ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

Disbursing with Accounting Inefficiency

We've all read countless articles on the advantages of transactional filing. And many agencies have gone, or are in the process of going, paperless in their agency. Yet all of these articles have centered around the customer service representative and the client files. Why not extend the transactional filing process to your accounting department?

Let's take a little test:

1. Does your bookkeeper make photocopies of all the checks received?

2. Does a check approval form have to be completed before a disbursement is issued?

3. Does your agency use multiple copy checks?

4. Are copies of your check attached to the vendor's invoice?

5. Are vendor invoices filed in individual folders, either by vendor name or alphabetically?

6. Do you print and file duplicate copies of invoices and / or statements?

If you answered yes to one or more of the questions, your accounting department is not transactional filing. But don't be ashamed. Over 90% of the agencies I visit fail this test. Instead, let's concentrate on improving the efficiency of your accounting department so that your bookkeeper / accountant can assist you in other areas.

Making copies of checks

Does your bookkeeper make copies of all the checks he/she receives? And worse yet, are the checks then filed in the client's file? Why? Most of today's automation systems allow you to input comments for each cash receipt. This is the field where you should input your client's check number. If you need to do an account reconciliation you already have the date the check was received and the check number on your account analysis.

If your client pays with checks from different accounts, such as an escrow account, you can make the appropriate notation. If a client challenges your reconciliation, he will already have the canceled check in his possession. Handling receipts this way saves, space, copy paper, and most importantly, time.

Check approval forms

You will need check approval forms for those check requests that are not accompanied by a vendor's invoice. Yet many agencies attach request forms to the vendor invoice so that they can write down who approved the request and the disbursement number. Instead, merely have whoever approves payments to "OK" the disbursement right on the vendor invoice. And when the computer system assigns a check number, write it on the vendor invoice as well.

Multiple copy checks

Many agencies use multiple copy checks and attach the copy to the vendor invoice. Once again, I have to ask "Why?" If you are writing down the check number on the vendor invoice, you already have all the information either there, or on your computer system. Once the check has been cashed, you have the original, so you won't need the check copy.

Filing vendor invoices

Many agencies file vendor invoices either alphabetically or in a separate folder for each vendor. This is a tremendous time waster. When will you have to refer back to this information? Probably when a vendor claims that you failed to make a payment or when you see a past due amount on an invoice and you're not sure whether you made the previous payment.

Your automation system should allow you to assign vendor numbers. When you need to see if a vendor has been paid, run a search on disbursements to that vendor number. Since your computer will record the date you made the disbursement, you can file the vendor invoices in date order. If you ever need to retrieve that invoice, it's simply a matter of searching for that date's invoices.

Duplicate copies of invoices

Why make duplicate copies of invoices or statements? Statements can be run and rerun as many times as you need to. Statements as of a specific date can be reconstructed via an account analysis. Invoices, if your system will not allow you to reprint them, can be retyped manually if the client needs another copy of it. Although this may seem inefficient, it will take less time than filing away duplicate invoices month after month.

Conclusion

Obviously, your agency's ability to institute these systems and procedures are limited by the capabilities of your automation system. But isn't this true of all types of transactional filing? In most cases where an agency is not following these procedures it is because of routine. The bookkeeper had to manually handle situations before the agency was automated. After automation, the bookkeeper was able to handle things faster but kept the same procedures out of habit.

Challenge yourself. Before following a procedure that has been around since the start of the agency ask one question. Why? If the answer is "Because that's the way we've always done it," rethink the process.