If your business wants to achieve its financial and accounting goals, it will need to be in complete control of tracking and recording daily transactions, posting debits, credits, producing invoices and maintaining and balancing general ledger, at all times. These fundamentals provide the basis for a functional and effective accounting department, and without it, your businesses bottom line could soon be in jeopardy.
When and how can bookkeeping harm your business?
As any business grows, controlling its’ bookkeeping processes becomes more time consuming and complex, and if you don’t have the expertise in place to deal with it (such as an in-house bookkeeper or accountant, or an outsourced accounting firm), you could soon be forced to deal with significant accounting issues that could have a very real and negative impact upon the business as a whole.
Below are 4 ways that inefficient bookkeeping can be harmful for your business:
Inaccurate tracking of receivables is the simplest way to harm your business, and when invoices aren’t efficiently monitored and tracked, you could lose money you never even knew you had. With a large volume of invoices and a lack of bookkeeping input or manpower, a loss of cash flow is a very serious problem. Solving it, however, is simple. By outsourcing your bookkeeping requirements to an expert team of professionals, they will categorize all receivables and follow up on them, saving you both the hassle, and ideally, money.
Expenses that have been misjudged
This common error can be harmful for any business over time, and when vital details such as hidden fees, charges, interest, recurring payments and smaller purchases are missed from business payments and transactions, it can cause a significant gap between expenses that are real, and those that are expected. Smaller purchases are often not recorded and monitored appropriately by small businesses, and can cause a very real blow for their finances.
Accurate tracking and monitoring of expenses is simple when you use the services of an outsourced accounting and bookkeeping firm, who have streamlined processes already in place to deal with them appropriately and efficiently.
When cash inflow isn’t accurately tracked, it can distort the estimated profit margins and cash flow of a business, and when expenses are misjudged, this can also result in a failure to report expenses and ultimately, an overpaying of taxes.
Accurate reporting is essential for the success of any small business, and is how they are best able to understand and manage their financial position. Poor bookkeeping is simply a barrier to a business’s success, and if yours is struggling with its reporting, outsourcing this element could provide you with a very real lifeline.
Problems involving taxes and the law
When revenue is lost and expenses are misjudged, cash flow problems can quickly follow, and this almost always spells disaster when it comes to tax filing. Cash crunches can lead to penalties from the IRS, and even legal problems, and the only way to avoid these is by ensuring that your bookkeeping and accounting requirements are professionally taken care of; the simplest and most cost-effective way to do this, is by outsourcing to an agency who have a large team of professionals ready to help.