The Dangers of an Overworked Accounting Staff

May 19th, 2024

The accounting department serves is the financial backbone of a business, responsible for managing crucial tasks such as bookkeeping, financial reporting and budgeting.

However, when the demands on an accounting team become excessive, the consequences can be severe — not just for the employees themselves, but for the entire organization.

Consider this data from Gartner released earlier in 2024:

Eighteen percent of accountants make financial errors at least daily, a third make a few every week, and 59% make several errors each month, according to a Gartner survey of nearly 500 individuals working in the controllership function. And Gartner says the survey “revealed that these errors were closely linked to concerns about low capacity.”

Says Mallory Barg Bulman, senior director of research at Gartner Finance: “While capacity issues aren’t new to accounting, demands on accounting staff capacity continue to rise. In the past three years, 73% of accountants report that their workload has increased because of new regulations, and 82% say economic volatility has increased demands for their work.”

In short: Swamped accountants are a risk to the accuracy of your business’s financials. Today, we’ll delve further into the dangers of an overworked accounting staff, and explore strategies to mitigate these risks.

The Toll of Overwork

The following are some of the potential threats that lurk when accountants’ duties far surpass their available hours:

Increased Errors: One of the most immediate dangers of overworking your accounting staff is the increased likelihood of errors. Fatigue and stress can impair concentration and judgment, leading to mistakes in calculations, data entry and financial analysis. Even the seemingly smallest of errors can have significant repercussions, potentially undermining the accuracy and integrity of financial records.
Compliance Risks: Compliance with regulatory requirements is paramount for businesses, particularly in industries with stringent financial regulations (think banking and healthcare). Overworked accounting staff isn’t just at risk of committing errors that bring a firm out of compliance. They also might struggle to stay abreast of evolving compliance standards or inadvertently overlook important regulatory deadlines, exposing the organization to fines, penalties, even legal liabilities.
Financial Mismanagement: Inadequate oversight due to overwork can pave the way for financial mismanagement and fraud. Overwhelmed employees might lack the time and resources to conduct thorough reviews of financial transactions or implement robust internal controls, increasing the risk of embezzlement, unauthorized spending or other fraudulent activities.
Strained Relationships: Overworking your accounting team can strain relationships within the department and across the organization. Burnout and resentment might breed discontent among employees, leading to decreased morale, higher turnover rates and difficulties in recruiting and retaining top talent. Also, strained relationships with other departments can hinder collaboration and communication, which could lead to critical gaps in the flow of financial information.
Diminished Strategic Focus: An overworked accounting staff could become so consumed with day-to-day tasks and firefighting that they lose sight of long-term strategic objectives. Instead of providing valuable insights and analysis to support decision-making, employees might find themselves trapped in a cycle of reactive problem-solving, unable to dedicate time to strategic planning or process improvement initiatives.

Signs of Overwork

Recognizing the signs of overwork is essential for addressing the problem before it escalates. Some common indicators include:

Increased Work Hours: Persistent overtime or weekend work could be a signal that your accounting staff is struggling to keep up with their workload.
Missed Deadlines: Frequent missed deadlines for financial reporting or regulatory filings might indicate that your team is stretched too thin.
Decreased Productivity: Declines in productivity or quality of work, such as an uptick in errors or missed details, can be red flags of overwork.
High Turnover Rates: A spike in turnover within the accounting department sometimes suggests that employees are feeling overwhelmed and seeking opportunities elsewhere.
Health Issues: Physical and mental health issues, such as chronic stress, anxiety or burnout, can manifest in employees who are overworked.

Mitigating the Risks

So, how can you prevent accountant burnout within your organization? Here are a few steps you can take to reduce the risk of red-lining your team.

Prioritize Workload Management: Assess the workload of your accounting staff regularly and prioritize tasks based on urgency and importance. Delegate non-critical tasks where possible and consider outsourcing certain functions to alleviate pressure on internal resources.
Invest in Automation: Embrace technology to streamline routine accounting processes and reduce the burden on your staff. Automated solutions for tasks such as data entry, invoice processing, and reconciliation can help improve efficiency and accuracy while freeing up time for more strategic activities.
Provide Training and Support: Equip your accounting team with the tools, training and support they need to succeed. Offer professional development opportunities to enhance their skills and knowledge, and foster a supportive work environment where employees feel comfortable seeking help and feedback.
Encourage Work-Life Balance: Promote a healthy work-life balance by encouraging employees to take regular breaks, use their vacation time and disconnect from work outside of office hours. Implement flexible work arrangements or remote work options where feasible to accommodate individual needs and preferences.
Promote Collaboration and Communication: Foster open communication and collaboration within the accounting department and across the organization. Encourage regular meetings and check-ins to discuss workload, priorities and challenges, and empower employees to voice their concerns and suggestions for improvement.
Monitor Workload and Performance: Keep a close eye on workload levels and performance indicators to identify potential signs of overwork early on. Conduct regular performance reviews and solicit feedback from employees to gauge their satisfaction and identify areas for improvement.
Consider Outsourced Accounting Services: What happens if your company has more accounting needs than available hours, but not enough on its plate to warrant a full-time hire? Rather than exhausting your current staff, you should consider outsourced CFO and accounting services. Outsourcing certain accounting tasks saves time and reduces overall accounting costs, while also increasing the level of expertise and experience working on your books.

We Can Help Lighten the Accounting Load

From increased errors and compliance risks to strained relationships and diminished strategic focus, the consequences of an overworked accounting staff can be far-reaching and severe.

McManamon & Co provides a number of services for small and midsize firms, including outsourced CFO, accounting and bill pay services, allowing you to add as little or as much accounting bandwidth as you need.

Some of our outsourced CFO, accounting and bill pay features include cash flow management, banking relationships, payroll services, account analysis and timely bill pay services.

Let us give you a hand — and give your accounting staff a break. Call us at 440.892.8900 or contact us online today.

Tags: accounting, McManamon, McManamon & Co., outsourced CFO, small business, small business accounting | Posted in accounting, McManamon & Co., small business