Streamline Your Business: Standard Operating Procedures for Accounting

Suzanna Daniel
September 27, 2023
min read
April 19, 2024
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SOPs are a crucial way for accountants to maintain th consistency and accuracy in their operations. Here's how and why to us SOPs for accounting.
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Businesses need a well-organized system for documenting processes, procedures and policies that ensure consistency and reliability in their accounts and financial operations. This is where standard operating procedures for accounting come in.

SOPs play a specific role in accounting, and there are so many ways to use them to optimize daily operations in your organization.

TL;DR: Standard operating procedures for accounting

  • Standard Operating Procedures (SOPs) are crucial for ensuring consistency and accuracy in accounting and finance operations.
  • SOPs for accounting improve daily operations, efficiency, productivity, compliance, and risk management.
  • Creating effective accounting SOPs involves clearly defining objectives, roles, and responsibilities, standardizing format and structure, and using clear language.
  • Regular reviews, training and documentation are essential for maintaining and updating SOPs for accounting and finance.

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Wh‎at are SOPs for accounting and finance?

SOPs (Standard Operating Procedures) for accounting and finance documented instructions for specific tasks and processes. They outline the policies, processes anthed standards for all financial operations in accounting and finance.

SOPs help to ensure that all accounting and financial activities are performed consistently and accurately, following best practices and regulatory requirements.

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‎Cr‎eating standard operating procedures for your accounting team

The specific responsibilities of an accounting team cover a broad scope, but here's a list of some of the responsibilities your SOPs should cover: 

  • Financial record-keeping and documentation: The accounts team is responsible for maintaining accurate and up-to-date financial records, reconciling or converting bank statements, credit card statements, and other financial accounts, and supporting proper documentation of all these policies and processes.
  • Financial reporting and analysis: The accounts team also prepares financial statements and compiles and analyses financial data to create reports for management and stakeholders.
  • Budgeting and forecasting: They also ‎create, revise and analyze the company's budget, preparing financial projections and scenario analysis to help the business plan ahead correctly and ensure all departments stick to the budget.
  • Manage cashflow in and out of the company: The team is responsible for processing vendor invoices, managing vendor relationships, resolving payment discrepancies or inquiries and monitoring and tracking customer payments.
  • Payroll processing: They maintain employee payroll records, including salaries, benefits, and deductions, and calculate and process employee reimbursements, bonuses, and other commissions.
  • Tax filings: The accounts department is responsible for accurately filing and remitting taxable business incomes to the appropriate quarters and by the tax deadlines

Using AI-powered tools like Scribe to automate the creation of accounting SOPs reduces the time you spend documenting processes by 93 percent. Check out our guide on Accounting Manual Samples for an in-depth look at examples of accounting manual policies and procedures.

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Ac‎counting SOP best practices

Now that we have an idea of SOPs relevant to accounting and finance processes, let's look at how to create an effective one.

An accounting Standard Operating Procedures (SOP) goal is simple—make the procedure clear, easy to follow and relevant. Here are a few ways to make that happen:

1. Clearly define objectives, roles and responsibilities

Start each SOP by clearly stating its purpose and objectives. This helps users understand the procedure's scope and intent and establish a clear understanding of expectations.

2. Streamline your SOP creation

To save time at this stage, use tools like Scribe's free Accounting Manual Generator to simplify the process of generating accounting SOPs.

To create your manual, identify the accounting processes you want to document, such as financial reporting, budgeting or tax compliance, and install the Scribe extension. Scribe automatically captures screenshots and logs steps as you navigate through the process, creating a detailed step-by-step SOP.

Use Scribe's ChatGPT tools to customize your accounting documents by adding details that are relevant to your accounting practices, titles, descriptions, additional context, and more. You can ensure you're staying compliant by automatically redacting employee or customer data from screenshots (Pro users).

You can add your team to your Scribe workspace, share the guide via a link, or embed Scribes directly into other tools like wikis or knowledge bases.

Scribe user Sarah at Ignite Spot Accounting shares how she uses Scribe to document processes for Quickbooks and payroll tools for hundreds of clients.

‎Scribe tip: ‎If you need to train your team or clients on Quickbooks, use our free Quickbooks Training Generator to build creates professional, detailed training guides in seconds.

3. Standardize format and structure

Use a consistent format and structure for all SOPs within the accounting department. This promotes familiarity and ease of use for employees needing to refer to multiple procedures.

Using a pre-designed template, like this Standard Operating Procedure (SOP) template, will help to standardize your SOPs.

4. Use clear and straightforward language

Write in simple language to ensure anyone accessing the SOP document knows what to do afterward. Use numbered lists or bullet points to outline each action or task, and avoid jargon, acronyms, and technical terms unless necessary. Also, explain when using specialized terms, and supplement written instructions with visual aids like flowcharts, diagrams, or screenshots to clarify complex processes.

To speed up learning, use examples or sample documents, such as completed forms or reports, to illustrate the expected format or content.

5. Cross-reference relevant resources

Add links to related SOPs or other relevant resources, such as accounting policies, manuals, or software user guides, to provide a source of additional information when needed.

6. Carry out regular reviews and updates

Periodically review and update SOPs to ensure they remain accurate and reflect any changes in processes, regulations, or best practices. When you create SOPs with Scribe, you make universal updates, so you'll always have the best version regardless of where you share it. Be sure to ask for feedback from employees using the SOPs to identify areas for improvement.

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7. Training and communication

It's not enough to create SOPs and ask employees to figure them out independently. Provide training and orientation to employees using the SOPs. Even after completing the SOPs, stay in touch with your team, and communicate any updates or changes effectively to ensure widespread adoption and understanding.

8. Documentation and version control

Maintain a centralized repository for SOPs and ensure proper version control. Record revisions, approvals and effective dates for easy reference and compliance tracking. Accounting document management software can help you properly store, organize and manage documents.

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Types of accounting SOPs

Below are some key processes that you could identify and standardize with SOPs.

1. Accounts receivable SOPs

Accounts receivable refers to payment owed to a company for goods and services it supplied to customers on credit.

Here is a defined SOP for managing this accounting function.

  • Payment processing procedures may cover billing guidelines, invoicing, logging payments, updating customer accounts, and accepting different forms of payment.
  • Debt management procedures for handling defaulting customers or late payments and the systems for initiating legal actions when necessary.
  • Customer communication procedures for talking to customers regarding outstanding balances, payment reminders, and instructions for handling customer disputes and inquiries.
  • Reporting and analysis procedures for generating reports related to accounts receivable.

2. Accounts payable SOPs

Accounts payable covers the amount the company owes creditors over a while. The standard operating procedures include: 

  • Invoice processing defines the procedures for receiving, reviewing, and processing vendor invoices, confirming receipt of goods or services, and checking for discrepancies or errors.
  • Approval workflow outlines the approval workflow for invoices and specifies the individuals or departments responsible for reviewing and approving invoices at different levels. 
  • Payment terms and conditions define the payment terms and conditions that the organization follows, such as payment due dates, early payment discounts, and late payment penalties. 
  • Payment processing outlines the procedures for processing vendor payments, obtaining required signatures or authorizations, and maintaining proper documentation.
  • Vendor management includes guidelines for managing vendor relationships, updating vendor information, and resolving any vendor inquiries or issues.

3. Tax compliance SOPs

Tax compliance SOPs are necessary for the finance and accounts team to stay aligned with the law and protect the company from any tax-related troubles. Here are a few things tax SOPs cover and monitor:

  • Identifying applicable tax laws and regulations relevant to a business.
  • Established guidelines for maintaining accurate and organized tax records
  • Established deadlines for submitting tax returns and remitting payments, as well as defined responsibilities for individuals involved in the filing and payment.
  • Defined processes for conducting periodic compliance checks, internal audits, self-assessments, or engaging external tax professionals to review tax compliance and identify areas for improvement.
  • Identify guidelines for documenting tax-related decisions, actions, and procedures for handling tax audits and disputes.

‎From financial procedures to regulatory compliances and internal audits, Scribe's free CPA Documentation Generator can help you build optimized, efficient process documentation in seconds.

4. Cash flow management SOPs

SOPs for cash flow management control and monitor the movement of funds in and out of an organization so there is consistently enough cash to cover operational needs. Some of these SOPs include:

  • Cash flow forecasting outlines the methods, tools, and timelines for projecting incoming cash inflows and outgoing cash outflows. 
  • Expense management defines procedures for budgeting, monitoring, and controlling expenses, including guidelines for reviewing and approving expenditures, negotiating payment terms with vendors, and optimizing cash outflows.
  • Cash flow monitoring structures procedures for monitoring cash flow regularly, plans the frequency of cash flow analysis, such as daily, weekly, or monthly, and specifies the key metrics or indicators to track.
  • Cash flow reporting specifies the reporting requirements for cash flow management, procedures for generating cash flow statements, projections, and other relevant reports.

5. Banking and investment SOPs

The banking and investment sector is highly regulated, and trust and confidentiality are essential. SOPs are vital in ensuring adherence to industry standards and cover a wide range of banking and investment activities, some of which include:

  • Clearly defining the roles and responsibilities of different banking and investment unit stakeholders, including employees, managers, compliance officers, and auditors.
  • Outlining the relevant laws, regulations, and industry standards that govern banking and investment activities and guides on adhering to them.
  • Describing the process for conducting thorough customer due diligence to ensure compliance with anti-money laundering (AML) and know your customer (KYC) regulations.
  • Detailing the procedures for opening and maintaining customer accounts, including the necessary documentation, approval processes, risk assessment, and periodic reviews.
  • Explaining the range of investment products and services the banking unit offers, such as savings accounts, fixed deposits, mutual funds, and securities trading.
  • Detailing the risk management framework for the banking and investment unit, covering areas such as credit, market, liquidity, operational, and compliance risks and specifying procedures for risk identification, assessment, monitoring, and mitigation.
  • Outlining the procedures for processing various transactions, including deposits, withdrawals, fund transfers, loan disbursements, and investment orders.
  • Establishing procedures for handling incidents, such as fraud, security breaches, data breaches, and customer complaints and outlining the steps for incident reporting, investigation, resolution, and escalation.

6. Bank reconciliation SOPs

Bank reconciliation SOPs outline the processes for matching the organization's account balances to the information recorded in the records. This is essential to allow transparency and prevent discrepancies in the transactions processed by the bank. The SOP typically covers the following steps:

  • Instructions for gathering bank statements
  • Detailed procedures for reconciling accounts and verifying checks and payments to ensure consistency.
  • Guidelines for investigating discrepancies identified during the reconciliation process.
  • Outline steps for approving the final and completed reconciliations
  • Establish procedures for documenting and retaining reconciliation records.

7. Delegation of authority matrix 

A Delegation of Authority Matrix, also known as a Delegated Financial Authority (DFA), is a process that outlines the authority levels and decision-making powers delegated to individuals or positions about approving financial actions, allocating resources, and generally managing the organization's finances.

The information can be documented in a flow chart or easy-to-read table so all employees can access it. Tools like Scribe's Free Flowchart Maker can assist in creating comprehensive SOPs tailored to address accounting needs like this.

8. Recurring task management and payment reminders

Recurring task management and payment reminders are essential for efficient organization and financial management.

  • Recurring task management SOPs break down how to manage recurring tasks that must be performed regularly, such as monthly reports, routine maintenance, or scheduled meetings.
  • Payment reminders SOPs outline how your company handles payment reminders and any platforms or software used to automate the payment reminder process.

9. Approval methodology and process flow

Approval methodology and process flow SOPs are designed to establish clear guidelines and procedures for obtaining approvals within an organization. These SOPs provide detailed instructions for:

  • Initiating approval requests.
  • Defining criteria for approvals.
  • Determining levels of authority required for different decisions.
  • Establishing rules and guidelines for obtaining approvals.
  • Routing proposals through appropriate channels.

10. Petty cash management SOPs

This SOP applies to all employees responsible for handling petty cash funds or making petty cash disbursements on behalf of the organization. The SOP typically covers the following:

  • Petty cash fund set up.
  • Petty cash disbursements.
  • Petty cash replenishment.
  • Reporting and recordkeeping of the petty cash fund.
  • Petty cash audit and compliance.

‎‎Th‎‎e benefits of standard operating procedures for accounting

Standard operating procedures for accounting and finance teams to create an efficient accounting process and identify areas that need improvement over time. Their importance also includes the following: 

1. Consistency and accuracy

SOPs establish standardized processes and guidelines for carrying out accounting and financial tasks, reducing the risk of errors in financial data, calculations and reporting. 

2. Improved efficiency and productivity

By outlining efficient workflows and best practices, SOPs help streamline processes, reduce redundant tasks and eliminate unnecessary delays. 

3. Compliance and risk management

Organizations that adhere to SOPs can mitigate risks and demonstrate compliance during audits or regulatory inspections.

4. Training and onboarding

SOPs are valuable training materials for onboarding new accounting and finance team employees. They provide a structured framework for learning and understanding various processes, systems, and procedures, reducing the learning curve and allowing faster integration into the company culture.

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Conclusion: SOPs in Accounting

By following these steps and best practices, you can start implementing accounting SOPs today and witness their positive impact on your success.

Not sure where to start? Scribe auto-generates step-by-step guides while you work—meaning you'll never have to write another process doc again.

Creating standard operating procedures for accounting with Scribe is simple and straightforward.

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