• Pricing

5 Ways to Set Up Your Accounting for Success in 2022

Picture of Restaurant365
Share this

This article was written by Tyler Kump, Senior Manager of Implementation Customer Success Onboarding at Restaurant365, for FEI Daily.

While it might feel like an overwhelming task, applying these five new year accounting resolutions can remove inefficiencies before you find yourself drowning in disorganization.

On the heels of closing the books for year-end, it is natural to want to coast through January and February before we buckle down again to close Q1. However, taking the next few months to deep clean your books and set yourself up for success in 2022 may be the biggest gift you can give to yourself and your team.

While it might feel like an overwhelming task, applying these five new year accounting resolutions can remove inefficiencies before you find yourself drowning in disorganization.

Pair down your Chart of Accounts (COA)

As your business grows, your chart of accounts grows and changes along with it. If your COA is too big, it becomes overwhelming to deal with. A clean COA produces better reports that make it easier for you to analyze your financials. These are three best practices for pairing down your COA:

Deleting Accounts: As you sort through your COA, identify accounts that are no longer in use. For example, loans taken out when the business first opened that have been paid off. You can archive the activity and delete those accounts if you are sure they are not going to be used; any transactions recorded under these accounts will not be deleted.

Deactivating Accounts: If there is doubt, then the account can just be deactivated. Deactivated accounts will no longer show on your reporting, making them shorter and easier to read.

Merging Accounts: When you have two similar accounts or vendors you would prefer to show up combined on your P&L, they can be merged to simplify your reporting. Note that merging accounts is a permanent action and cannot be undone.

Review your list of vendors

Starting the new year off with a lean, clean master file of vendors increases employee productivity by reducing processing time. Vendor management can be a burden and is often neglected due to the constant change in contact names, phone numbers, and addresses, making it easy to have many incorrect entries. Slim down your vendors by consolidating company names, addresses, and other vendor information based on global standards. Once your list is as clean as you can get it, verify addresses, banking information, and other critical data with external sources to ensure accuracy.

If you haven’t used a vendor in 18-24 months, consider removing them from your master vendor list.  Archived vendors can be easily accessed for reinstatement should they become active again.

Format your financial statements

While you may spend every day knee deep in the numbers, executives prefer to have a snapshot of the business’s financial health at any particular point in time. Your formatting choices can make or break the efficiency of your financial statements. If you have not already done so, use the slower months to unclutter your statements and carefully format them so the C-suite can clearly see the company’s revenue, expenses, profitability, and debt.

Review your processes

The beginning of the new year is a great opportunity to challenge that corrosive ‘we’ve always done it that way’ mindset. Just because certain processes have always worked, that does not mean they are the most efficient. In fact, accountants often find themselves begging for budget to switch accounting platforms when all they really need is to find efficiencies within their existing software.

Implement secondary modules

While you might make great use of your core modules throughout the year, many users neglect using some very useful secondary modules, such as fixed assets, simply because they are unaware they are available. Why track your fixed assets on an Excel spreadsheet when the ability to track their lifetime costs in your accounting software may already exist at no additional charge or for a small fee?

These five steps will ensure you have better control over your finances, less stress, and great insights into your business’s performance in the new year. By proactively organizing your accounting processes, you’ll be in the best position possible when it comes to a successful 2022.