Why You Need a Scalable Accounting Process [with Examples] |
Posted: May 2, 2024 |
Business is a dynamic field full of opportunities, challenges, and uncertainties. With a scalable infrastructure, technology, or operation, it’s easier to navigate the change. So, you can also build a scalable accounting process for the same reason! Before we delve into the reasons for scaling your accounting operations, let’s define the concept first. Well, “scalability” is not a function or a feature by itself. It represents a fundamental characteristic that empowers an organization, system, or process to effectively manage heightened workloads, increased demand, or expansion. Scaling Your Accounting Process Doesn’t Imply a Scale Up AlwaysA business’s full cycle accounting needs can evolve due to both external and internal factors.External triggers could be changing market conditions or evolving regulations. Whereas your shifting business goals and priorities signify the internal triggers. Therefore, it becomes imperative that you are able to adjust accounting tasks and workflow to align with any unexpected events or planned strategic initiatives. Markedly, scaling doesn’t always mean upsizing or increasing your capacity. You may also need or choose to hold back sometimes. Let’s look at some scenarios for clarity! There are times when a company needs to downsize its accounting process. The reasons could be:
Following reasons could compel a business to scale down its accounting process:
How the Scaling of an Accounting Process?Might Look LikeLet’s look at three examples of when and why a business needs to scale up or scale down its accounting process. Case 1: Restaurant Business Scaling its Accounting Process A small restaurant chain with 10 locations plans to add five new locations in the next 12 months. It will be hiring new staff, expanding its menu, adding more suppliers, and investing in accounting software and technology upgrades. However, it may need to scale down its accounting process if it is closing locations or experiencing a decrease in sales. Case 2: Fashion Retail Business Scaling its Accounting Operation A fashion retailer operates 50 offline stores and an e-commerce shop nationwide. It may need to scale up its accounting process if it is launching a new product line, expanding into new markets, or raising funds for expansion. On the contrary, the fashion chain may be forced to scale down its accounting activity if it is discontinuing a product line, seasonal demand loss, or closing stores. Case 3: Accounting or CPA Firm Scaling its Client Accounting An accounting/CPA firm (size regardless) may need to scale up its client accounting process if it is taking on new clients or expanding its service offerings. The firm might also require additional resources to handle the high workload of the busy tax season and specific projects. However, the firm may need to scale down its client accounting process if it is losing clients or experiencing a decrease in demand for its services due to economic downturn or other reasons. Challanges of Scaling In-house AccountingA scalable accounting process is designed to be flexible enough to meet the changing business needs. Being scalable, it’s easier to sustain or enhance its performance, efficiency, and capacity as required. However, building an in-house scalable accounting process can be challenging due to the following reasons:
Outsource Your Way to Scalable AccountingHiring a third-party accounting service brings in so many advantages:
Need a flexible accounting process that adapts to your changing business needs? You can easily achieve a scalable accounting process by outsourcing with Centelli, saving you the hassle and high costs of in-house operation. Get your free consultation today! The Bottom LineAll organizational systems and should be able to adapt to the changing business needs. A scalable accounting function ensures efficiency and supports strategic decision-making, all while managing costs and risks effectively. So, whether you have an in-house function or choose to outsource your accounting, you may need to scale it at some point.
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