“The word accounting comes from the word accountability. If you are going to be rich, you need to be accountable for your money” – Robert Kiyosaki
Chief Financial Officers and Finance Managers understand the need to simplify accounting procedures and processes. Most organizations deal with stringent payment guidelines and with the high turnaround expectations from the accounting team to deliver swiftly. The accounting teams are an important part of an organization’s goals and operational efficiency, and hence efficient processing of invoices, internal billing, and timely reporting on myriad financial metrics must remain speedy and efficient. Additionally, the lack of invoice processing transparency creates issues with regard to cash forecasts, overall expense control, and timely audits. Finally, those preparing and monitoring business budgets are constantly harried since their presence is required to approve invoices, and or approve make do and hurried invoices sent to them over email. The people required to approve such invoices, then find it hard to make a choice to approve or not since they have no ‘history’ to look at by way of previous invoices, or a summary of actual expenses, and no trail to help them make an informed decision. It becomes exceedingly harder for those responsible to find and fix such obstacles, but doing away with these challenges is necessary to create and sustain a highly efficient and effective accounting department. The key then is to simplify accounting procedures and processes, and flowcharts prove to be a highly effective tool.
What is the Accounting Process?
This is described as a sequence of activities within an organization required to gain useful information about the company’s finances. In order to understand them better, it makes sense to simplify accounting procedures and processes, since they are a wide and sizeable set of activities that start with all kinds of financial transactions and culminating with the closing of books. These processes encompass the entire gamut of financial information of the company – income, expense, purchases, sales, IT returns, payroll, and a wide range of other numerical information. According to accounting professionals, there are 9 processes within the accounting function – analyzing of business transactions, journal entries, posting to ledger accounts, trial balance preparation, adjusting entries, trial balance adjusted, financial statements preparation, closing accounts, and post-closing trial balance.
Given these complex and wide processes, it makes sense to simplify accounting procedures and processes, and an accounting flowchart is one of the best ways to do so. An accounting flowchart is a system of processes that represent the accounting system of a company. The accounting teams have some serious challenges that transcend resource intensive manual tasks. It takes a lot more than a procedures manual to understand and succeed in accounting today. Without automating and using tools to optimize the process and procedures, the teams would lack visibility and efficiency, and as a result would struggle to put together the data required to accurately close the books.
Keeping it Simple Using Flowcharts
The accounting flowchart is a visual tool that displays the flow of information from the base documents right up to the records of accounting. This type of flowchart helps to simplify accounting procedures since it is a specialized flowchart designed using specific symbols. With the help of these symbols, accounting personnel can visually describe tasks, understand documents, assign and keep a track of people responsible to execute each task, and several other such processes to mark each stage of the accounting flow. As a pictorial way to represent the flow of data and transactions, the accounting flowchart helps not just to simplify accounting procedures, but also ensure accuracy and complete transparency of the entire accounting operation. An accounting flowchart would typically include commonly used vector symbols that would help to demonstrate receiving, purchasing, payments, and all steps of the accounting process.
The good news is that there are standard templates of accounting flowcharts with the traditional symbols that enable accounting personnel to design an easy and several types of accounting flowcharts without any problem or wastage of time. The templates and samples can help to prepare accounting flowcharts of any level of complexity. Using the suggested symbols within the templates, accounting flowcharts can be made easily understandable not just for the accounting staff but even for persons working outside of the accounting realm. The beauty of these flowcharts lies in how easy it becomes to understand the sequence and steps involved in the accounting process, which in turn fosters transparency and speed. The symbols used therein are also easily recognizable since they are commonly used, and hence the templates help to save time and effort, while greatly contributing to the cause of being able to simplify accounting procedures for enhanced efficiency.
What do the shapes in Accounting Flowcharts mean?
- Process – this represents a step or within the accounting procedures
- Decision – indicator of a point where the decision of one step directs the next step. The usual outcomes are yes and no, but there can several outcomes too. This step represents the choice the user might make from the mutually exclusive options available
- Terminal Points – marking the start and end points of a process
- Data Shape – This is an indication that the information for the process is being received from outside or is going out of the process
- Delay Shape – This is a waiting period – typically no activity is undertaken due to delays
- Input/action symbol – representing a user response that then directs the course of the process from there on
- Off-page reference – a set of hyperlinks between two separate pages of a flowchart or between sub-process shape and a separate page of the flowchart depicting the steps of the sub-process
- Document – a step resulting in a document is represented here
In addition, these are also used within an accounting flowchart:
- On page connector depicting the transfer of the customer’s order to the credit section
- Off Page connector representing the sending of the sales invoice to the customer
- Annotation or the method to note or describe an activity
- Punched card, punched tape, and magnetic tape all methods of computer input
- Manual Input – the method of manually entering data
- Magnetic disk – the method of storage in the computer
With these templates and symbols, an organization can easily establish a basic and realistic financial target. By using an accounting flowchart and the standard KPIs a company would be able to benefit from industry benchmarks and constantly track their performance in comparison to similar companies. In addition to being able to simplify accounting procedures, a flowchart would help the accounting teams to work with sustainable efficiency, make regular and necessary improvements. Further, the accounting teams would be able to establish their work that is highly efficient, contributing to cost savings, and hence having a positive effect on the bottom line and overall business goals and results. It makes sense therefore, for businesses to invest time and effort to create accounting flowcharts. For larger companies especially, the flowchart as a visual tool is par excellence to compare different companies and divisions within the same group of companies too. The leaders of an organization would face fewer challenges when identifying high and low potential individuals, focus on issues, derive, share and use industry best practices across all groups, and hence improve the overall performance levels in an organization.