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Turn Over a New Cliche

Turn Over a New Cliche: Adopt Best Practices

As we enter a new year, it’s the perfect time to reassess your business practices and commit to running a more efficient, productive, and successful operation. One powerful way to achieve this is by adopting accounting best practices, particularly when leveraging the capabilities of QuickBooks. This guide will walk you through the process of identifying, implementing, and ensuring the success of best practices in your business.

Understanding Best Practices

Best practices are proven techniques or methods that consistently lead to superior results. In accounting, they’re the operational guidelines that can significantly improve your financial management, reporting accuracy, and overall business efficiency.

The Three I’s for Adopting Best Practices:

Let’s look at the three stages you’ll encounter when you decide to apply best practices to your company.

Identify

Start by pinpointing the areas in your business that need improvement:

  • Cash Flow Management
  • Collections Efficiency
  • Payroll Accuracy and Timeliness
  • Customer Retention
  • Bill Payment Processes
  • Inventory Management

Pro Tip: Engage your employees in this process. Their front-line experience can provide invaluable insights into system bottlenecks and potential solutions.

Figure 1. When you’re formulating ideas that could evolve into best practices, use your best resource: your employees.

Implement

Turn your ideas into policies, and formalize them. Make a big deal out of introducing them to all staff related to accounting, and explain the rationale behind them. They’re intended to improve your company’s financial bottom line, which should translate into a positive outcome for everyone. Don’t turn your presentation into a critique of past performance; emphasize the constructive nature of the changes. Put it in writing, too.

Here are some examples of best practices that other businesses have implemented.

  1. Timely Invoicing: Use QuickBooks to invoice at the time of service or shipment, rather than on a fixed monthly schedule.
  2. Structured Collections Process: Utilize QuickBooks’ Collections Center (in 2011 version and later) or  reports, like A/R Aging Detail, Open Invoices, and Collections Report. 

    • Figure 2. QuickBooks 2011 features the automated Collections Center.
  3. Regular Tax Estimation: Use QuickBooks to estimate your income tax obligation monthly, preventing surprises at quarter-end.
  4. Cross-Training: Ensure each accounting role has a trained backup. Consider professional QuickBooks training for your team.
  5. Embrace Technology:
    • Implement a QuickBooks-supported merchant account for faster customer payments.
    • Use electronic bill payments where possible.
  6. Accurate Time Tracking: Leverage QuickBooks’ built-in timer or Time Tracker for remote employees to capture all billable hours accurately.

Figure 3. Have employees time billable activities whenever possible.
  • When was the last time you looked at your pricing structure? Are you building in enough profit? Evaluate your selling ratios on a schedule. Run inventory reports regularly.

See? It’s not rocket science. It’s a matter of emulating the practices of the most successful businesses. You might network with other companies to see how they handle this formalizing of processes. Talk to us, too.

Insure

Implementing best practices is not a one-time event. It requires ongoing evaluation and adjustment:

  1. Schedule Regular Follow-ups: Hold monthly meetings to discuss the effectiveness of new practices.
  2. Appoint a Compliance Officer: Designate someone to oversee the implementation and adherence to best practices.
  3. Encourage Feedback: Create an open environment where employees can suggest improvements or report challenges.
  4. Measure Results: Use QuickBooks reports to track improvements in key metrics (e.g., Days Sales Outstanding, Inventory Turnover).
  5. Stay Flexible: Be prepared to tweak or replace practices that aren’t yielding the expected results.

Best Practices for Businesses of All Sizes

While the concept of best practices might seem tailored for large corporations, businesses of all sizes can benefit:

  • Sole Proprietors: Focus on time management and accurate expense tracking.
  • Small Businesses: Emphasize cash flow management and customer relationship tracking.
  • Medium-sized Enterprises: Concentrate on departmental efficiency and comprehensive financial analysis.