What are some of the higher-level things to think about when it comes to planning out your bookkeeping and payroll? How can this function in your business help other functions to grow?
Accounts and Budgets
Your organisation’s chart of accounts is a crucial foundation for effective financial management.
If your chart of accounts is not structured in the way you need, this can create confusion for your team and potentially lead you to inaccurate and unhelpful (or even non-compliant) reporting. But when your chart of accounts is clear and well-structured for you, this can provide you with clarity and good reporting, as well as assist you with accurate and compliant processing.
When developing/reviewing your chart of accounts, some of the areas to take into consideration are:
- understanding your business operations and income streams
- your various functions or departments and how they operate financially
- the types of funds your organisation is administering and how these are best tracked
- the arrangement of your various bank accounts and how they interact
- the types of expenses that are common for your business
You’ll want your chart of accounts to helpfully and meaningfully reflect the real-life operations of your business.
At the same time, you want to ensure that the structure of your business’s chart of accounts is compliant with accounting standards (as advised by your accountant) and facilitates the reporting and compliance requirements that you may have.
The end goal of this process is that:
- all items that you need to be represented in the chart of accounts are there and clearly named
- each account in your chart is properly located in the correct place, with the correct configurations
This then provides you with the foundation for the development of effective reporting and insight for your business, so that you can ask better questions and make better decisions.
Related to having a helpful charts of accounts is having a clear and effective budgeting process in place. This is one of the key tools in assisting you in good management of funds.
Of course, it may be that for you an annual budget is an organisational requirement and so you must have it in place anyway. But there’s a whole bunch of value to your business that good budgeting can give you throughout the year.
When your operational teams know the scope of their budget, and you know how their budget is tracking, this can save you and the team confusion, frustration, and, in some cases, unintended over-spending (that leads you to having less funds than you thought).
You can include your budget as part of your regular reporting (i.e., reporting actuals against budget) – the basic steps to get this in place are:
- use your list of general ledger income and expense accounts to fill out your budget data
- take the budget data you and incorporate this into your accounting system
- develop your regular reporting structure so that your budget information (budget/actual) gets included
For your business, this may be all you need. But as your requirements grow in complexity, you may also want to consider some more detailed and complex budgeting or custom reporting to further assist your team.
Strategy and Growth
We believe that the financial functioning of your organisation should not stand in isolation from (or opposition to!) the vision and growth of your organisation.
And we see a key aspect of this for you as being a healthy and effective integration between the nuts-and-bolts processing of your finances, and your revenue and communication strategy with your leaders and teams.
What does this mean in practice? It means:
- understanding the revenue goals for your organisation and the way you are tracking and managing these
- reviewing and implementing models and cycles designed for you to enhance this process
- ensuring that you have the information you need at the right time to inform your strategic planning
- being aware of upcoming plans that may impact, or be impacted by, your business financial function
You may also want to consider what networks, connections and supports may enhance your management and growth in areas like:
- solutions that will help you make financial operations easier
- assistance with your business administration and communications
- high-level financial planning advice for your big-picture, long-term funding goals
At the end of the day, you want your finance operations to be supporting your growth, not hindering your growth.
Consultation and Audit
As you embark on your business finance journey, you’ll likely find that it’s always helpful to maintain regular relevant communication across various groups.
Of course, communication can happen at any time, but you may want to have purposefully scheduled times where you can chat about how you, your team and your business finances are going.
Communications like this could include areas like:
- reviewing your financial reports (like your Profit and Loss and Balance Sheet)
- looking together at your revenue and cash flow strategy
- going over any payroll changes and updates
- seeing how your budget is going and any updates you need
- reviewing the flow of communications across your organisation
- areas of attention and growth that would benefit you most
From these types of meetings (say with your team, your accountant, your business coach or mentor), you may often come away with important updates and actions to improve the financial processing and health of your business. Having these meetings regularly helps keep you on the front foot and avoid missing important things that may slip your mind in the busyness of life.
You may also find your annual audit process (if relevant) a valuable time to reflect on feedback or ideas that your auditor may suggest to you. You can plan out any changes that flow from these conversations, forming part of a continuous improvement approach where the management of your organisational finances is not static, but dynamic and open to helpful changes and improvements.
Would you like to explore further topics related to bookkeeping and payroll in your business or organisation? eBook available now:
