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Small business accounting can be a challenge and it’s something that’s best left to people who really know what they’re doing. If you’re unsure of your approach and you know you need to start making the right kinds of improvements, now is the perfect time to do that. We’ve got some tips and advice on how to improve your approach to small business accounting and boost outcomes in the process.
Detail Daily Expenses
First of all, you should make a concerted effort to detail all of your daily expenses. This might seem like a small move but it makes a difference when it comes to detailing and understanding the financial health of your business. It becomes much clearer where things stand and how much income your business needs in order to become sustainable when you understand your spending better.
Use Group Training Sessions
If you have a team of people and everyone is contributing to the finances and bookkeeping or even just a small part of the team is doing that, it’s important they understand the accounting software your company uses. There are Xero Training courses and other similar options that’ll ensure your team is fully able to use the accounting software you use to the maximum effectiveness.
Keep Income and Borrowed Funds Separate
When you’re tracking your incoming finances, it’s vital to keep the income from sales separate from the income that comes from borrowed funds. Loans are not the same as revenue and you need to understand that and keep those things separate on your books if you’re going to have a complete and accurate picture of your business’s finances. It’s a common mistake that small businesses make.
Ensuring the accountability of your staff is vital to the long-term sustainability of how your business approaches accounting. If people are not held responsible for their tasks and jobs in the accounting department, there’s always going to be a risk that things will get messy and your business will lose out as a result. That’s obviously not what you want to happen but it’s a real possibility. Make sure everyone knows their role and what’s expected of them in that role, and then hold them to account for their actions.
Take Action When Clients Don’t Pay Their Balance
Clients failing to pay their balance is far more common that lots of business owners realize. It happens and they often get away with not paying. If you just sit back and fail to chase non-paying clients, you will have big problems in terms of your finances. Ensure you’re clear about which clients have paid and which haven’t so you can take appropriate action when money is owed to you.
Accounting is one of those things you can’t afford to turn a blind eye to. Even small mistakes can grow into bigger problems when it comes to your business’s bookkeeping. Be sure to follow the rules outlined above if you’re currently in the process of making changes to how you approach your accounting obligations.