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Cost Reduction and Control Best Practices: The Best Ways for a Financial Manager to Save Money, 2nd Edition by Institute of Management and Administration

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Chapter 7

Accounting Department Costs

BEST PRACTICES

COST-EFFECTIVE CHANGE IN ACCOUNTING DEPARTMENTS

In IOMA’s most recent reader survey, 200 respondents were asked to identify five areas that had yielded the most cost-effective change in accounting department management in the last year. Interestingly, controllers at both small (250 or fewer employees) and larger (more than 250 on staff) companies had roughly the same opinion about the value of these management tactics. The tactic that was most successful in improving accounting operations or reducing costs was to ask or require staff to assume more responsibility. Some 76% of respondents at small businesses had success with this tactic, compared to 72.6% of participants at larger operations.

New Processing Procedures

Overall, 54.6% of respondents acknowledged success from implementing new controls or procedures for processing accounting data. Even so, controllers at larger businesses were more likely to claim success with this tactic than at small companies. Here, the differential is 13.8%—60.7% versus 46.9%—the largest in the survey. What is happening?

In this case, there were sharp differences in the scale of the new processes that respondents implemented. Only respondents at larger companies, for example, mentioned the implementation of P-card programs, which obviously affect numerous employees. “This took a huge number of invoices out of our AP operation,” explained the controller of a transportation company in Maryland. ...

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