Hitting the Books
by DeeAnna Gregston | Project Leader
The end goal of accounting activity is the ability to produce and acquire accurate and reliable financial statements.
After the dust has settled on your year-end closing procedures, you’ll want to start the New Year off with your best foot forward. It is important to have a solid foundation of basic accounting practices to ensure a smooth process for the year ahead. If good day-to-day practices are adhered to consistently, then even your dreaded month and year-end processes will become routine.
The end goal of accounting activity is the ability to produce and acquire accurate and reliable financial statements. These statements are important for a number of reasons, the most significant being the ability to realistically present the value of your company to your owners and investors. This is crucial, especially when attempting to gain additional funding for your operations.
In order to accomplish your goal, certain processes are a must:
- Hire qualified professionals in the accounting roles.
- Establish a system of controls that guarantee that sensitive transactions are only accessible by the accounting team.
- Ensure that all users understand the flow of transactions and where General Ledger (GL) accounts are mapped.
In order to be successful, you must fulfill the fundamental need for qualified employees in all areas of your business. This is especially true in accounting. Make sure that your accounting team is knowledgeable of generally accepted accounting principles and processes. Additionally, you should arrange a complete training plan for your team in all of the tools they are expected to use, including software. Whether they receive this training internally or from our AutoStar Professional Services Group is irrelevant, as long as they are prepared and empowered to conduct all of their necessary functions. During this training process, be sure that daily, weekly, and monthly processes are established. Furthermore, be sure to set up periodic review periods to confirm that these processes are effective and are being followed.
Here is an example of a typical morning for a Controller or Accounting Manager:
- Daily update of Notes Receivable in AutoStar Fusion
- Daily Contract Scan from CollectorPro
- Transfer to the General Ledger and print reports from AutoStar Fusion
- Transfer to the General Ledger and print reports from AccountMate
- Reconciling balances from AutoStar to AccountMate
- Reconciling the Cash Receipts from the previous day
- Posting Deposits
The above process could be used as a starting point for planning the Controller’s daily duties. It’s also important for the Controller to monitor the daily balances of all the accounts on the financial statements. If a reconciliation error occurs, it is much easier to pinpoint the transaction(s) causing the discrepancy if you are only going through a day’s worth of transactions.
Another item to keep in mind is that there are certain transactions that affect accounting and, as such, should only be conducted by qualified accounting personnel. Examples include: contract amendments, term settlements, applying of repo proceeds, and miscellaneous cash receipts/disbursements. In AutoStar, these functions prompt the user to choose a GL account. You don’t want anyone outside of the accounting department to be able to select a GL account that sounds like it might be correct, only to discover later that it was incorrect. This can lead to some serious, and perhaps costly, mistakes that will need to be corrected.
Finally, each member of the accounting department should understand the GL links in AutoStar. Running a GL link report will allow you to see accounts and their corresponding GL links. Understanding which functions use certain GL links will help you to begin to understand where the balances in your chart of accounts are coming from. Understanding this linkage is also useful during periods of reconciliation, so that you will be able to identify errors more easily.
As you already know, end of the year activities can be daunting. However, staying on top of the day-to-day activities during the course of the year can save you many headaches in the later months. Above all else, ensure that your accounting team makes time for these daily activities, and remains persistent in accomplishing them. With solid guidelines and processes in place, as well as proper training, your accounting team will remain an integral component in your dealerships future growth and success.