Accounting has always been a crucial function for businesses of all sizes. Over time though, since digital technologies have become more prevalent, various business operations have transformed significantly, especially traditional accounting.
As a business owner or accounting executive, you need to focus on a number of things, especially if your company is small and you want it to expand and become sustainable. One of the most important items on the list is overhauling the accounting division by maintaining accounts and implementing relevant control as well as compliance mechanisms.
Currently, 69% of owners of small businesses prefer to manage their accounting or bookkeeping. Although there are numerous tools and software to help with the procedure, the job can still be difficult. In reality, 21% of small and medium-sized business owners admit they lack sufficient understanding in this area.
Nevertheless, there is optimism in sight. Here are some pointers for business owners on how to improve, and maintain operations, particularly through the use of modern technologies:
Strengthen your basics
If you are a part of the cohort of business owners that prefer to handle their own accounting but don’t know much about it, the best place to start is your professional development. Thanks to digital education, business owners can easily enroll in online MBA accounting courses or a host of others that offer comprehensive, relevant knowledge as well as skills in this domain.
Of course, you have the choice to outsource the work to professionals, but even then, you need to be in a position to not just offer some oversight but also review the books once they return from the external auditors. Even when your business has a full-fledged accounting department, you’ll need to keep a check on them, and an accounting degree helps a lot in this matter.
Plan on integrating relevant digital tools
Digital technologies make it simpler to manage many conventional practices. Software has improved in-depth analysis techniques and accuracy over the last few years thanks to the wide availability of raw data, analytical tools, and cutting-edge AI. These technologies are also relevant to accounting departments in modern companies and their day-to-day practices.
Software streamlines numerous aspects of bookkeeping for your company, from balancing your books to giving you insights into optimization and effective resource allocation. You can reduce your workload in half with the aid of reliable software while easing your company’s use of future-proof business methods.
Ensure strictness about cutoff policies and reconciliations
Most businesses and their relevant accounting departments put off the task of reconciling accounts receivable and payables against other financial statements until the end of the fiscal year. This habit is nothing but a recipe for chaos since going back to each transaction, especially those that happened at the beginning of the year, can be a real hassle.
This is why it is important to have the accounting department and the team perform reconciliations throughout the year, ideally at the end of the month or even every week. Also, there need to be certain stringent rules in place that drive accounting processes effectively. These include guidelines and cutoffs for transactions like reimbursements and invoices etc. You must ensure that these rules are followed religiously.
Have a routine in place
A detailed schedule for when to complete bookkeeping duties could create consistency and a fluid, streamlined flow. Business owners and accounting professionals are usually so overburdened with management responsibilities and other obligations that they may forget that their books need to be updated frequently.
Numerous inconsistencies could result from this, impeding future development and efficient operating flow. You can remain on top of your finances and strive to make the most appropriate choices for the long-term viability of your company’s affairs by developing a schedule and then adhering to it stringently because, at the end of the day, the efficiency of your accounting department matters a lot for the company.
Routinely review all accounts
It’s essential as well as necessary to examine and scrutinize your financial information in addition to following a routine. Your company is your baby, and you have been growing it from scratch, irrespective of whether it is a new venture or even an established business. You can examine your current assets, liabilities, payables, and receivables with the use of bookkeeping.
This gives you a financial picture of your current situation and your chances for the future. Regular bookkeeping doesn’t just help you streamline your operations, but it also helps you understand accounting principles and, over time, become more adept at them. Setting such a routine also allows the accounting department to streamline its operations.
Whether they are handled by the accounting team or an external firm, a few crucial jobs can be separated to make the process more effective and speedy. For instance, you may require the manager to handle their own streamlined accounting for transactions and gathering receipts to improve inventory management.
You can also request the management of any financial concerns that other department heads oversee for the sake of their divisions. Not only will you reduce your workload via delegation, but you’ll also give the company a far stronger base for expansion. At the same time, the accounting department becomes more productive and efficient too.
Develop a plan for transaction processing
There usually is a lot going on, regardless of whether or not a business is already established or is just getting started. Things are made easier by developing a coordinated plan for the transactional and accounting procedure. There are many considerations to make, even when discussing bookkeeping alone.
It can be difficult to compile receipts and coordinate with suppliers, vendors, and other players to obtain the most recent financial information. Keeping track of inventory is another enormous chore if your company sells products. Without a comprehensive strategy, you can run into problems that irritate and exhaust you much more quickly than usual.
Given that majority of small businesses fail because of bad financial planning, letting ineffective accounting practices slide is a no-ho if you want your business to thrive. Therefore, whether you conduct the bookkeeping yourself or take steps to instill greater efficiency in your existing team, you must exercise extreme caution.