The Third in a Four-Part Series on Creating Successful Operations

The need to improve operational productivity -- and avoid operational risk -- spans both staffing and processes. Equally important are the competitive advantages that result from developing a well-run organization.

Certainly, teller functions demonstrate the most direct influence on customer retention. However, a financial institution’s bookkeeping and accounting units also have a considerable impact on ensuring operational effectiveness and influencing customer satisfaction. 

Each day there are a significant number of business and process-level tasks that occur under the responsibility of key bookkeeping staff. Financial institutions that want to improve the quality, accuracy, and consistency of accounting efforts must take a disciplined and proactive approach to managing them.

Start with available technology

It’s surprising to learn just how many institutions fail to take advantage of the efficiencies that are readily available within their own in-house systems. In fact, an informal estimate shows that 75 percent of institutions fail to fully use all of the technology in which they’ve so dearly invested.

Applying and making full use of that technology is a smart start to realizing operational and profitability improvements. Many bookkeeping functions can and should be automated. The remaining functions can be greatly simplified, particularly for use by staff members who are not necessarily accounting trained.

Automation can be effectively used for balancing system reports, internal checking accounts, and correspondent banking relationships. In fact, any task that bookkeeping staff currently perform manually should be revisited in the attempt to explore faster, more efficient automated means. 

For example, using a reader sorter to process exception items and to prepare statements speeds up the job and reduces errors. Additionally, today’s pursuit of efficiencies practically demands that check filing and checking accounts be truncated, making manual filing, counting, and managing a thing of the past. Automatic reconciliation should also be used for an institution’s own internal accounts, rather than manually balancing.

Technology applied to additional undertakings can further benefit an institution’s bookkeeping operations. The incoming cash letter is one area in particular whereby the electronic file transmission can replace the manual handling of physical documents and put the institution squarely in the realm of up-to-date efficiencies.   

Even something as simple as using a folding machine for preparing statements is a tremendous timesaver, allowing an institution to make better use of personnel and time resources. It all adds up.

Streamline tasks for maximum efficiency

On the other end of the spectrum, institutions can overuse aspects of technology to support their processes but with no real benefits. For instance, data storage certainly requires backups, but many institutions spend far too many resources unnecessarily backing up the backups. Efforts like microfilming documents often fall under the category of, “Is this really necessary?” and greatly add to redundancies.

The job of generating reports and notices also deserves scrutiny. Financial institutions must review what each report is used for and assess both its validity and frequency. The most common outcome is that such reports and notices can be either eliminated or simply viewed electronically.

Multiple locations are often an indication that bookkeeping tasks are ripe for streamlining. Statement processing should be conducted in one location to allow for greater efficiencies and faster customer receipt. Likewise, processing overdrafts can be accomplished much more efficiently when performed at a single location.

Find the obstacles and eliminate them

Like other departments within an institution, bookkeeping and its processes must be scrutinized to identify smoother workflows based on real-work experience.

A perfect example is in the area of proof. Here, rectifying errors is a time-consuming task that can drastically slow down operations. Analyzing a series of workflow questions and examining the entire process up and down the line can help find inefficiencies and reduce errors.

The same analysis can be applied to the frantic job of getting cash letters out on time in order to meet the end-of-day courier run. By evaluating the process, recommending procedure changes, and reshuffling duties, institutions can avoid this daily crunch time and the stressfulness it brings.

Part four of this four-part series explores improvements in loan operations.