How To Improve The Accounting Processes In Your Small Business
Your company revolves around money, making bookkeeping and accounting department’s processes, policies, and procedures significant to a company’s success. Your business could run into grave financial issues such as cash flow problems, internal fraud, tax fines, and even failure without a reliable accounting strategy. Therefore, it is vital to implement a solid bookkeeping and accounting system to guarantee success. Here is how to go about it.
- Management of expenses
You must have a system in place for tracking employee expenses. Your system should have protocols in place for tracking receipts, marking the purpose of the spending, and recording when the expense is reimbursed. If your employees don’t have access to company credit or debit cards, you’ll need to establish a uniform procedure for expenditure reporting and reimbursement requests. You should categorise spending for management reporting and tax filing purposes in addition to tracking employee reimbursement for expenses. To do so, you’ll need to create two separate charts of accounts: one for taxes and the other for management accounting.
- Management of accounts receivable
Establishing systems, policies, and procedures for evaluating customer credit, educating customers on your payment expectations and processes, generating invoices accurately and timely invoicing customers, tracking received payments, and following up on past due accounts are all part of managing accounts receivable.
- Be sure your bookkeeping and accounting staff are adequately trained
All new employees should receive thorough training in significant bookkeeping or accounting procedures. Ensuring that your bookkeeping and accounting department is well trained takes away the risk of running into avoidable mistakes or actions that could cost the business in the long run. It also ensures that proper strategies are implemented to carry out various activities.
- Back office automation
Technological solutions like Filemaker hosting have been created to address practically all of the challenges faced by today’s bookkeeping and accounting departments. Before deciding on one product over another, make sure you do your research. Look for scalability and continuing maintenance, but don’t be scared to employ modern accounting and bookkeeping software.
- Sales tax management
When it comes to taxes, quarterly and year-end taxes aren’t the only ones that might cause headaches in the bookkeeping and accounting department; sales taxes happen all the time. Businesses that deal with sales tax must stay on top of changing rates, holidays, exclusions, and different sets of rules that vary by tax jurisdiction. Create a proactive plan and system for accounting and sales tax compliance.
- Forecasting cash flows
You should also keep a current cash flow statement to aid in the cash flow forecasting process. Unexpected cash flow shortfalls can put your company in a bind, prompting owners to make rash financial decisions to stay afloat, such as taking out high-interest loans or selling shares. Cash flow forecasting enables you to anticipate when cash flow shortfalls occur and make appropriate financial plans to avert the problem before it arises.
Your accounting and bookkeeping department is the lifeline of your business. Therefore, it is vital to assess your accounting department quickly to see areas that need improvement to see your business achieve growth and success.