To streamline your business or financial system, streamline your Chart of Accounts first. it is the most powerful system in your business which generally is not given the importance it deserves.
Chart of Accounts – is a method of designing your ledger heads/ trial balances along with proper groupings, sub-grouping, sub-ledgers, etc., it also includes a proper definition of cost centers, profit centers, etc.
imagine the strength of a human being if the backbone is neither straight nor perfect, it defines the man’s structure and so is Chart of Accounts for businesses.
how will a good Chart of Account system help in management:
it helps to simplify accounting and bookkeeping
it arranges your finances in a defined order which is easily understandable
it helps to analyze the health of financials with ease
it simplifies the calculation of important financial metrics/ratios
Designs and integrates the Budget Control System
it enables preparation of your MIS reports faster without human intervention/cleaning
it also enables methods to benchmark with competitors by bringing in uniformity
imagine a house in total chaos with things spread without any order is similar to not defining/designing a robust Chart of Accounts.
if you are looking to streamline your financials then this is the place to start.