Many business owners think that accounting consists of someone to do income tax returns, and someone to do bookkeeping. That’s all that a small business needs when it comes to having an accounting department, right?
Large companies have many functions in their accounting departments. Small and mid-sized businesses need many of the same functions as a large company, they just don’t have as many staff to handle them. Many of these functions will fall on the CEO, but an effective CEO will find a way to delegate and automate some of the accounting duties to free their time.
Here are just a few of the areas you’ll want to make sure are covered in your small business accounting department:
Accounting Software Expertise
Do you have someone on your team that can identify opportunities for making your accounting function run more efficiently? The solutions could include training on your current system or could be more comprehensive, such as identifying a new accounting system that will save a tremendous amount of time and money.
Analyze manual processes because there may be software applications that can do the tasks faster, better, and cheaper. Manual data entry is a hot spot of potential; today, software, scanners, and even smartphones and tablets can automate the data entry, even if paperwork is all there is to enter.
One key find for Lucrum was Tsheets.com which syncs all our time with Quickkbooks in seconds, vs manual entry. We’ve also had good luck converting clients to Bill.com for automatic invoicing and bill payment. So get out of the “this is how we do it” mentality and instead, adopt a “why do we do it this way” view.
Business Performance Advice
Are you getting accounting reports that correspond to the areas where there are challenges and issues? If not, let your accountant know about those specific areas. A well trained accountant should be able to create some reports that will provide insight and enlightenment.
If you are receiving reports with lots of numbers, but are not quite sure how to interpret those numbers, ask your accountant for help. A quality provider not only can help interpret the numbers, but can also put the report into a graphical format so that it’s more visual.
A major goal of most small businesses is to attract more business and generate more revenue. A good accountant can help study your revenue patterns by presenting “what if” tools that can calculate what happens when there are changes to price, mix, or volume. Studying the results may help determine where to concentrate your marketing efforts.
Keeping the Cash Flowing
If your business seems to stampede through cash, you’re not alone. A cash flow forecasting report is essential to plan ahead and be ready for the peaks and valleys. Creating a cash flow statement of past months is a good place to start. Historical receipts and payments can be used to estimate the amount and dates of future activity. Then add additional income or expense items that are expected in future months. Review the report to see when cash may be scarce and when cash may be in abundance. This tool is extremely valuable for planning purposes.
If your accounting department focuses on compliance work alone, such as taxes and recordkeeping, it may not be providing valuable input. If properly staffed and used, the accounting department could even become a profit center of sorts. With these added functions available, you’ll discover new actions to take in your business to drive profitability. Clarity about decisions like price changes, and knowledge that your accounting function is efficient and not wasting time and money are just a couple of the benefits derived.
Take a look at your accounting department, and if it reminds you of swiss cheese, we can help you plug the holes.