As a business owner or an entrepreneur, you will definitely have to deal with cash flow day in day out and not knowing how to effectively manage your financial accounts well can lead to a lot of financial loss you’re your business and ultimately hamper growth in a great deal.
Before I go further, I would just like to drop a few tips to hold on you as you go through this content.
- Most of the small businesses around manage their accounting processes by themselves
- If peradventure you get a professional to do your accounting for you, ensure that such an individual or company has the license to do so.
- Businesses especially those who are just starting up shouldn’t neglect the influence tax has on them.
- As a business, you shouldn’t involve the financial transactions in your personal life to affect that of your business if you want it to grow.
Below are some of the mistakes to avoid in accounting when the growth of your business is your priority.
1. Inefficiency in the monitoring of funds
When bookkeeping and accounting are not done at all or they are not done appropriately, there is always bound to be inaccuracy of output and therefore growth cannot be measured.
Due to the fact that you are not keeping accounts of your financials, you won’t be able to track your bills like tax payment, rent and other miscellaneous expenses. As a business savvy, you can begin to imagine the consequences of these actions if no remedy is brought to use.
Because some businesses do not have a good accounting setup, it blinds the business from knowing what the next line of action would be for the next month, next quarter and so forth.
2. Not employing the services of a professional
A professional is someone who knows the in and out of a particular thing. Having a business that can actually afford the services of a professional but doesn’t want to hire their services is doing more harm than good to the business because the professional has gathered a lot of experience in such am field and what would probably take you longer time to do, the expert would need less time to do the same job.
When this happens, it helps to save time because the workers can focus on their primary assignment while the professional does the job. In this case of having a professional over for other tasks to be delegated to him or her, it helps the business grow because most often than not the professional always do the right thing and the result gotten from such an audit can be used to access the status of the business and focus more on area that need to be looked into.
3. Inefficient billing management
For any business to be sustainable, there needs to be a continuous cash flow process as this will ensure the business to keep track of its health.
Not having a good record of the cash flows will affect things like the duration of transactions because if you are to pay your employees and the money you need to that hasn’t entered the company’s account.
The billing management would be held responsible or any inaccuracies of values which depicts a wrong view about the company.
When opportunities rises for investments, these are parts of the things an investor looks at before he or she can invest.
To fix this issue, ensure you always document any transaction immediately they are being made so as to properly track your sales and other types of transactions.
To make this further simpler for you, you can employ the use of several accounting software that can help.
4. Not clearing out the terms of your personal and business accounts
As much as every business owner would have a personal life, one thing to never do is to confuse your personal finance with your business account.
Meddling with your personal finance at the expense of your business accounts will run your small business down.
As a business person, your expenditures should be carefully managed and only send money on what you need not what you want.
Also, one thing you should never do is to take a personal loan in the name of your business.
Let me explain, Mr. A wants to fund a personal project but doesn’t have the financial capacity to fund it instead he goes to a bank and gets a loan in the name of his business to fund the project. What I just wrote up is a really wrong thing to do as a business owner and will ultimately hamper the growth of your business.