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
Step 5: Document
Step 6: Implement and monitor
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.