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7 habits of a highly effective accounting department

 

7 habits of a highly effective accounting department

Aug 23, 2019

If you have ever taken a deep breath and thought, “I wish my accounting department were more effective,” you are not alone. 

Ten years ago, grading an accounting department on effectiveness meant simply looking at financial savviness and data entry skills. However, the world is evolving, and accounting departments need to evolve right along with it. 

If your accounting department lacks the soft skills necessary to function as a team, you could be missing out. Stephen R. Covey's book, The 7 Habits of Highly Effective People®, offers powerful insight into the attributes and habits of highly effective people. Do you think its concepts can be applied to your accounting department? Let’s find out.

Habit 1: Be proactive

Being proactive is about taking responsibility. Many people associate being proactive only with members of management or a sales department, but an accounting department is no exception.  

An accounting department must take control and responsibility of numerous tasks, such as providing timely financial information, safeguarding assets and preventing fraud.  

Example: Any accounting department can just deliver the financial results at the request of management, but a highly effective accounting department can be proactive and deliver those financial results ahead of the due date, as well ask management hard-hitting questions, perform critical data analysis for management, and provide management with dynamic reporting.

Habit 2: Begin with the end in mind

Covey illustrates that “begin with the end in mind”means to begin each day, task or project with a clear vision of your desired direction and destination, and then continue by flexing your proactive muscles to make things happen.

An accounting department has many tasks to complete in a given time period, and all of those tasks should have a thoughtful path laid out in how to accomplish them. Whether these tasks have written policies and procedures in place or just informal steps to complete, it is critical that the desired goal has been evaluated.  

Example: A highly effective accounting department, when performing their month-end close, should assess the timing of each deliverable and work backwards to determine the steps required to successfully reach the desired goal.

Habit 3: Put first things first

Covey defines thisas organizing and executing around your most important priorities.  

Because an accounting department must prioritize on a daily, weekly and monthly basis and be able to line up their critical action items, this routine is filled with both expected and unexpected “to-do’s. Managing your schedule and workload to focus on those important priorities is vital to the department running effectively.  

Example: A member of the accounting department receives an unexpected request to run certain inventory reports for the Operations Manager, but is in the middle of the month-end close. Therefore, the accounting team member must communicate to all parties to be able properly manage their workload and prioritize which actions items will be done first.

Habit 4: Think win/win

This can be described as agreements or solutions that are mutually beneficial and satisfying.  

An accounting department works with many different people both within and outside of the organization, and these relationships are integral to maintaining effectiveness. The accounting team may collaborate with various other departments, including management, sales, operations, payroll, information technology and others — sharing information and knowledge can be valuable to both parties.  

The accounting team may also have important relationships outside of the organization with customers, vendors, bankers, attorneys or other third parties, where maintaining a solid relationship builds a foundation of trust and interdependence.  

Example: A customer requests that the method of invoicing them be modified from regular mail once a month to electronic delivery. A highly effective accounting department will understand the importance of the customer’s request and work within the organization to accommodate this request; and, as a result, the new process ends up benefiting both parties.

Habit 5: Seek first to understand, then to be understood

Covey emphasizes that “seek first to understand, then to be understood” means putting oneself in the perspective of the other person, listening emphatically for both feeling and meaning.  

An accounting department must use communication and the component of listening in everyday duties, as they must obtain information by communicating with various parties to perform almost all duties such as financial reporting, customer billing, vendor payments, inventory management, budgeting and many more. While the information can be obtained in different forms, the accountant listening and understanding is vital in how they will utilize and complete a final deliverable.  

Example: A sales manager requests a sales report from the accounting department that shows specific customer sales data. The accountant listens intently to the sales manager’s requests, asks quality follow-up questions and provides the sales manager with various sales report examples based on the request.  The end result is not just a standard sales report, but also a valuable, specific sales report that benefits the sales manager.

Habit 6: Synergize

Synergize means innovate and problem solve with those who have a different point of view. In other words, synergy can mean “two heads are better than one” and creative cooperation.  

An accounting department not only cooperates within its own team but also must synergize with all departments of an organization to be successful. A successful management team at an organization usually has dynamic leaders from all departments who communicate regularly to meet the organization’s many needs.

Example: The accountant may be entering the weekly payroll data into the general ledger based on a manual process the organization has done for many years. What if the accountant decides to inquire of the information technology (IT) department if there is a way to automate the payroll process? The cooperation and different point of view may result in an automated process to enter payroll that would allow the accountant to use their time in more critical areas.      

Habit 7: Sharpen the saw

“Sharpen the saw” means to seek continuous improvement and renewal professionally and personally.  

The accounting department should continually find ways to improve and educate themselves on all of their functions and responsibilities. Because the accounting industry is ever changing, it requires the accounting department to be current on their discipline.

An accountant can learn from on-the-job training with an immediate supervisor, but they also can do many activities on their own, such as perform research and attend continuing professional education trainings. A successful accounting department should have varying levels of accountants who are constantly learning and striving for more knowledge.

Example: The cost accountant has their daily duties relating to inventory and costing, but occasionally they need to assist the budget team. The cost accountant is eager to gain more expertise in the budgeting area and attends continuing professional education courses.

Learn more

Could Covey’s The 7 Habits of Highly Effective Peopleapply to your accounting department and create a highly effective team? Read more here:

Next Generation of Leadership: Individual and Team Engagement

10 Ways to Elevate Your Financial Reports

Author(s)

Jason Carlson
Jason Carlson, CPA
Manager
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