AFO

Our last piece explored why companies would rather send random children to Disney World than prepare an annual budget. Today, we are going to discuss three reasons you should embrace budgeting with a smile. 

1. Budgeting: Know Thyself!

The budget is not just a collection of numbers, but an expression of our values and aspirations.

A budget process helps an organization identify and orient itself around its core values, a financial true north if you will. At the onset of the journey you ask, what are we trying to accomplish this period? At decision points along the path, you ask if each decision will help move the organization toward its goals. As you go forward and acclimate to the journey, an organization can use the budget to assess the appropriateness of its goals and reassess.  

2. Resource Allocation: Project the Future

The best way to predict the future is to create it.

Step one offered direction. Step two is to identify the resources needed to follow that direction. Do not leave the future of your organization to chance. Point your resources towards your goal. Build a plan on how additional resources will be obtained. Own the future! 

3. The Horizon: Playing the Long Game

Someone’s sitting in the shade today because someone planted a tree a long time ago.

The most successful organizations I work with are typically the most enduring. They play the long game. The operating system of these organizations is designed to pursue bold long-term goals. They establish quarterly goals that feed into annual goals which feed into decade-long goals. They line up priorities like dominoes. A key component of this mentality is a budget. Most of these organizations have some form of multi-year budget. Some organizations have highly detailed budgets while some prepare what I would call a “gist’ of a budget. Regardless, there is thought put into a plan. A plan is documented. That document becomes a tool that can be used, sharpened, and improved upon over time.  

Do any of these reasons for building a budget resonate with your organization? Have you tried budgeting only to become frustrated by the process? Do you need a coach to help you walk through the process? Do you need a gentle nudge to take that first step? Whatever the case may be, our team at Dean Dorton can help. 

Justin currently leads Dean Dorton’s Accounting and Financial Outsourcing (AFO) group, providing outsourced accounting and business consulting services to clients throughout the country in a variety of industries.

Most organizations I deal with do not enjoy the budgeting process…

Correction: most organizations I deal with hate the budgeting process. They spend two months suffering through the budgeting process and 10 months dreading the next budgeting process.

Have we ever thought about why? 

This is the first part of a series designed to explore the ins and outs of the budget process. There is no better place to start than with the squirmy dread that the budget process often triggers. 

So why do organizations hate budgeting? What causes seasoned executives to whimper in fear and the most balanced of accountants to break an excessive amount of lead from their mechanical pencils? Here are five realities that need to be checked when entering a budget process: 

1. The Uncertainty Circus

Many budgeters feel like budgeting is akin to building a horoscope with organizational finances. Most humans are uncomfortable with the unknown and do not want to think about it, much less put it on a spreadsheet to be scrutinized.

2. The Cognitive Bias Bloopers

We all have cognitive biases. When applied to a budgeting process, these cognitive biases put together an entertaining blooper reel. First, we have the Overconfidence Bias. Captain Overconfidence thinks the budget is gold and cannot fathom being wrong. Then we have Confirmation Bias, an expert in finding information to support what is believed to be true, regardless of relevance, source, or accuracy. Lastly you have the coolest bias of all, Status Quo Bias, whose tagline is “if it ain’t broken, don’t fix it.” These three and many other forms of bias come together to put on a comedy routine within the budgeters thought process, leaving him or her to question what is real and what is not. 

3. Resource Wars: A Budgeting Battle Royale

In one corner you have human resources, in another you have marketing, and in another you have the sales team. Each group has their eye on that shiny prize they want to spend your budget dollars on. Budgeting meetings turn into a C-SPAN deluge with many words and little substance. There are no winners, only losers with the budgeter being the biggest loser of all (or so they are often told).

4. Constraints: The Budget Gurney

Annually, the budgeter decides that they are going to toss aside their proclivity towards weekly meal prep and advanced wardrobe planning in favor of a spontaneous creative bent towards life. Unfortunately, that annual disposition coincides with the budgeting process. The budgeter feels their creative zest is stifled by the rigid nature of a budget. Their dream of dreams not yet construed is squashed by the tyranny of a budget. They cannot spell creativity, but they know the budget process is suppressing their creative outlets. 

5. The Budget Meeting Nap Time

Then, there is the issue of employee engagement. The budgeter may take their task seriously, even if they do not enjoy it. How do they get team members involved in the process? Weeks of built-up angst over the budget process pour out during budgeting meetings, turning what should be a lively conversation into a monologue. The room warms up, eyelids get heavy, and participation vanishes. If team members are not actively involved in the budget conversation, then these meetings turn into a snooze fest rather quickly.

This is an attempt to take a humorous approach to a challenge for many organizations. A budgeting process does make us explore the uncertainty of tomorrow, deal with our interpretation of reality, deal with the agendas of our colleagues, wrestle with what we want to do versus what we realistically can do well, and then get departmental collaboration before finalizing everything. It is not easy, but it’s valuable.

Our next several posts are going to be focused on the budgeting process, starting with the next post with some thoughts around why an organization should make budgeting an annual priority. 

The accounting and financial outsourcing team at Dean Dorton has considerable experience in helping organizations of all sizes design, build, implement and monitor a budgeting process. Sometimes we drive the entire process and sometimes we simply brainstorm ideas or act as cheerleaders as our clients move through their annual budgeting process. We are here to help! 

In today’s fast-paced business landscape, organizations of all sizes face the challenge of managing their financial data efficiently. Accounting, one of the most crucial aspects of any business, requires precision, compliance, and time. For many companies, finding the right balance between in-house accounting and outsourced accounting is an ongoing dilemma. In this article, we’ll explore the cost effectiveness of outsourced accounting and shed light on the numerous benefits it brings to businesses.

Understanding Outsourced Accounting

Outsourced accounting refers to the process of delegating financial tasks to an external accounting firm or a specialized service provider. These professionals handle various accounting functions, including bookkeeping, financial reporting, tax preparation, payroll, and more. Unlike in-house accounting, which relies on hiring and maintaining a dedicated accounting team, outsourced accounting offers a cost-efficient alternative.

Cost Savings

• Reduced Overhead Costs: Maintaining an in-house accounting department involves numerous expenses, such as salaries, benefits, office space, equipment, and software. With outsourced accounting, businesses can save significantly on these overhead costs. The outsourcing provider handles their team’s expenses, and the client only pays for the services they require.
• Scalability: The financial needs of a company can vary throughout the year. During peak seasons or when significant financial projects arise, outsourcing provides the flexibility to scale services up or down. This adaptability allows businesses to avoid overstaffing during quiet periods and ensures they have sufficient support during busy times.
• Access to Expertise: Outsourced accounting firms are specialized in their domain. They employ experienced professionals who are well-versed in the latest accounting regulations and industry best practices. By tapping into their expertise, businesses can improve financial accuracy and reduce costly errors.
• Technology Savings: Adopting and maintaining accounting software can be expensive. Outsourced accounting firms typically provide their software as part of their service package, allowing clients to access the latest technology without additional costs.

Increased Efficiency

• Focus on Core Competencies: By outsourcing accounting tasks, business owners and their in-house teams can concentrate on their core competencies and strategic initiatives. This increased focus leads to improved productivity and a more efficient use of resources.
• Timely and Accurate Reporting: Outsourced accounting teams are committed to delivering timely and accurate financial reports. This allows business leaders to make informed decisions quickly, respond to market changes, and identify potential cost-saving opportunities.

Compliance & Risk Management

• Compliance Assurance: Staying compliant with tax laws, financial regulations, and reporting requirements is a critical aspect of any business. Outsourced accounting providers are well-versed in these areas, reducing the risk of non-compliance and associated penalties.
• Risk Mitigation: Outsourced accounting firms implement robust data security measures and backup systems to protect their clients’ financial information. This reduces the risk of data breaches, financial fraud, and internal embezzlement, which could be extremely costly for a company.

In today’s competitive business environment, the cost effectiveness of outsourced accounting is evident. By reducing overhead costs, gaining access to specialized expertise, and improving overall efficiency, outsourcing financial tasks allows businesses to focus on their core operations and grow their ventures more effectively.

At Dean Dorton, we have over 40 professional accountants in our outsourced accounting team. We serve clients across multiple industries and various levels of complexity. We offer a standard accounting technology stack that consists of Sage Intacct, Bill.com, Floqast, and Expensify. We specialize in providing exceptional accounting and advisory services to our clients so that organizational leaders can focus on driving their organization forward.

The world of accounting has witnessed a significant transformation in recent years, thanks to the advent of automation technologies. Gone are the days of manually crunching numbers and sifting through mountains of paperwork. Today, accounting departments are at the forefront of embracing automation to streamline their processes, improve accuracy, and enhance overall efficiency. Efforts to automate manual processes result in significant returns on investment, enhanced operational value through resource realignment and recovery of every management group’s most valuable asset, its time.

There are many benefits automation brings to the table. Here are a few to think about:

Automating Data Entry

One of the most time-consuming tasks in accounting is data entry and bookkeeping. Traditionally, accountants had to manually enter financial transactions into ledgers and accounting systems. However, with automation, this laborious process is now a thing of the past. Advanced accounting software can now automatically extract data from various sources, such as bank feeds, credit card feeds, vendor invoices and receipts, and enter them directly into the system. This not only saves time but also minimizes the risk of human errors, ensuring accurate financial records.

Streamlining Accounts Payable and Receivable

Automation has revolutionized the way accounting departments manage accounts payable and receivable. With automated systems in place, businesses can process invoices, send payment reminders, and even make payments automatically on predetermined dates. Similarly, when it comes to accounts receivable, automation helps in tracking and following up on pending payments, improving cash flow management and reducing the risk of late payments.

Enhancing Financial Reporting & Analysis

Generating financial reports and conducting in-depth analysis used to be a tedious and time-consuming process. However, with automation tools, accounting departments can now generate real-time reports with just a few clicks. These reports provide valuable insights into a company’s financial health, allowing decision-makers to make data-driven choices. Moreover, automation enables accountants to perform complex financial analysis quickly and accurately, thereby adding more value to their roles. Many accounting systems can automate notifications for budget variances and performance measurements that fall outside of acceptable parameters.

Managing Payroll & Employee Expenses

Payroll processing and managing employee expenses are critical functions in any organization. Automating these processes not only saves time but also reduces the chances of errors in calculating salaries, benefits, and reimbursements. Automation ensures compliance with tax regulations and labor laws, minimizing legal risks and penalties. Additionally, automation provides internal controls that can prevent the creation of fictitious employees or unauthorized adjustments to employee pay.

Ensuring Compliance & Security

Accounting departments deal with sensitive financial information, making security and compliance top priorities. Automation can strengthen security measures by restricting access to authorized personnel only. Moreover, automated systems can track changes made to financial records, leaving a digital trail for audit purposes. Compliance-related tasks, such as tax filings and financial reporting, can also be automated, reducing the chances of oversight and non-compliance.

Integration with Other Business Systems

Modern accounting automation tools can seamlessly integrate with other business systems such as Enterprise Resource Planning (ERP) software, Customer Relationship Management (CRM) tools, and Inventory Management systems. This integration ensures that financial data is consistent across the organization, facilitating better decision-making and strategic planning.

Transformation Through Automation

The transformation of accounting departments through automation is revolutionizing the way businesses handle their financial processes. By automating routine tasks, accountants can focus on more strategic and value-added activities, such as financial analysis and business forecasting. Additionally, automation ensures accuracy, reduces the risk of errors, enhances security, and facilitates compliance with regulatory requirements.

While the adoption of automation within accounting departments has been met with some resistance due to concerns about job displacement, it’s essential to recognize that automation complements human expertise rather than replacing it. Embracing automation allows accountants to elevate their roles and add greater value to the organization they serve. As technology continues to advance, accounting departments that embrace automation will undoubtedly continue to evolve and will lead the way into a more efficient and prosperous future.

Dean Dorton’s accounting and financial outsourcing and ERP software teams focus on leveraging cutting-edge technology to drive automation in the delivery of our services. Contact us today if you would like to learn more about our services and what automation could mean for your organization.