Process Standardization

If you’re like most of the accounting firms we work with, process standardization is a lot like going to the gym. You KNOW it’s something you ought to be doing, but somehow you just can’t make yourself go. Is it worth the effort? Absolutely. Having a standard set of processes is one of the most effective ways to increase the quality of your work. Having similar processes allows staff to keep less information in their heads as they switch between clients. That means less training for you to perform, and more flexibility in how you assign staff. Also, having standard practices makes pricing new clients much, much easier.

So why do so many firms struggle with standardizing their processes? In some cases, it may be partners wanting to “do their own cooking”. They often don’t like to be told how to manage their own business. For others, it’s a case of partners feeling that providing highly “individualized” service really is the best way to serve their clients. But most of the time, it comes down to firms not knowing how to go about managing a process standardization project.

Where do you start?

Think of us as your “personal trainer”. Here’s a 6 step roadmap that shows how we’ve gone about process standardization with our clients. It should give you some ideas of how you can do it yourself.

Step 1: Choose your process

To begin with, don’t try to boil the ocean. Start by identifying the four or five processes you spend the most time on. Look for ones with easily repeatable elements that are typically done by junior staff. Good candidates include Accounts Payable/Accounts Receivable, Bank Reconciliation, Audit preparation, Financial Statement preparation, Grants & Vouchers reporting and Payroll. Whatever you come up with, the idea is to take each process one by one.

Step 2: Understand your current state

The next step is to document your current state. Let’s look at bank reconciliation as an example. We recently helped one of our clients put together an audit of how they did bank reconciliation across all of their clients. We built a simple tracking spreadsheet that included, among other things, bank name, number and type of bank accounts, whether or not a bank feed was in place, the mechanism for sharing supporting documents, the process for noting unreconciled items, and cut off dates.

We met with our client’s managers over the course of several days and gathered information on just over 200 of their customers. A quick review identified an opportunity to consolidate from three different file sharing solutions to one. It also surfaced several of their customers who could be using automatic bank feeds but were not. We decided we needed to define a process for onboarding customers that encouraged bank feeds to be put in place, as well as processes for doing the reconciliation for customers with and without feeds in place. Remember, the goal is not to remove all variation in how you do things, but to remove as much as you can.

Step 3: Define (and document) your future state

Once you have identified what processes you need, you will define your future state in a format you can share and validate. We typically create process flows – each step in the process is represented by a box with a clear label. Boxes are connected by arrows that show the sequence in which things happen. Different branches show how to handle decision points or exceptions.

You can create these flows using a variety of different software programs. Lucid Chart is an excellent web-based solution with lots of templates that can help get you started. Visio is a powerful tool available through Microsoft Office, and even PowerPoint can be used for simpler flows. Don’t worry about getting too fancy. The point is to create something that clearly communicates your ideas.

Step 4: Share with stakeholders

This is the most crucial part of the process. You should share your flows internally to make sure you have it right and that you’ve identified the different contingencies you’ll need to account for. It’s critical that you review these with the people who are actually doing the work. You definitely need the partners to sign off but it’s your managers and staff who can tell you if the process will really work. If your staff spot a part of the process that needs reworking, listen to them. Don’t be afraid to go back to the drawing board. It’s better to spend a little more time getting it right from the beginning because it can set you up for autopilot later.

Step 5: Document

If your feedback is clear and actionable, which you should always encourage it to be, you can clean up your process flows even further. Create a detailed set of written instructions that backs them up. How detailed should the instructions be? Well, the flow and documentation should be comprehensive enough that a new person coming in should be able to pick them up, give them a read, and do the work. Remember that this written process is your hard-won intellectual property. Be sure to give it the attention it deserves, while cutting out as much unnecessary information as possible.

Step 6: Implement and monitor

At the end of it all, you should put your finished documentation in one centrally located place – an intranet like a Microsoft Teams site or a shared folder. Never let everyone keep copies in their emails! If you do, you will soon find controlling all the different versions an impossible task. It will make managing change impossible. Speaking of managing change, as time goes on, you’ll need a mechanism for updating these procedures. Appoint a resource to “own” the documentation – this is an excellent task for an administrative person or office manager. Every six months or so have them reach out to your managers and ask them if anything has changed in how they do these processes. If they have, that should prompt a discussion about whether or not these changes are valid and should be brought into the standardized processes, whether they should be allowed to continue as client-specific variations or whether they should be “rolled back” to conform with the standard way of doing things.

Conclusion

It might seem like a lot of work, and it is, but with a little preparation it doesn’t have to be daunting. If you have questions about how to get started we’re happy to talk, or if you’d like to learn more about our outsourcing solutions for Tax and Client Accounting Services.

Yann Beaullan-Thong

Yann Beaullan-Thong

Yann is Accsurant’s president. With 20 years experience and six different technology startups behind him, Yann has a proven track record in developing innovative solutions based on his technology and financial acumen.