Excellence is always a relative term and requires an evaluation yardstick! How often do companies try to find this out through benchmarking and best practice? But in the end it is always about finding the best possible support from accounting for the business model and strategy of the company in the most efficient way possible! For companies, this means finding out what it means to do the right things and how to do it.
These requirements from the business model and the strategy were ideally the basis for the development of the Target Operating Model in the finance area. Therefore, within the framework of this model, the aspired self-image, the role, the process map as well as the organization and the system technical support should have been described. This lays the foundation for an evaluation!
What do you mean, do the right things?
Sometimes it is easier to understand a general approach with examples than to try it abstractly. The demands of strategy and business model on the CFO organization can be very diverse. Strong organic growth requires scalability of processes. Strong external growth requires a high level of integration capability in accounting and consequently the change component for migration to the defined or redefined standard. The change in the business model, e.g. instead of selling a product, renting the product or even transferring it for a defined use, i.e. pay-per-use, not only changes the contractual representation in the commercial area, but also the recording and processing of performance data. The last example of illustration is a new model based on acquired data. Not that an omnipotent CFO must necessarily manage these areas - but he must in any case ensure that the accounting basis can be sufficiently documented, archived and, in the event of an audit, traced. This presents many a volatile data source, which is used today in the context of data mining, data analytics, etc., with considerable difficulties.
In relation to all these requirements and developments, the finance processes must be evaluated in terms of fulfillment, scalability, promotion of development, etc.!
What does it mean to do things right?
Usually this is understood as Excellence, although it is only the second side of the coin. Doing things efficiently aims at a fast, cost-optimal handling of the processes!
The typical levers for process efficiency lie in clear guidelines in the sense of guidelines, in the consistent consideration of processes end-to-end and therefore the standardization of processes and reduction of complexity through variants, in the automation and optimization of system support and sometimes still the labor cost arbitrage. And all this in compliance with legal and other regulations.
What are best practices in accounting?
As already mentioned above, Best Practices are maximum clues for meaningful approaches, which however must always fit into the individual business context! Let's pick a few examples.
Organizational structure:
Clarify the role of accounting in the organization and if shared services or outsourcing are discussed as an option, consciously make this decision with all prerequisites. Without clarifying the expectations, the finance organization will fail because of the expectations!
Content framework:
In terms of content and methodology, there are many facets. In any case, this includes the uniform chart of accounts, the explicit allocation of control objects to profit centers, cost centers, cost units, etc. Leaving this assignment to each unit makes both intercompany reconciliation and pierced profit and loss accounts or the profit and loss statement according to cost-of-sales accounting much more difficult. Accounting must try to define and implement a standard and at the same time satisfy the information requirements from the business transactions in the best possible way.
Process Management:
One of the greatest challenges lies in the end-to-end consideration of processes, although or precisely because this is in the greatest interest of accounting. Traditionally, most hassle is caused by behavior in the process that is beyond the control of accounting. Incoming invoices without purchase order reference to Odyssey in the company, regularly cancelled outgoing invoices because the delivery is not in order, booking corrections because the customer is unclear may suffice as examples. Whether more automation or improved process adherence at the front end is more helpful here may be decided by everyone. In the end, however, it is still the case that more quality at the beginning of the process in the sense of clean master data, complete recording of the process, quality assurance of the fundamentals, etc. always leads to an increase in efficiency in accounting.
Technical setup:
Technical integration is often mentioned first and always comes last in the analysis. But of course a high automation rate, a high BAnf or catalogue order rate, configuration management on the customer side and automatic archiving systems, etc. can increase efficiency.
Interestingly, the use of the technical possibilities of existing systems is always a source of more efficiency. Not all companies that regularly post accruals and use SAP use the Accrual Engine - why not?
And last but not least, the favorite tool - the Leatherman of Accounting - should be mentioned here: Excel. The Janus-headed tool - flexible and fast and at the same time a time grave due to manual data filling and error potential - has to be put to the test again and again. In many companies, the interim tools on Excel have long since established themselves as unquestioned standards. Automating these process steps is in many cases an overdue step for excellence in accounting.
