Common Small Business And Startup Accounting Problems
An option to keep your budget under control is to outsource professional accounting and bookkeeping services.
One of the main problems that small companies and startups face and the reason for constant struggling and failure is complete lack of or a deficient accounting structure. In many cases, this important process is often overlooked by inexperienced entrepreneurs; in other situations, a tight budget induces the owner to look for cheaper or free alternatives resulting in a lot of problems, sometimes even fatal to a business. An option to keep your budget under control is to outsource professional accounting and bookkeeping services.
When you don’t have a proper accounting system in place, some problems begin to appear after a while. One of the issues that we have detected is that in many cases, small companies and startups don’t have reliable reports about clients that haven’t paid, those that are behind in their payments, and lost or overlooked invoices. In other cases, we have seen that small businesses fail to manage their own payments and consequently they incur in late payment fees. Late fees are not the only aspect of not having a proper management of accounts payable, it can also affect your credit, a preferential rate and even lose a supplier.
Accounts payable and accounts receivable are two accounts that are vital for any company in order to keep a healthy cash flow.
In this same line, we can also include the inability of a company to meet their tax demands. When a company has good accounting and bookkeeping system in place, this is usually not a problem at all, but for small businesses and startups that believe that these processes are more optional rather than a necessity, tax liabilities may become a cause for failure, most of the time, tax issues can be avoided with efficient accounting and bookkeeping services.
There are many aspects of a business that can be improved and problems that can be avoided with proper accounting information. As you have probably read in previous articles, reliable accounting information is vital for the survival, improvement and performance measure of any business. This information, provides an accurate picture of the financial situation of the company at a given period of time. The upper management (CEO, owner, etc.) should rely on this information to make effective business decisions and establish any necessary controls to improve a particular area of opportunity.
When you lack information, it is almost impossible to measure your performance. You are probably familiar with the term Key Performance Indicator (KPI) which is a measurable value that shows if your company is achieving the key business objectives and how effectively it is achieving them. In other words, KPI’s are used to assess the success of a company at reaching targets. The KPI’s are measured using the balance sheet.
If you are about to start your own business or if you are already struggling with any of the complications listed above, you can always set up an appointment with any of the professional accounting and bookkeeping services to improve your company’s accounting.
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