When was the last time you looked at your systems and procedures from the viewpoint…
Why You Need to Follow The Dots
I often use the phrase “follow the dots” about accounting processes. Bookkeeping processes were designed many years ago and while the systems we use have changed, the fundamentals haven’t.
Once you have your accounting system set up and running for a few months, it’s mostly just doing the same as the transactions previously; hence “follow the dots”.
When you have procedures documented, your team and new team members can undertake the task by following the procedure.
The same applies when working with spreadsheets.
Yes. There are times when they are necessary for showing information in a different way. However, they shouldn’t be used to replace your accounting system; rather as an addition to it.
I’ve recently been working with a client who has a number of extensive spreadsheets that they maintain. A new team member had been updating them and adding in new information. When reviewing the data and ensuring the numbers reconciled back to the accounting system, we found a number of discrepancies.
The new team member hadn’t followed the dots. She hadn’t looked at how particular transactions had been dealt with in the prior year. And as a result, the numbers didn’t balance.
One of the challenges with spreadsheets is ensuring that rows of numbers add up correctly.
You can use the automatic sum total, or you can add each line separately. Most people use the automatic sum total as it will include numbers in newly inserted rows.
While checking the integrity of the numbers and being certain that they were correct, we hadn’t checked that the total was correct including all the figures in the sum. When we did, it was to find that a sum total had been changed to adding specific numbers and had omitted a few new lines.
But there are times when you shouldn’t follow the dots.
Innovation and improvement are necessary for every business and should be encouraged. Procedures should be reviewed, and consideration given to updating or improving them.
Continuing to pay costs without consideration of their use and necessity in your business could be costing you hundreds, if not thousands of dollars a year. Blatantly following the way it’s always been done, or costs that you’ve always had is not the way to improve profit and cash flow.
I wrote about this in more detail in a previous article about finding the hidden profits in your business.
So, what’s the strategy for identifying when to “follow the dots” and when not to?
While I believe there is always room for improvement, the old saying “if it ain’t broke, don’t fix it” seems apt. If you have a system that is working well and appears to be done in an efficient manner; leave it be.
Focus on the processes and procedures that seem to take longer to complete that you’d like, or that seem to be excessive to complete the job.
A spreadsheet that has multiple sheets saying basically the same thing in a few different ways, doesn’t actually achieve anything.
I used to have a team member who created spreadsheets to keep track of lodgements even though we had a perfectly good system that did that for us. The result; additional time spent in maintaining the spreadsheets which wasn’t necessary meaning that other work didn’t get done.
Even with automated accounting systems, there are quick efficient ways of reconciling the bank accounts. And then there are the longer slower ways. Both reach the same result.
Wouldn’t you rather follow the dots to get the job done or have your team member complete the task more quickly?
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