How to Cut Unnecessary Costs in Your Accounting Department Effectively

The accounting department is in charge of providing accounting services, reporting, and managing the company’s financial status. Generally speaking, the accounting department does not incur much cost in their daily administrative activities, compared to some departments which have huge operating and production expenses.

Because of the smaller budget, the accounting department gets compared to other departments, many companies do not look at it when they want to cut unnecessary costs.

The accounting department is an essential part of your organization, and you should cut unnecessary costs to turn it into a well-oiled machine.

There is no doubt that maintaining accounting records is a time-consuming and labor-intensive process. You need to set up your accounting department for success by hiring only qualified people for the task even if it is going to cost you extra. You also need to purchase the best technology and equipment available in the market.

However, the reality is that while some companies have the funds to get the best possible accountants into their accounting department and buy the best equipment and technology, many other companies cannot afford it.

Even if your company can afford these expenses, you can improve its performance and revenue by simply cutting unnecessary costs in your accounting department.

Here are a few tips you can use to cut unnecessary costs in your accounting department.

6 Ways to Cut Unnecessary Costs in Your Accounting Department Effectively

1.  Use the 5S Analysis

The 5S lean six sigma was created to help companies run their manufacturing or service operations systematically and effectively that boosts productivity. You can also utilize the same 5S technique to reduce your accounting costs.

The systematic technique (5S of lean production) helps improve waste reduction by cutting down on processes that do not add value to the company. The term originated in Japan and got its 5S name for five Japanese words that start with the letter S – seiri (整理), seiton (整頓), seisō (清掃), seiketsu (清潔), and shitsuke (躾).

Source: ProjectCubicle

Amazingly in English, when translated from the Japanese language, they all begin with the letter S. They include sort, set in order, shine, standardize and sustain.

Let’s break down what each word in the 5S methodology means.

1.    Sort or Seiri (整理)

The first phase of 5G is the sort or seiri stage. Sort means to eliminate or remove all unnecessary materials in the workspace. It also involves classifying all materials and equipment used in the workplace according to how frequently you use them.

Deciding what is necessary and unnecessary in your workspace is made easy with the sort or seiri step. The main benefit of utilizing this step in your workplace is that it helps you get rid of things or processes that you do not need. You can easily increase your efficiency and productivity by carrying out this step.

You need to remove those items and processes you no longer use for your workplace. For the accounting department, they can move out a damaged printer, photocopier or fax machine.

2.    Set in Order or Seiton (整頓)

Proper organization is vital for maintaining an effective and efficient workspace. Seiton or Set in Order means to arrange items in such a way that anyone can easily identify their location. When the workplace is unorganized, workers spend more time than necessary trying to find a simple document.

Accounting departments deal with a lot of paperwork, they need to ensure that every file they need is properly organized so they can find it without having to scatter the whole space. Time tracking for accounting processes, utilizing work schedule and employee scheduling software can also help boost the efficiency of your accounting department.

Arranging items according to their purposes and placing them in clearly designated areas makes it easy for employees to access them when needed. Properly arranging paperwork helps improve how fast it takes your accounting department to complete a particular task.

3.    Shine or Seisō (清掃)

The third step involves cleaning the workspace including the equipment and tools needed regularly so that employees can work efficiently in the workspace. Having a clean environment helps improve productivity.

It also involves the maintenance of all equipment and tools used to ensure that they are in good working conditions at all times. This step also has huge benefits to employees’ health and safety.

When you properly maintain your equipment, tools, and space in the accounting department, you prevent them from damaging and deteriorating. It saves the business the massive cost of fixing faulty equipment or worse, getting a new one.

Cleaning the workspace will also prevent your employees from sustaining injuries while working, which will reduce their productivity or cost your business medical fees.

4.    Standardize or Seiketsu (清潔)

This step involves creating or setting up standards in the workplace. Here you are to build a set of rules or procedures to guide your entire workforce, in this case, the accounting department. The goal of this standardization is to create an effective and efficient work environment for employees, which will bring massive rewards for you.

5.    Sustain or Shitsuke (躾)

This is the final step in the 5S lean six sigma technique. It simply means maintaining the previous improvements and ensuring that they are practiced regularly in the workplace.

A good way to go about this is to hold regular team meetings, conduct training, and establish responsibilities among team members. You can also use team-building activities to foster healthy relationships which leads to more efficiency and productivity.

The 5S analysis helps reduce accounting costs. When you sort and set in order various items in the office, you can easily identify items you no longer need and remove them.

The sort step shows you processes that are not necessary and items you should not spend on. The set in order step helps you arrange your files and items in a way that is easy to locate.

The shine, standardize and sustain steps help you boost the morale, efficiency, and productivity of your staff. When you sustain the 5S technique, you will cut unnecessary costs in your accounting department and boost the morale of your staff.

2.   Cut on the Use of Paper

Many accounting departments make use of paper to retain data. Although there is accounting software that helps to reduce the need to use paper to store information, the use of paper cannot be avoided.

A printer is one of the most used equipment in any accounting department. There is a preference among staff or managers to print some financial reports, invoices, receipts, and even vouchers for record purposes.

The cost of printing may be minimal, but calculate that by the cost in the long-run and it adds up to a bigger figure. The biggest concern with paper is not the cost of printing, but the larger cost when it gets misplaced, damaged, or destroyed. Once valuable information is lost on paper, it can cost your business massively such as having to redo the same financial report if it is still possible.

You can utilize paper better by using scratch paper instead of using fresh one for each printing need. Use scratch papers for internal communications with colleagues. Scratch papers help save paper space and storage space. In this way, your accounting department is contributing its quota to the fight against deforestation.

3.  Use Accounting Software

Accounting software is a common yet underrated way to cut unnecessary costs in your accounting department effectively. There are still some accounting departments in 2021 that still use manual ledgers and journal vouchers.

Source: FinancesOnline

Another problem is that many accounting departments are using accounting software but underusing it. They still do a lot of bookkeeping tasks manually. Is bookkeeping hard? Not if you have the right software. Without the right tools, it can be time-consuming.

When choosing accounting software, check if it will improve your business efficiency and help cut costs. Ensure that the software you choose can serve your accounting department in the short and long run. It should perform the following tasks: data-keeping and tracking, payroll, report generation, and accuracy.

Both small businesses and large enterprises need to use accounting and bookkeeping software if they want to cut unnecessary costs in their accounting departments. You can also provide training for your accounting staff to enable them to learn how to develop accounting software and use it to its full potential.


The benefits of utilizing accounting software include cost-saving, improved efficiency and productivity, and reduced manpower needs (saving you costs on hiring staff to do the jobs the software can do).

There is so much accounting software in the market, the most popular is QuickBooks. You can also use QuickBooks alternatives such as FreshBooks, Wave Accounting, Sage, NetSuite, and more.

Many companies combine inventory management and payroll into their accounting departments. If your accounting department also performs these roles, also get inventory management software and payroll software. Some accounting software like QuickBooks offers accounting, payroll, inventory management, and other services in one platform.

If your company runs an eCommerce store and has social media accounts, accounting software can with your website and other social media marketing tools to provide accurate reports of sales and other statistics for your business.

4.   Consider Outsourcing and Contractors

One of the easiest ways to cut unnecessary costs in your accounting department is to outsource or use contractors for jobs that you do not do regularly.

For example, it makes no sense to hire a full-time certified public accountant (CPA) as a small business. You get lower sales than bigger companies and do not need a CPA’s signature for your reports.

Instead, employ the services of a CPA only when you need their services. Hiring a CPA for a one-time service for small businesses will save the salary and employee benefit costs that come with hiring them on a full-time basis.

Analyze the different roles played by your accounting department teams, especially those roles that are done less often. Decide if it is more profitable to hire people or outsource it. You can cut unnecessary staff overhead costs with this method.

Source: Stage 1 Financial

5.   Hire and Train the Right People

Hiring and training the right people add extra cost in the short-run to the accounting department expenses but in the long run, it will prove a shrewd move. When businesses want to make cuts, they look at programs they can cut costs on such as training programs.

Hiring into your accounting department can be expensive. Employee onboarding costs include monthly salaries, cost of office space, and lots more. However, if you hire the right people and train them, you are investing in a more efficient accounting department.

There are different methods to train your employees. They include one-on-one training, in-house seminars, and the use of webinar platforms such as Zoom, LiveWebinar, Google Hangout, and GoToWebinar.

Investing in hiring the right people and training them should not be looked at as an expense but as an investment. When you compare the possible losses that the wrong set of staff can bring to your company, it is a cost-saving method.

The wrong employees do not just affect the productivity of your company, they also earn payroll and other company benefits they do not deserve. Training the wrong employee counts as a loss.

Hiring the right employees that are the perfect fit for your accounting department will bring immense benefits to your company. You will see good returns on the services you hired them for. You can also conduct training programs to boost their efficiency.

6.   Work with a Budget

A budget helps businesses to stay within their projected expenditure. The document is only useful when it is used and followed strictly.

Before the start of the new business year, companies hold the end of the year meetings where they review their performance for the year. It is also the time they make budgets for the coming year.

Small businesses may not have such a rich practice in place, but should also follow that principle to plan and identify areas where they can reduce costs.

For the accounting department, you first take an overview of their spending in the previous year especially concurring expenses like office supplies and payroll to see if there are opportunities to cut unnecessary costs.

After preparing the budget, ensure your spending on your accounting department does not go beyond the limits you set. It has to be a necessary expense, without which the accounting department cannot function before you can spend beyond the budget set.

Setting a budget and sticking with it is one of the most important skills any organization serious about improving its finances should have. Companies can easily identify items, processes, and subscription costs that are unnecessary and cut them off accordingly.

Next Step: Running a Cost-Effective Accounting Department

The accounting department plays a crucial role in maintaining a healthy financial status for the business. Because of the role it plays, much attention is not given to its running cost.

Many accounting departments are incurring unnecessary costs. You can cut on these costs and improve work performance by implementing these six steps. They include the 5S lean six sigma technique, cutting down on paper use, using accounting, payroll, and inventory management software, outsourcing non-full-time jobs, investing in people, and working with a budget.

Running a cost-effective accounting department has lots of immense benefits for businesses. They save overhead costs, other costs, and still run an effective accounting department that can perform their roles and responsibilities.


Guest post courtesy of Anastasia Belyh

Mercy - CBNation

This is a post from a CBNation writer. CBNation is a Business to Business (B2B) Brand focusing on increasing the visibility of and providing resources for CEOs, entrepreneurs and business owners. CBNation consists of blogs(, podcasts ( and videos ( CBNation is proudly powered by Blue 16 Media.

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