Are you a small business owner? Do you have trouble managing your company finances? Is your company going through a hard time due to poor financial management? Well, here’s a short guide to managing company finances.
How can Accounting Help My Company?
A study conducted by Jessie Hagan reported that 82% of businesses fail due to mismanagement of money.
Source: The Hartford
A majority of business owners believe that profits will rise only by increasing the number of sales or finding new customers. However, this is not always the case. Most large firms and businesses choose to hire dedicated accountants and accounting services as this helps them keep tabs on invoices, cheques, and taxes a lot better.
Accounting can also help you in several other ways, by saving time and total effort which would have been spent on repeatedly having to check your dues and payments.
Here are some of the basic strategies when it comes to accounting:
- Be early and be consistent, dealing with smaller chunks of work on a daily, weekly, or monthly basis will lead to increased accuracy when filing invoices and receipts.
- Reduce tax-time stress, a serious mistake made by most small business owners is to delay the accounting process to the end of the financial year. By doing so you end up working with large chunks of unrefined data at once leading to higher likelihoods of error.
- Make sure the raw data is accurate, working with precise data can help make sure every penny is accounted for. having error-free input data will ensure that there is no mistake in the accounting process.
For the more experienced businessman, here are some tips that would be imperative to the growth of your business:
- Use dedicated accounting services, in recent years more and more organizations have moved towards hiring custom accounting services to suit their needs. They come in a range of packages and types and can be used by organizations of any size. These not only ensure that their client has a reliable agency to work with but are also quite cost-efficient and easy to work with.
- Shifting to a cloud-based environment will help keep all your files in one place and aid with making financial plans and organizing business meetings. Having all your documents in one place makes individually sharing reports redundant. Such a shift will help keep you in sync wherever you go and make administration smoother while keeping you well aware of any transaction with company money leading to a more transparent workplace.
- Commit to one kind of accounting method, monitoring your transactions through either physically counting money or calculating based on invoices is perfectly fine, you must stick to a single choice as altering between them could lead to miscalculations.
- Getting paid on time might seem to be rather intuitive, however, most establishments tend to allow some customers to delay their payments. This may help build customer relations, but being too lax with this policy will only lead to customers defaulting on payments.
- Take care of yourself. Paying yourself decently is a necessity when it comes to successfully running a company but having to pay yourself in scraps just to maximize profit will not only hurt you but will also cost the company dearly. Just as a good leader makes a good team, a healthy leader(both in mind and body), can run a healthy company. Take care not to work yourself to exhaustion as reaching such a point will leave your business stranded like a colony of ants without a queen.
- Monitoring key financial reports regularly is as essential as it gets. Taking a good look at your profit and loss statement will be able to tell you the current health of your company. Declining profits, underpaid workers, unpaid invoices, and a decline in the spending on marketing and sales of goods are a sign of an unhealthy company and can be treated if caught at the right time.
The job of a company owner can be quite demanding on an individual, from collecting and keeping tabs on invoices and payments to deciphering a report and implementing timely measures.
Thankfully, with time and effort, this too can be done.