As the tax season is finally coming to a close, you might be looking back on your small business’ accounting and bookkeeping for tax year 2016 and think, “Why weren’t we more prepared?” It’s always easier to say you’re going to improve your companies accounting processes over the next business year than actually going forward with changes that need to happen.
While continuing to muddle along with your current accounting processes until you somehow manage to find the time to change or update them may seem like an adequate methodology, not mandating proper accounting procedures can actually result in loss and lower income. Even simply outsourcing your small business accounting to an outside company can dramatically help keep your business successful, if not to simply keep the business from the following problems:
No Business Performance Information
In order to know how well your business is doing, you need to be able to compare your balance sheet to your key performance indicators and your business plan, and that requires having an accurate assessment of your current financial situation. Without proper accounting processes in place or without any bookkeeping or accounting services, your business cannot have an up-to-date picture of performance. There is no way for your small business to know what is being done well, what is being done poorly, or what can be improved upon.
Higher Cases of Fraud
When the cat’s away the mice will play – especially when it comes to financial statement fraud. When your employees know that your accounting processes have no oversight, transparency, or lack internal fraud control, they are twice as likely to commit fraud on your financial statements as those employed by companies with consistent oversight procedure. Trusting your employees can come with a price – when they know there’s a system in place to check for mistakes and fraud, they’re going to be more likely to do honest, good work.
Accounts Payable Becomes Delayed
In order for your business to run smoothly, invoices issued to you need to be paid up and on time. Your business needs good small business accounting processes in place in order to keep up with accounts payable, especially if your accounts payable is complex. Failing to manage accounts payable in a structured, organized manner can lead to financial losses through late fees, losing a preferred rate or a supplier, and even lowered credit worthiness.
Accounts Receivable Also Becomes Delayed
You didn’t go into business out of the goodness of your heart, and your amount of unpaid invoices should reflect that. When your small business lacks structure around your accounts receivable, your cash flow can start to dry up from late or overlooked invoices and slow-paying or non-paying customers. Having structured accounting processes ensures that your small business has a steady stream of revenue to continue doing business well.
No Tax Season Preparation
Bad planning and lack of organization in your accounting department can potentially spell death for your small business. Substandard record keeping can lead to astronomical tax liability while bad organization can result in being surprised by unknown tax implications with no plan for the future. For your business to continue to be successful and thrive, you need to have accounting processes in place and a team that can properly execute them.
Contact Executive Accounting Services for accounting and bookkeeping services today
If your small business is suffering from a lack of structured and organized accounting processes and procedures, contact Executive Accounting Services by calling 919-859-8600 or filling out our contact form.