Overview
Accounting is full of many repetitive tasks, perhaps more than any other business function. It’s the heartbeat of the business. Accountants have long been known for heavy workloads for a variety of reasons, including loads of manual work where “we’ve always done it that way.” But it doesn’t have to be done that way. Tasks we often think are too complex can and should be optimized.
It’s easier than you might think. The key is to break things down into each tiny step. In this article, we’ll touch on common accounting tasks (outputs) that are ripe for optimization, the common steps they can be broken into (inputs and logic), and tools to help automate them.
Common accounting tasks
Accountants perform a lot of tasks, but three particular types of tasks tend to take up a large portion of their time.
Journal entries
Journal entries are used to record activities to the G/L (general ledger), which is used to compile financial statements and other reports. They can be system-generated (such as from a point-of-sale system or other subledger) or manually prepared by an accountant. Within those buckets, there are a variety of journal entry types – adjusting, reclassification, allocation, amortization, accrual, reversing, etc.
Account reconciliations
Account reconciliations are used to verify or substantiate that the balance in an account is correct. They tend to be used mainly for balance sheet accounts, but sometimes certain income statement accounts are also reconciled. Some businesses focus mostly on accounts like cash (with bank reconciliations), but ideally all balance accounts are reconciled on a routine basis. Reconciliations tend to be based on:
- a comparison (i.e. bank balance to G/L balance)
- a list of valid items (i.e. equipment that has been purchased)
- a calculation (i.e. an allowance for bad debts)
- a combination of the above
Account reconciliations can be at a high-level or extremely detailed. They tend to be a major source of audit evidence.
Reports
After all journal entries are recorded and (ideally) account reconciliations are performed, many reports are often compiled. Most reports tend to be of an income statement or balance sheet variety. They could be for internal or external purposes, to guide business decisions or fulfil compliance requirements. Reports can be fairly basic or extremely detailed. They can summarize activities from a small portion of the business, consolidated operations, or anything in between. They can be purely numerical and tabular, or they can include narratives and graphs to help explain results, changes, and trends.
Breaking down the common steps
The inputs
If you look at the three common task types in the section above, they all start with one thing: data. Often there is significant effort involved with just gathering the source data. It could come from one source or multiple sources. It could be in a nice, clean, tabular format, or it could be a hot mess. It could be in one comprehensive data set, or several data sets may need to be run to get everything you need.
Here are some tips for efficiently gathering your data:
- Try to get all the fields (columns) in one report. Often you can customize a report to include all the needed fields or combine reports into one.
- Try to get all the rows (records) in one report. Instead of running multiple reports with different locations, regions, divisions, departments, dates, etc., try to get it all in one shot. Hint: you may need a special report built or access to the underlying data, but don’t give up too easily!
- Have the data pushed to you. Often you can subscribe to reports and have the data sent to you or you can be notified when it’s ready.
- Set the data up so it can be easily refreshed. Many tools let you connect directly to the underlying data via API or other integration method.
- Set the data up to automatically flow into the process. The best approach is for the data to automatically flow into the process where further automated steps take place.
The logic
Once you have the data you need, there are a variety of steps you may need to take with it. Those steps tend to fall into three groups:
- Data transformation (text extracting or combining, formatting, lookups, calculations, etc.)
- Data categorization (assigning categories, locations, vendors, etc.)
- Data comparison (filtering, grouping, mapping, matching, etc.)
Those steps are ripe for automation! Before you try to automate them, make sure each step is:
- Required – often there are unneeded steps that were added at one point and are no longer relevant.
- Documented – this helps people understand how it should work and diagnose when it doesn’t work.
- Ordered – placing steps in the right order helps with accuracy and speed.
Use a templatized approach to build the steps in a way such that they can easily be reused with a minimal amount of manual steps. In the list below, ideally only the inputs and/or source data should be manually changed. In a templatized approach, there are usually four sections (or sheets if using Excel):
Inputs – items such as dates, locations, account ranges, names, etc. – often the kind of stuff you see in a filter form.
Source data – this is the raw, starting point data – the cleaner the better.
Logic/calculations – this is where the logic is performed with formulas, settings, or programming code. Sometimes the logic itself is separated from the calculations so it can be easily tweaked without diving deep to within the actual calculations.
Output – this is where the finished product lives – the journal entry, account reconciliation, report, etc.
Tools for automation
There are infinite tools that can help you automate gathering data, apply the appropriate logic to it, and output it in the desired format. I’ll touch on three that have been instrumental for me throughout my career.
The General Ledger
Your G/L, or if more robust, your ERP (enterprise resource planning) system, likely has more functions to automate tasks than you know about. We are usually trained on these systems (if at all!) by someone with limited knowledge, limited time to train you, or both. Take the initiative to flip through the manual or cheatsheets. Pick the brain of the experts (inside and outside of your organization). Attend webinars, user groups, and conferences if you can. These are all great ways to learn more. If there’s a process in your G/L that is painful, it doesn’t hurt to submit an enhancement idea.
Excel
Excel has evolved over the past 30+ years from a simple spreadsheet to its own entire platform. Tools like Power Query help you collect, enhance, and process data. Formulas and macros add other options and help fill in the gaps. Analysis tools like PivotTables, charting, and filtering help you see what’s happening with the data. It’s the standard for data import and export, facilitating processes that aren’t otherwise more automated. It’s the quick-and-dirty canvas for all kinds of ad-hoc analysis and at the same time, it can be used to automate all kinds of tasks. But it’s not without limitations. It’s tough to lock things down. Formulas can contain hidden errors. Files can crash. And the data volume/processing power are limited.
BlackLine
If you’re unfamiliar, BlackLine is a web-based platform that automates many common accounting processes, including the three types above (journal entries, account reconciliations, and reporting). It supports a continuous, modern, templatized approach leveraging repeatable logic. Imagine having source data automatically flow in, compared to what has already been recorded (archiving matches), building a journal entry for any variances or new items to record, and automatically pushing a report for anything that needs to be reviewed. And it can happen every day like clockwork. When you break down the steps above, a huge chunk of them can be automated with BlackLine. For data volumes and iterative logic that Excel just can’t handle, BlackLine is the best option for accountants to modernize common accounting tasks.
Summary
When you break accounting tasks down into inputs, logic, and outputs, and optimize each individual step, it’s not near as daunting. Leverage the tools and approaches above wherever you can to save time and reduce the risk of errors. If you’re having trouble getting started, just tackle one thing that’s frustrating. Pay attention to where the opportunities are. Improve a little bit at a time, and you’ll be surprised at how far you’ve come in a year, or even a few months.
What kind of accounting tasks do you spend a lot of time on, and how have you optimized them? Please share your thoughts in the comments below!
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