How to Do an Accounting Workflow Analysis and Make Improvements

Accounting may seem like a difficult profession, but all accountants do is repeat the same things each month and year. A consistent set of operations are followed by all accounting services. More or less the same stuff is done each following year. This is also known as an accounting workflow.

What is an Accounting Workflow?

Accounting workflow refers to a defined set of tasks that you repeat in an accounting firm during the standard service delivery. These steps are different depending on the nature of the tour work. For example, the steps for tax preparation include:

  • Gathering the documents 
  • Data input into the program
  • Reviewing data with clients

Each accounting project consists of its unique steps. A bookkeeping project has a different workflow than auditing. You can choose the number of steps and assign tasks to different people accordingly.

In workflow analysis, you review the stages of the existing accounting workflows, define roles in a given project, and find ways to improve efficiency. It includes an analysis of each step and a review of any substeps involved.

Steps on an Accounting Workflow Analysis

The steps in a workflow analysis include:

  1. Gaining an understanding of the existing processes and documenting it

In order to improve workflow efficiency, you need to evaluate the existing processes. You should start by examining each granular step in the accounting workflow. You should make note of steps that occur frequently and might be missing in some projects. For example, reaching out to firms for some additional information or waiting for a K-1. 

It is best if you have a number of team members involved in the process of accounting workflow documentation to ensure that each step is noted. This will help you notice how each member is doing in the accounting workflow; whether they are able to manage and complete tasks on time.

  1. Collection of Data

While collecting data, you have to think about both quantitative and qualitative data. Quantitative data includes data that can be measured easily and can be obtained from timesheets, and billings. Qualitative data does not have a standardized measurement and can be obtained by speaking with the team members and asking them questions about the projects.

  1. Analyzing the Data

After the data is obtained, you have to analyze it. Quantitative data can give you results on what is benefiting the projects and what is taking up unnecessary time. Qualitative data can show the similarities and differences in responses.

It is beneficial to have several people working on the analysis of data to ensure that there are no loopholes. Some questions that can help you in the analysis are:

  • Are the tasks in the project getting redundant?
  • Are there manual tasks that could be automated?
  • Can workflow efficiency be improved by integrating new tools and programs?
  • Are the tasks assigned to team members appropriate?
  • Can the performance be monitored to ensure optimum results?
  • Can the tasks be better defined?
  1. Finding areas for Improvement 

After a thorough analysis of data, you need to decide if any changes need to be made to improve workflow efficiency and decrease frustration. In this step, you can test new ideas, and come up with innovative ideas that can lead to sustainable improvement. Ideas that do not have the desired impact can be discarded.

Create an Accounting Workflow Checklist

An accounting workflow checklist will help you maintain consistency across the organization by documenting the entire accounting process. Think of it as a log that systematically breaks down the various accounting processes into predetermined tasks. You can view the whole process in chronological order and sharing it with the team will help you maintain uniformity. 

An accounting workflow checklist not only specifies the smallest details that are unique to your firm but also digs deeper into the structure of the firm. For example, when you hire a new accountant, although he will be certified and knowledgeable about accounts, he will still be new to your firm and how the services are structured in it. An accounting workflow checklist will help them identify:

  • How the team members collaborate to complete tasks
  • How do you prefer to manage various tasks
  • How to engage with the clients
  • How to file and organize data
  • Time duration for each task

It is important to create an accounting workflow checklist because of 3 main reasons. They are:

  • It Improves Work Quality

An accounting workflow checklist provides clarity on all the processes, guiding employees toward the most effective process. It helps reduce human errors and standardize processes across the firm. It ensures that each employee knows his role, and guarantees that work quality and deliverables are provided to clients at all costs. 

  • Boosts Productivity

The accounting processes can get hectic, particularly during tax seasons. During such times accountants struggle to manage their time and chase deadlines. Most of it is due to poor management and organization inefficiencies, resulting in poor quality of work. 

Accounting workflow checklists can resolve these problems by quality project management and streamlining task handling. Accountants can be provided with a checklist on what to do when to do it, and how to do it. It can help them avoid common mistakes. Accounting workflow checklists are also great at fostering a collaborative environment which results in increased productivity. 

  • Helps in The Training of New Employees

Accounting workflow checklists can help with the onboarding of new employees by providing them with the same checklists that old employees have been following. It can help them seamlessly integrate with the functioning of the organization and quickly learn the firms’ standard processes. It also prevents new employees from constantly bombarding you with questions about the various tasks involved. 

An easy-to-follow checklist can help clients get familiar with the workings and learn the ropes fairly quickly. It can save time on training new employees, helping them get on board and execute tasks with ease. 

How Can You Improve Your Accounting Workflow?

It is essential for your firm to have a good accounting workflow. It ensures the delivery of high-quality service to clients and makes sure it is profitable. Hence, accounting workflow should be optimized in a way that the projects are completed efficiently and the quality is not compromised at all. 

Some ways to improve workflow efficiency are:

  • Identify The Critical Processes

Prior to digitizing the accounting workflow, you want to do a top to bottom investigation of the accounting work process graph in your firm and record the outcomes. This requires information on the essential administrations of the firm, the scope of the processes, and which of these processes greatly affects the firm. This accounting work process outline is significant in light of the fact that you don’t have to advance every one of the processes in the firm, simply the significant ones.

Once the important workflow for accountants is identified, you have to map out the current processes. They include the details on the number of people involved in the project, the client touchpoints, the quality of service within each step, and any inefficiencies throughout the processes. 

The mapping process helps you identify the most crucial steps in the accounting workflow making room for improvements and implementing new technologies for greater efficiency. Integration of technology can help you automatically sync information forming a double-entry process. 

  • Measure The Current Process

It can help you improve the efficiency of your accounting workflow if you measure your existing workflow so that you can determine how to increase the workflow process. These include the time to complete the processes, the costs associated with them, and their reliability. Measurement of these metrics can provide a before and after picture of the accounting workflow after efficiencies are added to the processes. 

  • Administer Automation Audits

Accountants need to conduct regular audits to make sure that they are compliant with the regulations. It also helps them identify areas where digitization can be used to improve the processes. Technology is a necessity that all firms need to keep using and avail of the newest innovations to keep up with other businesses and keep running audits on the automation processes. 

It has been estimated that over $2 trillion can be saved globally in the workforce if automation was implemented in businesses, as shown by the study by PWC. Companies can greatly benefit by investing in the latest tools. It will help them cut costs and improve the accounting workflow process. 

  • Artificial Intelligence can be Used

Artificial intelligence has been a huge development in recent years that has helped businesses thrive and improve existing processes, especially in the accounting workflow. It provides useful analytics, and not only increases the efficiency of the business but also reduces the chances of human errors.

Artificial intelligence can be used for automated services like data entry and bank reconciliation which can allow the employees to use their resources towards something more beneficial like strengthening client relationships, automatically increasing the efficiency of the accounting workflow. 

Artificial intelligence helps reduce human error with its latest robotic process automation. It allows for automated coding that can help streamline all the data eliminating the need for manual entries. It can also be used to make predictions after the analysis of data. Using this year’s financial data, AI can predict the next year’s financials. 

  • Invest in Human Capital

Artificial intelligence is a huge investment for accounting workflows, however, human capital is equally important. Accounting firms rely on human resources and relationships with clients. Automation by AI helps employees focus on the building of relationships with clients, and strengthen the existing relationships, instead of focusing on mundane tasks like data entry and bookkeeping. 

Investing in human capital can help improve the workflow, allowing employees to spend their energies on current tasks and spend money on the existing projects rather than try and expand new ones. Employee training programs need to be conducted so that the skills of the workers can be improved and accounting workflow can be optimized over time.

Technology is extremely important for thriving, but it does not solve all the efficiency problems. The processes still need to be monitored, and their end results noted. You must keep adding new accounting workflow processes to the existing ones to ensure future-proofing of your firm. You have to streamline your workflow processes. You can use an accounting workflow diagram that will cost less over time and help it become more stable. It can also provide useful information that can help you make important decisions regarding the workflow for accountants.