How Outsourced Accounting Benefits Your Private Equity Clients

How Outsourced Accounting Benefits Your Private Equity Clients

by | Feb 13, 2023 | Accounting, Outsourcing

Today, more than half of market private equity firms use an outsourced accounting partner, and for a good reason. Working with a financial operations management and outsourced accounting firm benefits both your firm and your clients.

Jump Ahead

In the sections below, we’ll explain how a financial planning and accounting firm can help you.

Instill Confidence in Your Investors

Investors like funding good ideas, but only if they know an experienced team will manage that good idea to its full potential.

Investors will be looking at how well your team works as individuals and as a group before trusting your firm to source, negotiate, monitor, and exit fund investments.

So, when meeting with potential investors, you want your team laser focused and ready to answer every question investors throw your way, like:

  • How forward-thinking is your team on issues that impact private equity?
  • How comfortable is the team managing a complex portfolio like mine?
  • Describe the technology you use to implement proactive portfolio strategies.
  • How quickly can the team produce high volumes of customized reports?

Your team’s biggest barriers to making a good impression?

Admin Distractions

If your team has to manage basic accounting tasks or stay on top of regulation changes, their focus will be split between essential and non-essential business functions.

An unfocused team has a greater risk of delivering reactive and lackluster strategies or accruing costly regulator penalties.

Disorganization

When your team doesn’t have a central platform to store, view, and extract financial data, it’s easy for teams to mistakenly (and unknowingly) work off of inaccurate or dated information. Without a centralized location to store client data, your team is more likely to stumble over unnecessary redundancies and inefficiencies.

By outsourcing your firm’s financial operation management and accounting, you let your fund admins focus on improving investment strategies, reports, and client dashboards – tasks that have a direct impact on the business.

Furthermore, your team will all be able to leverage accurate data, the bedrock of effective and proactive investment strategies.

Preserve Your Reputation to Attract Investors

As private equity firms grow, it gets more difficult to maintain a high growth rate. But a high growth rate is exactly what attracts investors.

In response, private equity firms are eager to find efficiencies and cost savings that don’t impact core business functions.

Outsourcing your financial and accounting processes is an excellent way for firms to reduce overhead costs while maintaining transparency and accuracy. Plus, private equity firms can still maintain management fees this way.

Additionally, you can retain a penalty-free track record by relying on your financial partner to monitor regulatory changes and how they impact your business. Plus, your financial partner can make sure your firm is always financial audit-ready.

Broaden Your Expertise

The very best outsourced accounting firms are the ones that can explain the meaning behind the numbers.

At Lavoie, we go a step further by also identifying:

Think of a company like Lavoie as an extension of your team that you can tap when, for example, you don’t understand why cash flow is low when the business is performing. Your financial partner has both the time and experience to investigate the problem and deliver a list of actionable next steps.

Finally, there is a degree of credibility you can achieve with investors when they know that a professional team is overseeing all the nitty-gritty details of their investment. This also reassures investors that your team’s focus is on their funds.

Free Up Cash Flow to Reinvest in Teams & Tools

There is a multitude of ways to enhance the investor experience at your firm, but very few of them are free.

An important benefit of partnering with an outsourced financial operations management and accounting firm is that it can free up more cash flow. This allows you to reinvest in other things such as team training, hiring new team members, or purchasing industry-leading tools.

When private equity firms experience rapid growth, they are suddenly inundated with heavy cash flow. A partner like Lavoie ensures that you can manage those funds efficiently.

Your financial partner can also manage your accounts receivable, allowing your company to collect payments faster or identify clients who are behind with payments.

They also have the time to carefully review invoices before they’re paid to check for any inaccuracies that can cost you.

The biggest cost savings come from not having to staff an in-house accounting team. With a financial partner, you only pay for additional financial support when you need it.

Meet Expectations of Digital-Savvy Investors & Regulators

Today’s most successful firms leverage the speed and accuracy of financial software to deliver superior client experiences and abide by current regulations.

All client investors expect financial transparency and accuracy and – with the emergence of technology – they expect them at a moment’s notice.

The Securities and Exchange Commission (SEC) also expects greater transparency and accuracy. The surge in private investments, plus the fact that private companies aren’t required to file information with local regulators, drew enough attention for the SEC to tighten regulations.

Today, regulators are more likely to request a report on performance or economic activity. All signs point to more regulations, re-emphasizing the importance of accessing financial information at a moment’s notice.

Financial software could easily alleviate these issues — but the software can’t do all the work by itself. Someone from your firm has to research and select the right product, learn the tool, and train other employees.

Realistically, private investors do not have enough time to do this, but the good news is that they don’t have to. Not when they partner with a financial operations management and accounting firm.

At Lavoie, for example, we make software recommendations to our clients based on the functionalities they need. We are proficient with several programs that satisfy a range of accounting needs.

We also:

  • Set up the software for you
  • Create custom dashboards for your clients
  • Show you how to maximize the tool in ways that add value to your strategy

In Summary

Private equity firms of all sizes can glean deeper insights at a faster pace and with greater accuracy when they have the support of a financial operations management and an outsourced accounting firm.

Firms like Lavoie can reduce operational costs, streamline inefficiencies, and introduce your team to the right software. The resulting improvements in accuracy, communication, and transparency will only enhance the client experience at your firm.

If you’re a private equity firm looking for financial support, contact Lavoie today!

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The Best Budgeting Methods for Your Business

The Best Budgeting Methods for Your Business

by | Jul 6, 2022 | Accounting, Blog, Budgeting

From software developers to capital investors, most business professionals understand that budgeting is vital for sustainable growth. But few understand that a company’s budgeting methodology can make the difference between financial success and ruin.   

 In this article, we discuss four traditional types of budgeting. Then, we offer insight into driver-based budgeting – an innovative and flexible technique that allows companies to focus on factors that directly influence future success. 

Contents

What Are the Traditional Types of Budgeting?

The Problem With Conventional Budgeting Methods

How Driver-Based Budgeting Works

Why Savvy Business Owners Opt For Driver-Based Budgeting

Why Your Company Needs Driver-Based Budgeting Software 

What Are the Traditional Types of Budgeting?

Many companies follow traditional budgeting approaches, including: 

  • Incremental budgeting 
  • Activity-based budgeting
  • Zero-based budgeting
  • Value proposition budgeting

Each methodology has unique advantages as well as downfalls.   

Incremental Budgeting

This popular budgeting technique involves using the current budget as a starting point for next year’s budget. From there, you can adjust specific line items.   

 A cost of living raise may equate to a 2.5% increase in personnel spending, for example. Or, a merger may lead to a 4% reduction in production costs. 

Though incremental budgeting provides funding stability, it can also contribute to unnecessary spending. 

Pros

  • Straight-forward and easy to understand; no complex calculations are required
  • Budgets remain consistent over time
  • Less internal conflict; departments know what to expect from year to year

Cons

  • May lead to unnecessary spending; departments feel compelled to spend all the money in their budget
  • Doesn’t account for unforeseen or external factors
  • Leaves little room for innovation or creativity 

Activity-Based Budgeting

Activity-based budgeting is a top-down approach. Companies start with a key business objective and then ask, “What must we do to accomplish this goal?” Resources are allocated thusly.   

For example, if the goal is to generate $6 million in revenue from a new product line, an organization may decide to increase its personnel budget to hire more sales representatives.    

Though activity-based budgeting helps companies make goal-centric decisions, it can be tedious and time-consuming. 

Pros

  • Allows companies to focus on factors that influence the bottom line 
  • Company leadership is more likely to identify budget inefficiencies
  • Affords flexibility; changes can be made in response to internal and external events

Cons 

  • Time-consuming and expensive
  • Can lead to short-term thinking in pursuit of annual goals
  • May be difficult for younger companies to implement

Zero-Based Budgeting

Zero-based budgeting starts with a blank slate. Every year, department heads must create a budget from scratch, justifying each line item without reference to the prior year’s numbers.    

This budgeting approach is an excellent way to eliminate wasteful spending as it allows company leaders to aggressively cut fat while prioritizing key activities. 

However, zero-based budgeting is very time-consuming. 

Pros

  • Streamlines inflated budgets
  • Holds department heads responsible for costs 
  • Helpful during restructuring   

Cons

  • Incredibly time-consuming and frustrating for department heads
  • May reward short-sighted decision-making rather than big-picture thinking

Value Proposition Budgeting

Value proposition budgeting is a happy medium between incremental budgeting (which, some argue, is too blasé) and zero-based budgeting (which, some argue, is too scrupulous).   

 

The approach involves evaluating each line item by asking:  

  • Why are we spending this money?
  • What value does this provide to our stakeholders, customers, and employees?
  • Does the value outweigh the cost?

Though value proposition budgeting is useful for cutting wasteful spending, it can be difficult to operationalize “value” (i.e. what’s valuable to one person may not be valuable to another).   

Pros

  • Allows leaders to identify expenses that bring little to no value to the organization
  • Keeps companies customer-centered
  • Great for cutting wasteful spending 

Cons

  • “Value” is hard to operationalize 
  • Perceived value may change based on cultural, social, economic, or technological influences beyond the company’s control  

The Problem With Conventional Budgeting Methods 

While each traditional budgeting type has clear advantages, these methods are rigid, making it challenging for companies to pivot in response to a rapidly shifting economy.     

By contrast, driver-based planning is innovative and flexible. This type of forecasting allows companies to focus models on key drivers that directly influence financial success.   

Simply put, this top-down approach helps businesses focus on the metrics that actually matter.   

How Driver-Based Budgeting Works

Implementing a driver-based model involves four high-level steps.

Step 1: Identify Qualitative Goals

As with all budgeting, driver-based planning begins with an overarching goal. Your company may, for example, aim to drive revenue growth or increase profitability. 

Step 2: Isolate Quantitative KPIs

After determining a qualitative goal, your team should work to identify key performance indicators (KPIs). These quantitative metrics can be used to gauge progress. 

Step 3: Define Key Drivers

Now, your business must define the key drivers that have the most significant impact on its KPIs. Examples include website traffic, product price, and call volume.

Step 4: Create Your Model

Finally, you need to develop a mathematical model that investigates the relationship between the key drivers and your overarching goal.  

 This model should allow you to survey different scenarios. For example, you may want to explore how net profits will change in the wake of a 2% product price increase.

What Key Drivers To Select for Your Model

Key drivers vary from business to business. However, they generally fall into one of five categories:

  • Cash
  • People
  • Profit
  • Growth
  • Assets 

Typically, key drivers are controllable. They are inputs that companies can easily manipulate, such as the number of sales personnel. 

Why Savvy Business Owners Opt For Driver-Based Budgeting

Most traditional budgeting techniques force company leadership to slog through unnecessary information. But with driver-based budgeting, executives can break through the noise – concentrating on the key drivers that affect the bottom line.  

Efficiency and Effectiveness 

With driver-based planning, your business can focus on the variables that impact organizational success.

Flexibility 

Using a driver-based model, teams can quickly assess how different scenarios may affect financial outcomes. 

Operational Alignment

A driver-based approach encourages collaborative thinking across departments. 

Data Integrity

A driver-based model allows companies to collect a smaller amount of more accurate and valid data. 

Why Your Company Needs Driver-Based Budgeting Software

Driver-based models help companies explore the causal relationships between key drivers and financial outputs. These models also afford visibility, allowing businesses to run different scenarios and explore what may happen in the wake of future changes.   

However, building a driver-based model in a spreadsheet can be very time-consuming. Large spreadsheets also struggle to handle the macros and equations needed for these models. 

Fortunately, there’s a better way. Driver-based financial planning and analysis (FP&A) software can provide the state-of-the-art budgeting and forecasting solutions you need to catalyze your business. 

Lavoie CPA and Jirav Software Solutions

At Lavoie CPA, our goal is to deliver cutting-edge financial support so that clients can focus on soaring to greatness. With this in mind, we have partnered with Jirav, a driver-based financial planning tool.  

“Jirav affords the flexibility and visibility required to scale, focus, and grow a business.”

— Sharai Lavoie, CEO of Lavoie CPA

As our preferred FP&A software, Jirav gives companies the confidence to navigate complex business challenges. With forecasting, budgeting, reporting, and analytics, this all-in-one tool has everything you need to make your next big move. 

Contact Lavoie’s financial experts to see if Jirav is the right software solution for your business.

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What Is Driver-Based Planning and How Can It Give Your Company a Competitive Edge?

What Is Driver-Based Planning and How Can It Give Your Company a Competitive Edge?

by | Jul 6, 2022 | Accounting, Small Business

Budgeting often leaves business professionals drifting aimlessly in a sea of details.

With so much information available, they struggle to determine which factors will propel their company forward and which will sink it altogether.

Fortunately, driver-based planning can serve as a beacon.

Intuitive and flexible, this budgeting technique allows companies to identify which factors have the greatest impact on financial performance. The budget is then built around these factors, also known as key drivers.

The result? A nimble and responsive budget that eliminates white noise by focusing on variables that actually move the needle.

Keep reading for more insight into this innovative budgeting technique.

Jump Ahead

What Is Driver-Based Planning?

Traditional budgeting methods focus heavily on details that have little impact on the bottom line. Comparatively, driver-based planning focuses on key drivers that are vital to a business’s financial performance and future success. 

Though key drivers vary from industry to industry, common examples include:

  • Call volume 
  • Quantity Produced
  • Product price

With driver-based planning, organizations can create models that explore the causal relationships between key drivers and financial outcomes. These models can then be used to make operational decisions. 

Driver-Based Planning in Action

At its simplest, driver-based planning helps businesses bridge the gap between budgeting and everyday operations. 

Your company can implement this forecasting technique in four steps.

Step 1: Identify Qualitative Goals

Much like in traditional budgeting, a driver-based model begins with an understanding of what your company hopes to accomplish. 

This goal doesn’t need to be overly complicated or even very specific. It can be as simple as “drive revenue growth” or “increase profitability.”

Step 2: Establish Quantitative KPIs  

After determining your high-level qualitative goal, map out how you will measure success. For most companies, this involves establishing key performance indicators (KPIs). 

Common examples of KPIs include net profit, operational cash flow, and inventory turnover.  

Step 3: Isolate Key Drivers

Now, your company must determine which factors – or key drivers – have the greatest impact on those KPIs. 

Hundreds of variables may affect a company’s bottom line. The objective is to isolate those that matter the most. 

Step 4: Develop the Model

The last step is to create a quantitative model based on your company’s key drivers. But a successful driver-based model can take days, if not weeks, to develop in a spreadsheet. 

Fortunately, financial planning and analysis (FP&A) software can minimize legwork while delivering a more precise and accurate forecasting system.  

Selecting Key Drivers With Momentum

Driver-based planning is grounded in the Pareto Principle. 

Also known as the 80/20 Rule, the Pareto Principle states that 80% of outcomes come from 20% of causes. In layman’s terms that means your company’s financial performance hinges on a handful of inputs.  

Determining which inputs – or key drivers – are worth your attention can be challenging. However, key drivers should be easy to manipulate. In other words, your company should be able to control key drivers with a high level of accuracy. 

For example, the number of sales representatives can easily be increased or decreased. However, the sales representative attrition rate is less predictable and harder to change.

Why Businesses Are Adopting a Driver-Based Approach

An increasing number of companies are moving away from traditional models and toward the driver-based approach. 

Why? Because this innovative methodology has clear advantages over the budgeting techniques of yesteryear. 

1. Driver-based planning puts the focus on key metrics that impact organizational success.  

Traditional models adopt a bottom-up approach, forcing the C-suite to wade through irrelevant information. But with a driver-based model, businesses can drill down on the metrics that actually matter. 

2. Driver-based models allow teams to quickly assess the impact of internal or external changes. 

In a rapidly shifting economy, the ability to pivot on a dime is invaluable. Luckily, driver-based plans allow companies to manipulate variables, run different scenarios, and determine how imminent changes could impact the bottom line. 

3. Driver-based approach nurtures operational alignment. 

Driver-based models link financials to the everyday activities of your company. This encourages finance professionals to collaborate with department heads to truly understand which inputs are linked to improved performance. 

4. Driver-based models ensure data integrity. 

The sheer volume of information associated with traditional models contributes to inaccuracies. But with driver-based planning, companies can focus on collecting a small amount of accurate, valid data. 

5. Driver-based planning helps stakeholders see the big picture.   

The chief advantage of driver-based planning is simplicity. This budgeting approach allows your company to explain – in plain language – the causal relationships between key inputs and profitability to stakeholders.

How Driver-Based Financial Planning Tools Maximize Precision

Driver-based models can give companies a competitive edge by illuminating key drivers that affect the bottom line. 

However, building one of these models in a spreadsheet can be tedious, requiring days of work from even the savviest of finance professionals. Worse yet, most spreadsheets get bogged down by the macros and equations needed for these models. 

Luckily, there’s a better solution. Driver-based FP&A software can offer cutting-edge precision and customizable forecasting solutions with a single click.   

Lavoie CPA and Jirav Software Solutions

At Lavoie CPA, we are dedicated to delivering strategic support so that businesses can focus on what matters most: catalyzing growth. With this in mind, we have partnered with Jirav, a driver-based financial planning tool, to help clients soar to greatness. 

“Jirav gives business professionals the clarity needed to make their next big move.”

— Sharai Lavoie, CEO of Lavoie CPA

As our preferred FP&A software, Jirav gives you a real-time look at financial projections. Rather than build budgets from last year’s stale data, you can rely on Jirav to help you visualize the future and test out different scenarios based on key drivers. 

Contact Lavoie’s financial experts to see if Jirav is the right software solution for your business. 

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How Monarch Doubled Revenue with Outsourced Accounting Services

How Monarch Doubled Revenue with Outsourced Accounting Services

by | Jun 20, 2022 | Accounting

“[Sharai] takes pride in what she does. [Lavoie] is not a giant firm where there’s no sense of ownership or sense of pride. For us, that was extremely important.” 

Client

Monarch Medical

Industry

Medical Software

Outcomes

  • Annual revenue doubled
  • Headcount increased from 12 to 35 employees 

Solutions

  • Implemented cloud-based ERP solutions 
  • Set up software to track commissions
  • Built a system of internal controls 
  • Created a new purchase order process 
  • Supported payroll and HR functions

The Client

Monarch Medical operates in a highly regulated and competitive industry, where the quality of products and services directly impact patient care. At the outset of the engagement with Lavoie, Monarch (which was purchased by Eigen Capital in 2012) had minimal processes especially in terms of accounting systems. Lavoie took responsibility for the entire back office support function of the company, with Eigen Capital’s leadership noting of Sharai Lavoie “she just knew what to do.” Monarch doubled its revenues, increased its workforce and improved its systems relative to invoicing, purchase orders and preparing financial statements. This resulted in many positive outcomes, with Monarch’s senior leaders noting, “The business is running like a well-oiled machine.”

As a medical software company, Monarch Medical creates algorithmic dosing products associated with insulin for hospitals and other healthcare clients. These products help save lives and improve patient care while giving healthcare providers the tools to treat patients more efficiently. 

In 2012, Eigen Capital purchased Monarch’s IP product and services while integrating the existing workforce into its operations. The existing business consisted of 12 employees and minimal accounting and business infrastructure. Also, Monarch’s products exist in an FDA-regulated industry and must meet rigorous standards of quality and reliability.

The Challenges: A Lack in Structure 

Monarch Medical’s baseline accounting processes lacked structure. Leaders of Eigen Capital noted, “All of the mechanics of administering the company, from an structural standpoint, didn’t exist.” 

As a result, accounts payable and document retention policies were not well-defined. Also, purchase orders and purchasing processes were not in line with industry best practices. 

Monarch did not have an accountant or financial professional on staff to help improve operations. For Monarch to provide better service to internal and external customers, while maximizing shareholder value, it was necessary to create policies, processes, and procedures to run the business.

The Need: An Experienced Outsourced Accounting Firm

Monarch needed an outsourced accounting service provider to set up the entire back office function of its business. This service provider needed to be self-sufficient and low maintenance while having the tools and expertise to revamp current operations and support future growth. 

Also, Monarch and Eigen Capital were looking for a financial service provider experienced with private equity clients. Lavoie’s holistic approach, accounting software applications and experienced personnel were an ideal fit to establish, improve and expand Monarch’s processes. Given the entrepreneurial mindset of Lavoie’s founder, Sharai Lavoie, and Monarch’s leadership team, there was a commonality of mindsets.

Sharai Lavoie also has a background in the healthcare industry. This proved critical for understanding the dynamics of Monarch’s operating environment. There is a wide spectrum of healthcare accounting applications, cloud-based technology solutions and add-on modules to standard accounting systems. Knowing how to parse through this array of systems to find the optimal solutions, based on the industry, size and nature of a company’s operations, is no simple task. Lavoie had the flexibility and knowledge base to do this effectively while having the acumen to communicate with private equity professionals on complex matters. Eigen Capital’s leaders appreciated Sharai Lavoie’s work ethic noting, “She takes pride in what she does.”

The Solutions

System Optimization and Process Improvement

To meet the objectives of the engagement, Lavoie implemented tools to make the company’s accounting systems more robust. These included cloud-based applications to streamline accounting and payroll tasks. Processes were standardized, measured and tracked to improve performance. For example, customer contracts were standardized. This led to the better management, evaluation and recording of important transactions that directly impacted the revenue cycle and cash management.

Internal Controls

A system of internal controls was implemented to meet the regulatory demands in this industry. Whether it was document retention policies, a series of account reconciliations to verify the accuracy of balance sheet accounts, or protecting confidential information, this system of controls was coordinated with all company personnel for maximum effectiveness. Lavoie participated in HIPPA training and integrated those guidelines relative to the tasks and accounting procedures they completed. Without an effective system of internal controls, a myriad of risks can impact the continued viability of Monarch Medical, which is why Lavoie placed emphasis on the integrity of the solutions implemented.

Commission Tracking 

Recommending and establishing the use of software to track commission, resulting in more clarity and accountability for the sales team to see commissions building up in real-time, was a beneficial best practice. It brought alignment and transparency for all stakeholders in the organization, improving morale, sales, accounting and other processes. Aligning business units is critical for efficiency and the continued growth of an organization, as well as for maintaining a competitive advantage in the global economy.

Attaining Purchase Order in Advance 

Another significant achievement was a new process to coordinate with hospitals to attain purchase orders in advance. Proof of purchase orders allows for bank funding alleviating funding concerns or restrictions. This process was integral for growing the business and was facilitated by Lavoie’s staff members. Fine-tuned processes are critical for enhancing the speed and capabilities of operations, as accounting supports management decision-making and helps attain the resources necessary to achieve organizational objectives.

The Result: Doubled Revenue 

Over the course of the engagement with Lavoie, Monarch doubled its revenues, increased its headcount from 12 to 35 employees and improved cash flow through effective accounting and treasury procedures. 

While some hospitals tend to be slow payers, Lavoie’s team worked with these customers to speed up payment and make more cash available for Monarch’s ongoing operations. Lavoie’s team undertook the many labor-intensive tasks required to streamline operations and establish a month-end-close for financial statement preparation.

Lavoie has proved to be a trusted advisor and strategic partner in the running of day-to-day operations of the business while building the infrastructure for future growth. Lavoie also participated in the interview of the CEO for Monarch Medical with Eigen Capital. This type of insight, combined with a clear illustration of company performance and the management of operational tasks, is where Lavoie’s added value really shows. Having a trusted partner to look to for advice and practical experience can yield a significant return on investment.

In Summary

Monarch Medical engaged Lavoie to perform outsourced accounting services, and help support the growth of their business while improving the efficiency, effectiveness and accuracy of Monarch’s financial reporting processes. The engagement was a success, with Monarch Medical doubling its revenues. 

If you’d like to explore how Lavoie can help your business, set up a consultation today. 

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Accounting Trends in 2022 That Can Help Your Business

Accounting Trends in 2022 That Can Help Your Business

by | Mar 14, 2022 | Accounting

The accounting industry continues to quietly undergo a transformation that will be revolutionary once the history books are written. This transformation is mainly the fruit of rapid developments in the technological infrastructure that powers the day-to-day functions of accounting practice. 

Those organizations who are adaptable and among the early adopters of these emerging accounting trends stand to capitalize significantly over their competition. On the other hand, organizations that are resistant to change will fall farther behind and may even become obsolete.

In this article, we take a closer look at three emerging trends in accounting practice for 2022 and how they can help your business.

1. Accounting Automation

Accounting automation is enabled by cutting-edge software programs that allow daily accounting functions to be completed with minimal human involvement. Any routine accounting function that has a clear set of rules can now be designed by accounting software and executed by these programs automatically without human intervention.

The automation of accounting functions will be a rapidly growing trend in 2022. There are tremendous benefits for organizations who adopt automation technologies in their accounting practices. The two most significant benefits are increased efficiency and reduction of errors.

Increased Efficiency

Prior to automation, many daily accounting tasks were done manually. These manual tasks were time-consuming and required substantial amounts of human resources. With accounting automation, these tasks that were once done manually are now done automatically by software programs. The result is that those tasks are completed much faster and with much fewer human resources.

This increased process efficiency enabled by automation allows the members of your team to focus on activities that are more valuable to your organization. These high-value activities include delivering better customer service and spending time on strategy and planning. Since the manual tasks are now automated, your accounting team is freed up to delight your customers more as well as spend time and energy planning how to make your business even better for the future.

Reduction of Errors

If your accounting team is overwhelmed by a mountain of daily tasks that they have to do manually, they will have to work faster to try to get everything finished on time. This rushed process will inevitably result in more errors in their work. Accounting errors are not only a source of liability for your company, they also take up a considerable amount of extra time by having to diagnose, correct, and readjust downstream books and records that were impacted. 

By implementing automated accounting technologies in 2022 your organization will experience tremendous benefits because the automated programs will be able to detect and even prevent accounting errors from occurring. Furthermore, if an error is detected by the automated accounting program, it will be much easier and less time consuming to fix because once the error is corrected, the software will take care of adjusting all downstream books and records that were affected by the error.

2. Agile Accounting

A recent survey found that 54% of CFOs plan to make remote work permanent for their accounting teams even after the coronavirus pandemic is over. This phenomenon represents a major shift in thinking about traditional processes within accounting departments. 

One of the most significant consequences of this shift is that accounting teams will need to be more agile in 2022 than ever before. In short, an agile accounting team is one that can have its members working in different locations at different times, but still meeting the goals of the accounting practice.

One of the keys that is going to enable agile accounting is cloud storage technology. Prior to the dawn of agile accounting in the industry, firms stored their accounting data on local servers within their organizations. As a result of this local storage, team members generally needed to be onsite to access the accounting data. With cloud services, an organization’s accounting data can now be securely stored within the cloud and accessed from anywhere in the world. In this way, cloud storage is a game-changer and has revolutionized the approaches businesses are now taking towards implementing more lean and agile accounting processes in their organizations.

In addition to bringing increased agility to accounting teams themselves, agile accounting is also going to have an impact on hiring and retaining top accounting talent in 2022. Agile accounting methods have obvious attractions for potential new team members. With an agile model, job candidates are attracted by the ability to work from their current cities and not have to move to a new location. They are also enticed by being able to work at different times during the day or night depending on what best suits their lifestyle. 

In short, agile accounting methodologies—enabled by cloud storage technology—will be a major disruptor in 2022. Accounting teams will become more agile and leaner than ever before. Organizations who don’t adopt agile methods may encounter problems hiring and retaining top accounting talent in 2022.

3. Outsourced Accounting

The year 2022 will also see a continued increase in outsourced accounting. Outsourced accounting encompasses many accounting functions including:

  • Accounts payable
  • Account receivable
  • General ledger accounting
  • Budget projections
  • Payroll
  • Time and expense reporting

With outsourced accounting, these standard accounting functions—as well as many others—are outsourced by businesses to specialist accounting firms.

Many organizations will continue to realize in 2022 that outsourced accounting firms bring a wealth of experience to their business. Additionally, by entrusting their standard accounting functions to qualified experts, businesses are freed up to focus on high-value activities such as revenue generation via more sales and better customer service.

Two additional benefits that businesses will realize from outsourced accounting services are the application of advanced technologies to their accounting processes and consultative financial expertise. Third-party outsourced accounting firms are experts in the latest accounting software programs. These outsourced partners can help businesses build valuable accounting software ecosystems that will automate many of their accounting functions. 

Outsourced accounting partners also bring tremendous value to their clients in the form of consultative financial guidance to help their business planning and strategy. With outsourced accounting, you get access to a highly-experienced controller or outsourced CFO who can leverage their decades of experience to help you optimize the accounting and financial aspects of your business even further.

Staying Ahead of the Accounting Curve in 2022

As you can see, 2022 is going to be a year of rapid progress for the accounting industry. Accounting teams who are quick to adopt automated accounting technologies will make leaps over their competition in terms of vastly increased efficiencies. 

Additionally, companies who become leaner and more agile will enjoy higher employee satisfaction and be able to attract top accounting talent. For organizations who are feeling overwhelmed by the demands of running a top-notch accounting practice, outsourced accounting services will be more necessary than ever in 2022.

For more information on how Lavoie can help Charlotte businesses stay ahead of the accounting curve in 2022, reach out to us today by calling 704-481-6699.