Would you be shocked to hear that your small or midsize enterprise (SME) could operate more efficiently? I didn’t think so. Processes that worked when you started out don’t work so well as you grow, when issues like account reconciliation emerge for the first time. Inefficient or redundant steps get added to solve a particular customer’s problem, or to work around an employee’s weakness. And you’re too busy to step back and revisit all those processes—besides, you’re already coping with too much change.
Many solutions exist to help you improve work efficiency. This article considers three: account reconciliation, business process automation and a low-tech approach—simply talking to people.
1. Efficient Business Account Reconciliation
Regular business account reconciliation is a fundamental financial control that every SME should use once it reaches a certain size, but that is often ignored in favor of more pressing priorities. When you reconcile, you’re comparing internal and external financial records to make sure they agree and are both accurate. Conceptually, account reconciliation is that simple—even though it may be a real chore for a growing business.
What’s in it for you, beyond neatness and precision? First, you may uncover potentially serious errors that could impact your financial posture and decision-making: not just your own company’s errors, but also errors by suppliers or banks in their favor. Second, it’s a powerful way to uncover fraud, so it keeps financial people careful and everyone accountable.
In a BPA-driven business process, paperwork never sits idle: people get nudged to move it forward when necessary.
Third, it helps you keep track of automatic deductions from your accounts, as well as uncashed checks that are easy to forget you wrote until there’s a rude surprise months later, when they’re finally cashed. Fourth, it calls your attention to hidden expenses and fees, so you can consider doing something about them and, thus, use your limited capital more efficiently. Fifth, it gives financial institutions stronger confidence about your finances, making you a better candidate for loans should you want them.
Ideally, every balance sheet account should be reconciled as part of a monthly closing process. But if that’s not practical, most finance managers recommend focusing on the big ones: accounts receivable, inventory, prepaid expenses, accounts payable, payroll, accrued liabilities, debt—and most important of all—cash. You have a variety of external financial records to work from, including bank statements, merchant processing reports, inventory counts, supplier invoices, card statements, payroll reports and loan statements.
Account reconciliation takes time, though it can increasingly be automated. You can also simplify it by relying on business charge or credit cards that include modern expense management tools. Easier consolidation is only one of the benefits of consolidating business expenses on the right business card: this may also help you earn significant rewards you can apply to equipment, advertising, employee benefits or other important purchases, which makes even the dollars you spend work harder.
2. Find Other Business Processes to Optimize and Automate
Business Process Automation (BPA) was originally just for the biggest companies, but it’s spreading to SMEs who can also benefit from its time and cost savings.
What is BPA? Analysts from research and advisory company Gartner define it as “the automation of complex business processes and functions beyond conventional data manipulation and record-keeping activities, usually through the use of advanced technologies.” In Gartner’s view, BPA “focuses on ‘run the business’ as opposed to ‘count the business’ types of automation efforts.”
In a BPA-driven business process, paperwork never sits idle: people get nudged to move it forward when necessary. But you’re not just automating steps that already exist. You’re reconsidering what steps are actually necessary, to find the fastest workflow that still includes the safeguards you need.
While many processes can be automated, it makes sense to start with “low-hanging fruit” opportunities for rapid cost savings and business improvement. These can include onboarding new employees, processing vacation requests, issuing purchase orders and managing travel expenses. Even without a BPA vendor, many companies can streamline travel expenses by using a business charge or credit card that comes with travel expense management tools and links to their accounting systems.
3. Have More Productive Conversations Around Efficiency and Process Improvement
Ultimately, business process is still about people—and they can be your most valuable ally in becoming more efficient.
- Ask your employees. Ask key people: “What processes would you fix around here?” To make sure you don’t just get unproductive venting, also ask: “How would you fix them?”
- Cross-pollinate ideas across your company. If you own multiple stores, ask employees at each store: “What have you tried lately that’s working especially well?” Maybe you can replicate those successes elsewhere.
- Use your network of peers. If there’s a process or business function that’s frustrating you, ask other local entrepreneurs how they handle it. Maybe you’ll find out they’re struggling with it, too. (That’s good to know.) Often, though, they’ll have a solid solution or vendor recommendation you’d never come up with on your own.
By refocusing on efficiency via account reconciliation, BPA and the collective wisdom of your own employees, you can increase profitability, reduce risk, strengthen customer relationships and prepare yourself for whatever unexpected challenges your business may face.
Photo: Getty Images
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