Do you often find yourself sitting at your workplace crammed with a terrifying pile of unattended bank statements, receipts and logbooks? It's time to simplify your business accounts!
Here are 6 essential tasks that skilled accounting personnel perform to keep your company financially healthy.
Accounts Payable & Receivable: Maintain a Separate Folder
Keeping tabs on the money you owe to others is very important. You must maintain separate folders for your vendors. Similarly, checking customer receivables is equally crucial because unpaid accounts result in debt expenses and other monetary issues.
Keep a record of crucial factors like payment due date, amount due, billing date etc. and check it every week. Also, calculate your payments, sign cheques and keep them in separate envelopes labelled with vendor names.
When you outsource this task to professional agencies, they use efficient software like Excel, Google Sheets or QuickBooks to quickly sort and manage this data.
Pick a Date to View Copies of all Receipts and Invoices
Tossing hard copies of receipts and invoices into a box until tax time is a common habit. Unless you handle a small volume of transactions, it's better to save all copies of cash deposits, cheque receipts, bills and card statements. Nearly all professional accounting companies maintain an e-database of important paperwork by scanning the hard copies. This is beneficial for small companies as they do not have to worry about cluttered office space or sorting a massive pile of papers in different folders.
Review Employee Payrolls
It's imperative to review employee timesheets every week, even when your payroll is on a monthly basis. If your employees stay back and work for longer durations, you're on the hook for overtime pay. Therefore, checking timecards every week is a great way to avoid overtime liabilities.
Compare your P&L with your Weekly Budget
If you aren't careful about your expenses, you will quickly exceed your monthly budget. Unrecorded spending can get out of control very quickly. Make wise spending decisions by comparing your weekly budget with your projected month-to-date profits and losses, once a week.
Weekly Bank Reconciliation
Banks send their account statements either monthly or bi-monthly. You must match all the credits and debits with your account statement (a process known as reconciliation), every week. This way, you don't have to worry about accidentally overdrawing your account, and you'll have enough cash to run your business.
Evaluate the Projected Cash Flow
Managing cash flow is critical for small businesses and start-ups. Forecasting the amount you will need in the coming week will help you keep enough cash to pay your suppliers, employees, and other bills. Categorise this information in the form of a customisable cash flow statement. It will help you make more rational business decisions.
Handling business accounting tasks are like eating spinach-you may not like it, but you must do it as it is crucial. Many businesses fail due to lack of proper knowledge or skills and inconsistent management. This is why those who've just started a new venture usually hire professionals for bookkeeping and managing financial accounting records.
Companies have a lot on their plates and need external help to manage all reports, transactions and receipts. Therefore, hiring an expert who can do the drudgery for you will make you less susceptible to poor business practices. This way, you can focus more on your core business ideas.