Day to Day Accounting With Kanban

I have previously covered the topic on how projects in the financial sector can benefit from the scrum approach. This time however I want to take a look at a smaller guys instead. In my focus you will find – the accounting firms and their day-to day operations.

Accounting firms are nothing new, nonetheless they are extremely important to a lot a businesses out there. Without the meticulous work they do, a lot of business owners would be completely lost in trying to sort out their finances complying with all the local and international laws and regulations. Therefore it is safe to say that these firms are one of the core pillars holding up a business.

Most of the accounting firms out there work in a simple way – they offer a variety of financial services that are completed by a qualified staff of accountants and the clients are billed based on the work done for them. The accountants are responsible for specific accounts and complete their work. Keep in mind that an average accountant firm can have hundreds of clients and up to a hundred of accountants to do the job. Therefore, it is safe to say that the day to day operations can get quite confusing.

In fact this is exactly what happened for one of our Lithuanian clients – an accounting firm “Integre”. They came to us looking for a solution because they were lost in their own process and confused in how to move forward effectively. After spending some time with them and analyzing their main issues we saw that applying a Kanban like approach to their operations would eliminate most of their organizational problems and help them move forward.

If you are not familiar with Kanban, it is a project management method focused on just-in-time delivery. Kanban visualizes the work process on a board and sets a few rules to keep the team on track.

After analyzing “Integre” and other accounting firms we have encountered since, we have crystalized three main issues that rise from this way of managing the process and found that applying Kanban did eliminate them.

  • Tracking the work that has been completed and that is still left to be done. With a large number of clients, accounting firms get lost in who is doing what. The accountant have the main responsibility of servicing their clients, however there is little or no overhead to supervise the process. While the work is completed and there is no issue with that, there is no clear process for the management to overlook and to make future prognosis about. Simply keeping track on the amount of work being completed at the firm at a certain time is a huge task.

Kanban approach solves this right away – introducing the Kanban board. One of the main tools of Kanban is the board where all the tasks of all the projects are visualized. The board could be set up for the whole firm or divided into parts based on projects or departments, either way, it is a place where any team member or management representative can quickly see the overall situation of the firm. It not only solves the issue of tracking the work, but can also be used as a great analytical tool, predicting future occupancy, income and teams capabilities.

  • Distributing the work between the accountants evenly is another big issue. Traditionally what the accounting firms have done is assigning certain clients to each accountant and having them complete all the work associated with them. This seems like a logical approach, but in reality, the clients are usually very different in their company size and requests. As evenly, as the firm tries to distribute the clients, what often happens is that some accountants are being overworked and others are enjoying a more relaxing work tempo.

With the Kanban approach, all the work to be done is kept in the backlog (planning) section on the board. It can prioritized or simply compiled there based on the request date. When an accountant is done with their previous task, they simply take a look at the backlog and take the next highest priority task that fits their competency. The tasks are not classified by clients or accountants and instead completed on the highest priority basis firm wide. If the firm is quite big, the accountants could be divided up into a couple of groups to have separate backlogs or head accountants could be assigned to distribute the tasks to their teams. This way, Kanban brings more comradery into the work process and ensures that all of the team members are equally occupied at all times.

  • Tracking the resources spent on each client. Another issue faced by accounting companies is the billing of clients. Most companies bill their clients on daily or hourly rates, but with a confusing process in place, it is hard to calculate the resource use accurately. In which case the client gets either over or under billed which is not ideal for either side.

By applying Kanban, the accounting companies gain access to a greater analytical power, allowing them to solve this issue altogether. Having a clear process makes the time tracking within the firm easier and more accurate. Besides the time tracking tools available to the teams, they can use the analytics from lead and cycle time diagrams and provide clear reports to their clients explaining how they were billed. Also, by having different accountants complete same tasks, the firm can analyze and allocate them to the best of their abilities instead tying them to specific clients.

While accounting firms would not see much benefit from applying scrum, Kanban brings in clarity into their process. Kanban offers a structure – the board and a loose management approach – accountants choosing their tasks themselves, which in turn deals with the three main issues that the traditional management brings.

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