Best Practices in Finance & Accounting to Get Your Books Under Control
A well-planned accounting process is like a pillar to the viability of a business. Because it establishes transparency and tells you the bigger picture of your business with journals, ledgers, trial balances, and financial statements.
However, executing the accounting process efficiently is not an easy task for a non-accountant. But by being organized, you will able to do this with ease. As the saying goes,
For every minute spent organizing, an hour is earned.
Fortunately, things get much simpler if you do use an automated accounting solution. Having said that, before using the accounting tool, you can follow these tips which will help you get your accounting process under control fast.
What are the best practices in finance and accounting?
If you are dealing with a small business and want to get build a competitive edge, you can follow these tips:
Avoiding payment in cash wherever possible
Experts recommend not to pay in cash apart from the small petty cash expenses. It’s because small expenses are tough to monitor and each time you pay in cash you have to issue receipts which are pretty tiresome. To this end, you can reimburse the cash payer with an expenditure tool so that you can ensure that every cash payment is recorded properly.
Another simple trick is that purchasing or buying in bulk can reduce the hassle of recording the cash payment transactions frequently.
Create separate records for accounts payable and receivable
Undoubtedly, dealing with loyal and reliable customers on credit benefits a business enterprise. While doing the same with the unreliable customers may result in bad debts which are harmful. Another thing is that accounts receivables are nothing but the assets for a business. But no business wants to take the sales payment entirely from the accounts receivables.
Why? Because it may make your cash flow unstable by diminishing the amount of cash money on a certain period which is pretty dangerous.
However, the more the balance of accounts payable, indicate that you are either utilizing the money or you are taking too much time to repay the payables. If you want too much time to repay your loans your suppliers will get angry.
Like maintaining separate bank accounts for your business enterprise, keeping separate records for the accounts payable and receivable will help you understand if your customers have paid or how much unpaid accounts do they have etc. The same rule applies to the accounts payable to improve a good relationship between you and your suppliers.
Going paperless with digital documents
In this technology-driven world, everyone prefers to take care of their business papers digitally rather than the conventional analog method. In case you don’t know, there is a legion of accounting solutions that will allow you to store or share documents completely in digital format.
Which means no more troubles to back up your physical documents which can easily be damaged or lost. The digital documents are also easily retrievable and are useful to free up your valuable office storage. In addition to that, it is also eco-friendly.
Maintaining separate bank accounts for personal and business
Maintaining separate accounts will help you avoid a series of hassles. The separate business account will give you a swift snapshot of the overall condition of your business’ finance. If you are not maintaining separate account then you will discover yourself looking up your business transactions in your personal bank statement.
Hence, chances are very high that you may miss out an important financial transaction from the statement. On top of that this looking up process is really time-consuming.
As your small business continues to grow, at one stage, your business may continuously need loans from the finance corporations. In such cases, you have to show the proper bank statement to the concerned institutions to avail the loans.
So, it’s better to open a separate bank account for your business enterprise, although it may seem a little irritating first.
Utilizing the power of the internet
When you are operating a business, you will often have to take important business decisions on the fly. But, if you do not have online access to your database, it will be impossible to do that. This is exactly where the influence of the internet comes to the rescue with the privilege of instant access over the air.
There are a few accounting solutions which will enable you to run circles around your competitors by allowing your employees access to your accounting systems.
However, that’s not the end! The best part begins when these types of accounting systems provide with custom access based on different user roles. Added to that, keying every transaction into the accounting system assure that there are no transactions which are amiss.
Harnessing the intelligence of the Accounting solutions
Some of the free accounting solutions not only analyze your transactions but also create important business reports like balance sheets, cash flow statements, income statements and so many more. This is pretty helpful for business owners to make informed business decisions.
These tips are gleaned from our practical experience – not just derived from theories only. Being organized primarily takes up a little time but later on, it certainly brings the upsides for your accounting process. Remember,
Organizing is a journey, not a destination.
However, if you do have anything more exciting tips to organize and to take control of the accounting process fast, don’t hesitate to drop us a line below. We will earnestly be waiting for your thoughts.