Small businesses and fledgling nonprofit associations often get their start with a single individual and a big vision. With hard work and time, many of them grow and scale, so much to the point that they can no longer do everything on their own. They start assembling a team.
This spells success and it’s a great development for these driven, ambitious business owners and founders. However, it can lead to unintended consequences.
When organizations are experiencing growth, particularly at a really fast clip, it can feel like drinking water from a fire hose. Leaders do what they can to put the right people in the right positions but teams and the systems under which they operate may be haphazardly thrown together in order to keep from drowning. Understandably so, the results are not always optimal.
Often one of the first teams an organization needs is in accounting, which is a function that is heavily reliant on processes and workflows to operate efficiently and effectively. And, all of the money flows in and out of this department so the consequences of suboptimal set up are great.
When it becomes apparent that the in-house accounting functions are not running the way they need to be to achieve ideal outcomes, these organizations often turn to a CPA firm with CFO services to help. In fact, this is one of the ways the team at Lumix supports our nonprofit and small business clients.
Here are some of the challenges a CFO services like Lumix can identify and change so that your in-house accounting processes achieve accuracy, transparency, and efficiency.
Lack of Automation
Problem: As mentioned above, accounting systems are often thrown together in an effort to simply get the work done, by any means necessary. Sometimes this means manual data entry and calculations, which takes more time than necessary and is prone to human error. The last thing an organization wants in their accounting processes are inefficiencies and increased chances of errors.
Solution: Accounting software and automation tools streamline repetitive tasks, reduce errors, and improve overall efficiency. This allows for better accuracy in financial reporting and smoother operations all around.
Problem: Back to our fire hose analogy, when things are coming at you harder and faster than you can manage, record keeping often gets missed completely or is poorly managed at best. This results in missing or incomplete financial information. It is challenging to track income, expenses, and overall financial health, which naturally leads to difficulties in budgeting and decision-making.
Solution: Record-keeping systems, such as cloud-based accounting platforms, ensure that all transactions are properly documented and they can be implemented with relative ease when an organization gets help. Reconciling bank statements, maintaining well-organized financial records, and accurate reporting are all gained when the right systems are put into place.
Limited Internal Controls
Problem: This is an area often overlooked by growing organizations because the potential problems are not glaring and obvious. However, oversight is incredibly important when it comes to accounting. Internal controls decrease the risk of fraud or mismanagement of financial resources. Small businesses without controls in place are left open to the real risk of unauthorized transactions or errors that go unnoticed.
Solution: Strong internal controls, such as segregation of duties, regular audits, and approval processes, help prevent fraud because financial activities are monitored closely and effectively. This promotes transparency and accountability within the organization, which is especially important for nonprofits that are subject to scrutiny.
The CFO services team at Lumix can assess your current accounting structure and workflow to propose a more efficient system. Our process is designed to save you time and resources by eliminating redundant work, inserting essential controls, and maximizing efficiencies. And as a huge bonus to you and your organization, we then train your current staff to follow the new system.
Could your in-house accounting processes use an overhaul? Contact Lumix today to see how we can help.