October 2017 - AccountingX

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Month: October 2017

Bookkeeping Mistakes Business Owners Should Avoid

Top Bookkeeping Mistakes Business Owners Should Avoid

According to Dun & Bradstreet’s Small Business Division, about 90% of small business failure can be attributed to cash flow issues. Their studies of this subject matter reveal that many of the top bookkeeping mistakes can be avoided by hiring a professional to handle this aspect of your small business.

 

 

Comingling of Personal and Business Monies
One of the most common bookkeeping mistakes is mixing personal and professional finances together. Every business needs its own accounts that are used solely for the company’s transactions. This includes credit cards and other capital lines. It is difficult to gain a clear picture of the company’s overall financial health if dedicated business accounts are not utilized and if found that you are comingling funds you can be held liable for business liabilities in a legal dispute.

 

Utilizing Cash Rather Than Accrual Accounting
While cash accounting can appear more straightforward and easier to implement, it is difficult to attain a clear picture of the firm’s financial performance with this method. When the accrual method is used, a more clear and complete picture of the expenses and profits becomes apparent. Understanding the company’s true financial health is much easier when accrual accounting methods are used.

 

Incomplete or Incorrect Account Reconciliation
Many bookkeeping mistakes occur when reconciliation methods are completed in an inaccurate or incomplete manner. Taking the time to reconcile the business banking account with the books is a monthly task that many small business owners delay or do not complete. This is an important task that can reveal any errors or areas of concern that require a deeper look. If you are a business owner that does not have the time to do a thorough monthly reconciliation, it may be time to hire a professional bookkeeper.

 

Trying to Do Everything
A lot of bookkeeping mistakes can be avoided by hiring a professional. Many small business owners wear multiple hats and take on many of the business’ task in an attempt to keep costs at a reasonable level. This decision can end up costing owners much more than any savings that they may realize. A professional bookkeeper can provide accounts that are accurate and up to date, and help to free up time for the owner to focus on the business at hand. For more information on how you can hire a professional bookkeeper click here.

Three Ways to Improve Your Business’ Cash Flow

Three Ways to Improve Your Business’ Cash Flow

Every business owner wants to boost cash flow. That’s because it helps keep income and outgoings steady, which helps make running a business as straightforward and pain-free as possible. The great news is, there are several proven ways to improve cash flow that won’t cost you an extra penny – here are three of the most effective:

 

Change Your Payment Terms

How quickly do your customers need to pay their invoices? Within 30 days of issue? Or 20 days? Cutting your terms to 14 days (or even 7 days) will cost you nothing and will speed up your cash flow cycle. This technique may also help reduce accounts going into arrears; when customers have less time to sit on an invoice before the payment deadline, they are less likely to forget about or neglect payment.

 

Send Proactive Payment Reminders

There’s no need to wait until an invoice is overdue to follow it up. Sending your customers a friendly reminder the day before a payment due date can cut down on innocent errors – like an invoice being lost or overlooked. It’s easy and free to set up auto-generated email reminders for your customers and it can have a positive effect on your business’s cash flow.

 

Analyze Your Cash Flow in Detail

Financial highs and lows are all part of most businesses’ normal cycles. That’s particularly true of seasonal retailers – for example, costume stores usually see huge spikes in October for Halloween and Oktoberfest. However, other businesses may find it more difficult to identify and prepare for cyclical spikes and dips.

 

Conducting a full business cash flow analysis can help with this. By looking into regular spikes and dips, you can better coordinate borrowing, staffing, and marketing efforts to ensure cash flow remains as steady and predictable as possible.

 

Financial health is a vital part of any successful business and if you’re currently struggling with any aspect of understanding your businesses finances AccountingX can help simply click here and schedule a 15-minute conversation.

 

 

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