Accounting is one of the fundamental aspects of a successful business due to its role in providing stability and accountability for the company’s finances.
Through reckoning, you keep an objective, systematic record of the financial information, helping you manage all transactions much better, whether they’re incoming or expenditures. You also guarantee that your company complies with regulations and that you can compare current figures with historical data to measure your progress.
However, the overall accounting process is quite complex, and knowing exactly how the proceedings should look when you run a small startup can be challenging. Here are some aspects you need to remain aware of in order to provide your enterprise with optimal service. Keeping track of business assets is one important part of asset management to ensure a smooth flow in your inventory and accounting.
Use software
Technological solutions are becoming increasingly widespread across all business areas and industry sectors. They’re used everywhere, from supply chains to marketing services, owing to their ability to help improve processes and make them faster and more manageable for employees. Accounting benefits from the use of technology as well, reducing the likelihood of human error.
Make sure that you use software for billing your projects and that all other programs you use are connected to the invoices you prepare and send. Doing so means you can streamline the tasks, with the invoices being ready in seconds. It also makes it much easier to accommodate the system to any specific project needs or client requests that might intervene along the way.
All your employees should know how to handle this software to ensure the system can function correctly. Human resources are no less important because computers are also hard at work.
Careful inventory
Keeping track of the business inventory is a crucial aspect of accounting. The checklists should capitalise several costs, including the purchases, storage, transportation, the direct material used, and any other overhead costs. Therefore, if you develop a better understanding of the stock levels, sales and purchases, you’ll also be able to create a more successful flow and a regular inventory.
For example, you can add an extra line to the balance sheet designated for finished goods to determine the value of your stocks. There are two options for expressing the figure, either as a retail value or a cost depending on what you prefer.
Internal controls
When you own a small business, it can seem like accounting is a walk in the park since you don’t have to consider as many different pieces as a large corporation. However, that’s not necessarily true, and even medium-sized enterprises need to develop an accurate system of internal controls that they can abide by. Establishing proper internal rules reduces the likelihood of fraud, minimises risks, and ensures better accountability across all company areas. Doing so means you can maintain the integrity of the financial operation you work with.
Ensure all accounting aspects are safeguarded, and there’s a reduced risk that anyone could tamper with them. This includes guaranteeing the safety of all physical assets, such as cash, as well as any company supplies and objects. Keeping the records in order with regard to these assets and managing custody is crucial. Still, you must ensure that overseeing all these things doesn’t fall to just one individual.
Asset custody and account reconciliation should also be assigned to different team members. You must also make sure that you put all procedures related to money and accounts in writing so you can keep track of them at all times. It doesn’t matter how small and insignificant they might look in the greater scheme of things; documenting everything means that you can retrospectively review any transaction and monitor anything that occurs during its processing.
The issue of delegating responsibilities brings us to our next point, which is:
Collaboration
Accounting is a complex task, and you cannot really believe that you can do everything yourself. At the same time, you cannot expect that every single one of your employees will become an expert bookkeeper overnight. You’ll have specialised individuals carry out the actual accounting. Yet, the other members of your team should come in with at least a modicum of financial expertise.
This includes the workers in the sales and marketing departments, as well as those that are involved in the larger supply chain. When these subsets of employees are well-equipped to handle the challenges and deliver accurate information, the accounting department will have an easier task of wrapping it all up. They are also more likely to get good results from the very beginning, so there’s no need for the papers to get redone several times over.
The different staff departments should work together to ensure everyone gets access to the information that enables more effective management.
Skill sets
You already know that the best kind of employees are the ones that display a set of various skills. Although it can seem far-fetched, if you want to ensure good accounting practices within your business, you must have people in your team who fit the criteria for all skills. First and foremost, specialised skills are necessary for anyone who will do accounting work.
Knowing how to operate specific software, including tax, compliance, and financial analysis, is a must, and the employees must also have a degree in the field or undertake accredited courses. Hard skills come to complete the picture, as they also contain measurable skills such as knowing how to operate cloud-based accounting, read analytics, assess risks and find ways to mediate them.
Soft skills are just as critical. For instance, flexibility may not seem necessary in accounting since the procedures are set in stone. Yet, it’s imperative to remain flexible, especially as technology changes, and you must include new aptitudes in your resume. Problem-solving skills are also crucial, as there are many times when things won’t always go according to plan, even when you follow protocol. During these times, you must find solutions that work to deliver the best results.
Taking care of accounting is one of the most critical parts of any business. If you want yours to succeed, you must pay attention to this sector.
