Errors are inevitable when accounting department rely heavily on manual processes. Property management companies deal with multiple accounts, hundreds to thousands of customers, vendors, and more, which can make the volume of invoices, payments, balance sheets and other accounting tasks overwhelming and difficult to complete perfectly on the first or even second try. Errors are inevitable, but unbalanced books can double the workload and stifle productivity. So, how do accounting teams avoid the seemingly unavoidable?
Here are 5 tips to keep your books in order:
The first and most important step to avoiding accounting errors and unbalanced books is to know exactly what potential errors are possible. Once your team knows what to avoid, they can proceed to implementing plans and strategies. Whether you’re inputting data manually or entering it into an accounting system, train your employees on how to effectively set up their system or enter entries to minimize errors. If your technology partner offers training, sign up for sessions to optimize use. They will be able to show your employees and management how to detect errors, prevent errors, and how to rectify them as well.
When its not digitized, accounting is extremely paper-intensive which leads to clutter and disorganization. Lost invoices, receipts, or even notes results in errors and unbalanced books. Digitizing those documents eliminates the ability to misplace them because of search capabilities and the removal of physical vulnerabilities like water damage, fire, or even tearing. You can also simplify journal entries through copy and paste or digital file uploads.
Property management software that automates repetitive or redundant data entry alleviates the burden of tedious input from your accounting team while reducing the potential for errors. Automated workflows move entries accurately through their workflow without the risk of distraction, mistakes, or misunderstanding – technology follows the directions its coded to follow, it can’t be distracted or interrupted from coworkers and customers like people.
Reconcile your account ledgers often, either use technology or your team to check that line items of subsidiary ledgers match your general ledgers or accounts payable and receivable ledgers. Increasing the frequency of account reconciliation, increases your chances of catching errors before they go too far through the workflow. Line by line reconciliation can be tedious, so it’s important to strike a balance, because looking at the same numbers too repetitively can make it difficult to notice small differences. It’s more effective to use property management software to reconcile at a faster rate to not tire out your team and miss mistakes.
Audits can be used to enhance accountability in your team but also facilitate retrospective action. When your team can look at journal entries and see who entered each record, when and why they did so, they can facilitate decisions on whether that entry belongs where it is or if a change needs to be made. Without audits, there is a lot of guess work and in mid size or large accounting departments, the employee who made a mistake would be very difficult to track down or the reason for an edit in an account would be challenging to decipher.
Avoiding mistakes in accounting entries is a combination of prevention, detection, and rectifying errors in a way that’s both timely and effective.