carbon footprint as your paper trail is cut down.
• Lack of budgetary control. To avoid over-spending, you can give budget holders daily access to up-to-date information as well as provide summary information to senior managers so they can oversee expenditure and ensure that it is being spent appropriately. They can also view at a glance reports that compare sales targets with actuals so that any remedial action may be taken.
• Inflexible and slow to react to market changes. Altering the method and frequency in which financial information is distributed can also make your organisation more flexible and reactive to market fluctuations. Whereas in the past, board members may have had to wait until the end of the month to see the sales figures, by giving them daily access to this type of information gives them the notice necessary for them to take the appropriate action sooner.
• Poor cash flow and credit control. This is a major area where devolvement can make a tremendous impact. Think about how faster invoices could go out if the sales team could enter their expenses on-line, directly into the core finance system or can alert the finance team via email when a project has been completed. Not only can you bill your customers quicker but a devolved strategy means that non-finance staff can also help you to chase outstanding debt because senior managers have daily access to reports on what is owed and by whom.
Adopting a devolved strategy is rather like a self-help remedy that if prescribed, can dramatically increase both your operational efficiency and your balance sheet. The next challenge is to give employees the right tools and the motivation to take part.
*Simon Kearsley is CEO and co-founder of accounting software vendor bluQube
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