What do business moguls like Elon Musk, Richard Branson, Bill Gates, and Jack Ma share in common? Is it their taste for million dollars cars or expensive bottles of whiskey? Not at all. Instead, what they have in common is something that every business owner wants- the ability to turn any business opportunity into millions of dollars in a heartbeat.
While some individuals might say it is down to pure luck, and they might be right. However, successful business owners make their own luck. They use their business skills and knowledge to their advantage, whether it is their money management skills or ability to attract top talent.
In the end, being a successful entrepreneur is all about taking calculated financial risks. With that in mind, improving upon your accounting and bookkeeping practices is an essential part of the risk-calculation process. After all, upping your financial game is crucial to ensuring long-term business success. That said, hundreds of US-based entrepreneurs still struggle to keep on top of their finances. So, if you’re searching for ways to improve your small business’s accounting and bookkeeping practices, then you have come to the right place.
We’ve listed down some highly effective hacks below.
Enroll in a finance/accounting degree
Obtaining a finance/accounting-related education will allow you to immensely improve your accounting/bookkeeping knowledge and enable you to know the ins and outs of financial management. On the other hand, if going to a university campus to earn an education isn’t your thing, you can always enroll in one online. Distance learning might actually help you save a few bucks while gaining new skills and knowledge. However, choose your course wisely. There’s a difference between financial vs managerial accounting, and if you want to enhance accounting and bookkeeping know-how, you may want to focus on the latter of the two.
Perform reconciliation every week
Good bookkeeping will undoubtedly help your business in the long term. While most business owners become lazy and procrastinate for no reason whatsoever, it is vital to take out a particular amount of time every week to reconcile your business’s financial books, even if you don’t enjoy doing so. Because in the end, it will save you the headaches that will come at the end of the year.
Furthermore, reconciliation will allow you to identify mistakes and errors and resolve them on time. Moreover, another vital aspect of proper bookkeeping and accounting is to follow up on your late payments, especially if your business runs of income from receivables. So, call your clients and remind them of late fees and the fines that go along with them.
Remain attentive when it comes to receivables
After issuing invoices, make a list of all the people who owe you money. Checking this list now and then will allow you to ensure if that particular customer has paid up or not. It will also help you manage your cash flows more effectively
Sometimes, you’ll have to deal with many orders from customers, and keeping track of every receivable invoice will require a lot of time and effort. However, it will be worthwhile to do so and ensure that your customers pay up on time, especially if you want to maintain tax compliance. Often, when customers fail to pay up their invoices on time, chances are customer deposits in your business’s revenue account won’t match up with the receivables report. This can result in your bookkeeper spending a lot of unnecessary time updating your receivables listing. Moreover, it also results in overpaying of taxes and high debts amounts. So, ensure you’re using effective bookkeeping software to monitor customer payments every month. It is something that will save you from debt, tax compliance issues, and a lot of time in the long term.
Set measurable accounting goals
It is vital to set realistic, tangible accounting goals if you want to run a successful business. That said, accounting and bookkeeping are two things that business owners don’t consider exciting. Because of this, many individuals stay away and don’t set clear accounting goals. However, they need to understand that accounting and bookkeeping are reliable financial performance and growth indicators for every business, and therefore vital. So, set realistic accounting goals and commit to maintaining your books regularly. After all, it will only take a few minutes of your time and provide you with tons of long-term financial benefits. However, if you don’t, your transactions will pile up and become harder to track as time goes by. So, whether you hire a bookkeeper or an accountant, ensure you analyze your books and make the best financial decision for your company.
Automate your accounting/bookkeeping practices
We cannot stress the importance of using the right business tools to manage your business books and accounting processes. After all, these tools enable you to improve efficiency and productivity. So, it is a must to identify opportunities for automation whenever and wherever you can. For example, use cloud-based accounting software and ditch paper-based processes. Doing so will reduce or eliminate human errors and make information sharing more manageable.
You can seamlessly integrate automation and gain access to various features. For instance, online accounting software will enable you to keep up with accounts receivables and send invoices via email. Moreover, the software also provides automated reminders, so you never have to miss out on your payment deadlines. With automation, reconciliation also becomes a simple one-click process. Plus, with automation, this software also provides seamless integration and interfacing with banking platforms.
Save your receipts
If you consider yourself a savvy business person, you must never forget to track all of your expenses. However, the irony of the situation is that not every business owner is good at this. Some still utilize the pen-and-paper approach to keep receipts and track expenses. Not to mention, they keep these pieces of paper in their pockets or wallets, making them fumble when the time comes to dig out these receipts. This is highly unprofessional and creates a mess in the long term.
A better way to track your expenses is via online accounting software. Moreover, you can also install a free expense tracking app on your computer or smartphone. Going digital is a lot better than relying on small bits of paper. Furthermore, you can always take photos of your receipts and invoices if you think using an expense tracking app is a hassle.
Link your credit cards and bank accounts
Innovative business accounting or bookkeeping is all about removing difficulty and hassle from financial functions. It means that you must leverage the features present in your accounting/bookkeeping software, including linking credit cards and bank accounts. However, to ensure that this approach is practical, only perform transactions through the credit cards you’ve linked to your business account.
Furthermore, avoid personal expenses from this account at all costs as it will mess up expense tracking when you sit down to file your taxes. Similarly, you can also connect your business accounting software with payment gateways to pay invoices. However, it depends on the viability and availability of such a feature.
Conclusion
Whatever your level of accounting and bookkeeping understanding, it is vital to keep your knowledge base and skills sets growing whenever you can. Any small step you take to improve your accounting and bookkeeping literacy is a step in the right direction. However, the sooner you start, the better. And to ensure you do that, consider incorporating the tips and hacks mentioned above. Doing so will allow you to ensure that you save money, remain debt-free, and make enormous profits in the foreseeable future.