Accounting and Finance Systems
Unlocking the Hidden Value

By Tom Sonde

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No software solution is perfect, but many offer major improvements in various areas. The key to getting the most from a system is to marry process with technology and apply best practices. Best-in-class organizations know that technology alone cannot solve every problem.

They recognize that technology works best when aligned with process.
For a variety of reasons, systems often fail to achieve the efficiencies envisioned by the software’s designers. It may be easy to blame the system, but the reality is that many problems stem from how the system was implemented. The good news is that most implementation issues can be resolved without the upheaval and cost of a new installation.

Why System Implementation Issues Occur

System implementation issues can be caused by a number of factors. Many projects are managed by external consultants who have a limited understanding of a company’s business. Projects often run into unexpected issues and consultants are forced to cut corners and redeploy resources to resolve the problems. Consultants’ expertise usually lies in installing software, not in improving business processes, which means they often focus only on technical issues. In addition, because IT departments usually manage these projects, consultants often view IT, rather than the process owner, as their customer.

The issues caused by end users often compound the problem. Rather than have full-time staff on the project, most accounting and finance departments run lean and have limited time to spend with system implementers. Users’ system knowledge may not extend far beyond their old systems. Often, they do not know what to ask for or what to demand out of a new system. This results in inefficiency when system functionality is misused or goes unused while old, inefficient processes are forced to work with a new system.

A Treasure Trove of Opportunities

A process owner who knows what a system is capable of and understands best practices can uncover a treasure trove of opportunities for improvement. Solutions to system problems may be as simple as restructuring payroll’s reporting system to rely on employee last names as opposed to first names. Or the solutions may be more complex, such as turning on the system’s workflow functionality so documents can be routed directly for data entry and approval.

Staff members often hear the dreaded claim: “The system can’t do that.” In many cases, the problem is simply that the system has not been set up to perform a particular task, but would be able to with the proper work and insight. Consider the following example. A purchasing manager had become displeased that his staff manually faxed purchase orders to several vendors. In one case, it was the only way to effectively work with a local, but critically important, hardware store. A process review recommended he automate faxing by using the system’s fax-on-demand functionality. The IT department had the new functionality up and running within a few days. The purchasing manager estimated that this simple change saved his department 200 hours of work per year.

Gaining an understanding of delivered system functionality is easier than most people realize. It is not necessary to be a system expert or to know how to implement software. Instead, it is important simply to understand what the vendor included as delivered functionality. This knowledge can be obtained from vendor-provided documentation or by purchasing an inexpensive book on the topic.

Combining knowledge of system functionality with an understanding of best practices can help accounting and finance departments become more efficient. Understanding best practices may require more effort but is still easily accomplished. Individuals can learn about best practices through a variety of sources, including conferences, professional organizations, internal and external auditors, other companies, web searches, books, and consultants. The same way addressing functionality issues improves the system’s performance, combining applicable best practices significantly improves the efficiency and accuracy of the department.

Armed with knowledge of system functionality and best practices, an individual is ready to perform a process walk-through. Meeting with the process owners and gaining an understanding of how their work gets accomplished will uncover many opportunities for improvement. It is most important to gain an understanding of the steps needed to complete the process. This can be accomplished by speaking to all process owners, regardless of their department. In some cases, this may require several sessions with an individual; in others, only a brief meeting may be needed.

Some findings will be a surprise to both the process owner and management. Recently, while reviewing an accounts payable department’s check disbursement process, the author made a startling observation: An employee was making a copy of every check and related advice before mailing them out, because the staff had not been instructed on how to properly access the information. They continued to use the old process from the legacy system and referred to the copy when a vendor called.

Areas to Address

When reviewing a process, the following areas should be addressed:

Training. The staff must receive appropriate training. Showing collections employees canned reports and teaching them how to write a database query is not nearly as effective as gaining an understanding of their needs and then helping them access the information. For example, having all relevant customer data available in one place can be invaluable when calling a customer regarding a collections problem.

Reporting and data access. All staff must know what data are available, how to access it, and how to use it. Simply knowing how to access a report or write a query is not enough. Users should understand how data are useful to them.

Self-service. Wherever possible, make sure each system’s self-service functionality is being used. Examples include allowing employees to order common parts and supplies from an online catalog, and providing vendors with query access so that they can check the payment status of their invoices.

Data input. Data should be input only once, ideally electronically. Electronic invoices are preferable whenever possible, especially if the volume of transactions is significant.

Paper. The use of paper should be eliminated wherever possible. Challenge the need for each piece of paper that is used. Question whether data can be accessed or input electronically. In addition, the effective use of imaging technology and an electronic workflow can significantly reduce the need for a physical piece of paper and the associated file storage.

Integration. A business should take advantage of any system integration features, both internal and external. As an example, a travel card vendor should provide an electronic feed to the company’s travel and expenses reimbursement module. This reduces the amount of data an employee must key in when preparing an expense report. In some cases, integration is already in place but simply needs to be properly used. For example, the accounting department can reduce the adjustments required to record new fixed assets in the fixed asset module when the appropriate procedures are put in place to ensure that the proper data is collected when the purchase order is created.

Electronic distribution and receipt of data. Every effort should be made to send and receive data electronically, specifically with high-volume transactions. For example, many organizations have FedEx bill them electronically, which eliminates the onerous task of allocating overnight shipping charges to individual departments.

User manuals, policies, and procedures. Documentation should be created with the end user in mind. Instructions should be process-oriented and not purely technical. Teaching an employee how to access and manipulate a report may be ineffective without proper instructions on how to use the data.

Reaping the Benefits

While the initial implementation of a system has to be about the big picture, over time, improvements can be made by focusing on functional areas on an individual basis. If it is not possible to implement system changes throughout an entire organization at once, it may be a good idea to start with one functional area (e.g., billing). After proving the methodology works, staff can then address other functions. At that point, it should be easier to get the actual system work performed, as most experienced IT departments can manage the changes in-house or, where staffing is limited, hire hourly contract consultants.

While it remains debatable whether a company will attain a positive return on investment for its initial system investment, there is little doubt that significant return on investment can be achieved from any improvements made. Organizations that have applied this methodology have reduced costs, increased productivity, shortened cycle time, and improved data accuracy. The costs related to improving an accounting system and its related processes are insignificant when compared to the benefits they provide.

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