Established procedures can save a business from falling into chaos in times of change. Small businesses often have a trusted employee in charge of several tasks ranging from accounting to project management. But what happens when this employee who knows the pulse and course of the business decides to submit his two weeks notice? Is two weeks enough time to find and train an adequate replacement? Often it is not. All business owners have either already faced this situation, or are about to come face to face with a brutal reality; they have no idea how their employees actually perform their tasks.
The best way to protect your business, especially as it starts to grow, is to document every process and task that is essential to day to day operations. The procedures can either be written in a step by step format, or they can be shown visually through flow charts. Flow charts provide a very effective visual representation for documenting processes, but can be very time consuming to create.
Procedures should be written with enough detail to allow a new employee to complete the documented task with minimal questions. For example, the accounts payable processes should be written step-by-step and would describe how materials are requested and ordered, how materials are received, how bills are received/processed and paid, and even where the paperwork is filed. This level of detail will ensure that at any moment, a business can still run accounts payable even if key personnel are not present to carry out their normal tasks.
Processes should also be written in step-by-step form for transactions between departments. This will help the business owner and the employees to understand the flow of the business. By documenting inter department relationships, it becomes much easier to see and correct inefficiencies that would otherwise go unnoticed. The best way to document these interactions is to start with an action and follow the action all the way through the business until the last effect has taken place. For example, the entire inter department process from when a customer submits a purchase order to the time that the check is received should be documented.
It is very important to safeguard processes; ensuring that employees from different departments will not be privy to information they do not need to know. For example, you don’t want a sales employee to access the process on how commissions are recorded and paid. Knowledge like this could lead to potential fraud.
TGG strongly recommends implementing this type of process to protect the business. We draft and install these at our clients. To get started, call us today.Written by: Jake Cavanagh TGG Accounting