How to Avoid the Accountant Triangle?

It's safe to say that every organization wants to run their offices to run as efficiently as possible. Our team has spent a lot of time in their careers working with, and in, medium to large companies working with them to become more efficient. The most significant efficiency killer we have heard over the years is the infamous "because we've always done it that way."

You may not hear those exact words, but that is what people are saying. A business leader needs to learn how to detect that disease as early as possible and get rid of it, fast! By the time you've identified it, it may have already spread too far.

Too often, as small businesses grow, they follow the path of every other small business; the team is focused on what they do best and don't allocate the time to make the most effective decisions with regards to the other parts of the business. One of those "parts" is accounting and bookkeeping.

Here is how a typical small business goes from DIY accounting to the Accountant Triangle:

DIY to Bookkeeper - The business owner, or their spouse, is no longer able to handle the accounting. A part-time person is brought in to process the transactions.

Bookkeeper to Accountant - As the volume and complexity grows, or the part-time bookkeeper quits (no shows), the business owner feels the need to hire a full-time person with a little more skill and dedication to the business.

Accountant to Accounting Department (the Triangle)-  Business growth creates too much work for one accountant. Collecting valuable cash warrants an A/R clerk while increasing purchases suggests an A/P clerk. Now you've entered the dreaded accountant triangle. How did the business get here? It just "happened" and now you appear stuck.

Here is a reality check of what happens with this team:

  • You have three employees that will adapt their workload to do the minimal amount of work needed to collect a paycheck. As your business grows or slows, you are paying the same amount.

  • You have three people you need to manage which drains time away from more productive activities. One of the clerks will start to gossip or cause some problem creating unneeded stress on management. Why? Because they are not busy!

  • Eventually you'll let that person go - or hopefully, they'll quit - which cost you more time and money than you'd like to believe.

  • Your accountant will be shocked that the loss of that person added very little additional work on the remaining two. They'll wonder, what did that person do all day?

  • Your accountant and clerk can easily absorb that additional workload because they've adapted their job and the expectations of those around them not to have a full day's work - thus, the free time to take on more. To pour salt on this business wound, they may even ask for a raise!

You get the idea. You probably didn't enjoy reading that either as it sounds miserable. And that's the point. Avoid the Accountant Triangle and think of alternative ways to manage the accounting function of your business.

The traditional growth = hire is not a practical solution to creating a highly efficient, agile business. Outsource necessary, but non-core, business functions whenever you can.