The case for detailed documentation of all finance processes, even the seemingly minor ones
8th Jul 2020
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It’s all too familiar – a long-time member of the finance team is due to leave the organisation imminently. The business is busy looking for a suitable replacement. Meanwhile, the outgoing employee is tasked with documenting an array of finance processes for a handover. Not only does this hurried effort bite into time that could have been better spent tying up loose ends, but the quality of such documentation is unlikely to be top-notch and all-encompassing.
Many businesses, large and small, tend to assign low priority to process documentation. Then when the documentation is actually required, may it be due to an audit, review or employee onboarding, there is either no formal documentation to speak of, is hard to locate or is incomplete and out-of-date. Often processes documented initially are not then updated with any amendments or improvements made along the way, since an employee performing the tasks on a daily basis would hardly ever need to refer to the notes.
With up-to-date finance processes documented in black and white and organised in a way that they are easy to access, areas of improvement can be identified much more easily. By removing redundancies, refining system usage, reviewing controls and evaluating audit trails, businesses can make the finance function much more robust and efficient. There is no one way to do things, even when using standard accounting software. Unless documented, there could be a lack of consistency in the books and time wasted trying to figure out the right way of doing things if a fresh employee were to take over a role or if management wanted to take a closer look at the data.
It may not sound like much, but there could be various ways of keeping track of cash advances made to employees for future expense claims, for example. Some businesses may use paper forms filled in by employees and signed by line managers. Others may post a faux supplier bill, a few may make manual journal entries or offset against expenses using credit memos, and the list could potentially be endless. In the absence of an effective method, the cash advances and employee expenses could get jumbled up, potentially resulting in under or overpayments.
On the other hand, with well-documented finance processes at hand and open to scrutiny, cash management can be improved, costs can be reduced, processes can be simplified, interaction between departments and with management can be enhanced, responsibilities can be easily fixed, precious time can be saved and duplication of effort can be gotten rid of. Technology can play a key role in simplifying, streamlining and automating core finance tasks like invoicing and expense management – not only would this save time and improve data integrity, but free up bandwidth of the finance team which could be put to better use in more challenging and rewarding work!