For any business to survive and thrive, everything has to be documented. That is why accounting is a critical function in any organization; every action has a transaction (see what we did there?). Efficient accounting can result in higher profits, as accounting lets you determine the number of sales you need to generate to cover your costs and expenses, show you when you need to cut down on costs, and when your cash outflows are exceeding your inflows. So if you want to avoid financial troubles and manage your cash without losing focus on other areas of your business, here are some great tips that will make accounting easier for you.
The advancements of accounting software and technology have been revolutionary. There are new software systems that facilitate accounting processes. These include:
- Xero: which controls your expenses, records, invoices, and many other financial documents.
- Quickbooks: an electronic bookkeeping software used by many accountants and tax professionals
- Freshbooks: an accounting software that offers flexibility and customization. It allows firms to send receipts, collect receivables, prepare ledgers and receive deposits.
- Wave: a mobile app that can track your expenses, invoices, and accounting reports
Accountants who use digital accounting solutions can help firms become much more efficient and productive. Digital solutions can also make a business more competitive, as automation and technology are indicators of productivity and profitability, allowing a business to reinforce its brand and seize a higher market share. Not only does technology boost competitiveness, but electronic document management can also allow you to ditch paper forms in the accounting processes and mundane procedures that require sending out invoices and proposals and requesting retainers. Document management systems and Cloud-based ERP software can enhance integration and collaboration between different departments as well.
Outsourcing And Seeking Professional Help
Not all entrepreneurs and managers are well-experienced when it comes to a business’s accounting responsibilities. Moreover, small businesses may not be able to hire accounting experts at first. Your accounting practices should be as efficient as possible, as it is considered the heart of any business. If you don’t have financial forecasts, breakeven charts, cash flow forecasts, etc., managing your expenses and financial statements will be much more difficult. You’ll find your business hardly making profits, and lenders and investors won’t agree to offer you loans without accurate financial reporting, which can hinder your business’s growth. The team at Sleek Tech Pte Ltd state that outsourcing your accounting functions can help you set up your business in a very short time and allow you to focus on your core competencies and on other important functions. Having professionals manage your financials and accounting matters can make your life so much easier and lift a burden off your shoulders, as they can help with:
- Ensuring your company is compliant with fundamental accounting principles like Estimated Chargeable Income (ECI), Individual Retirement Account (IRAS), Goods and Services Tax (GST), as well as Accounting and Corporate Regulatory Authority (ACRA)
- Day-to-day bookkeeping and journalizing your entries: some accounting services companies receive your scanned invoices using advanced software to enable them to manage your accounts virtually.
- Handling employees payrolls, salaries payable, and medical leave
- Regulating your taxes and providing advice on what accounting methods you can use that will yield lower taxes, for instance, LIFO or the Last In First Out inventory method.
Managing Accounts Receivables
There’s no doubt that giving clients long credit terms can make them satisfied and attract more sales. However, customers not paying on time and bad debts can drastically affect your cash flow and hinder your business’s performance. Not having enough cash on hand can delay your plans for expanding and investing in new machinery and technologies. Although accounts receivables are recorded in the current assets section in the balance sheet, they are not liquid assets and thus can contribute to many problems when they’re not paid on time. The best option to avoid bad debts and allowances for doubtful accounts would be debt factoring; this is a third party that buys your receivables and pays you a percentage of the amount owed by the customer. Debt factoring rids you of the responsibility of collecting cash from clients and gives you quick access to cash to reinvest in your business.
Accounting is a process that helps businesses stay organized and well-managed by overseeing all business-related entries and transactions. Accounting also has the power to attract investors and thus increase capital, allowing any firm to spend more money on all departments and focus on its central functions. So follow these strategies if you want to make accounting faster, more flexible, efficient, and focus on your key strengths.