In a small business it is common for employees to share job roles, including the role of taking responsibility for financial matters and the daily work of keeping business accounts up to date and chasing late payers. Such person(s) often have no training in accountancy and this can lead to issues arising that can be problematic.
Issue number one: collecting payments
Failing to secure payments is the most common and most dangerous issue a small business can deal with when it comes to accounting. The source of the problem can be customers deciding not to pay, but surprisingly often it is simply the inability of a business to reliably send an invoice. If a customer does not get a receipt or invoice they won’t be aware of any payment that is due – having receipt maker software is an efficient way to prevent this happening.
In terms of making sure all payments are made, good record keeping is the most important factor, while being diligent and persistent at following up unpaid accounts is also vital. This does not require any great financial skills – just make sure that a particular staff member is in charge of doing so and importantly, ask them to report on their progress.
Accounting methods and software
Thankfully there is a host of software solutions to make accounting problems less likely to occur. If you automate your accounting processes using software, you can make sure you don’t, for example, send payment to the wrong supplier – which could really harm your cash flow. Software will also make it a lot easier to report your business accounts to the tax authorities, while having a prepared set of accounts that are tidy makes it easier to sell your business or to gain investment.
It can be problematic in some businesses when staff members are used to performing accounting tasks in an old fashioned manner, with pen and paper. Though keeping files and rows of filing cabinets served businesses well over the years, it is not effective these days – your business productivity will be impeded, and you may struggle to effectively connect with some customers and suppliers who would expect electronic record keeping.
Finding professional help
It is unexceptional for businesses to outsource their accounting functions. In fact, almost all businesses outsource at least some element of it – for example, the filing of final accounts with the government. Every accounting process can benefit from professional help – from invoicing, through to debt collection.
A qualified accountant will also introduce you to the more interesting parts of financial reporting, producing tables and charts which would give you an insight into where your business is profitable – and where it is not. Large corporations produce detailed financial reports for a reason: keeping track of the numbers behind your business is an informative exercise that can help you improve business performance.