In Pursuit of Profit
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Whether it is due to taking a job elsewhere, switching careers, personal/family needs, medical reasons, or some other cause, the unexpected loss of an accountant can throw a business into disarray. Reining in this chaos as quickly as possible is critical to ensuring the viability of the company.
Recently, we talked to a set of business partners that epitomized this situation. They were a brother and sister that suddenly found themselves managing the family business after the untimely passing of their father who had been running the business for the last 30 years. They were coming to the table with little to no accounting knowledge and too much grief and shock to be able to invest themselves in running this aspect of the business themselves. They needed help!
Now, this example may not represent exactly where you are, but there are plenty of situations where people find themselves at the helm of a company’s finances without the experience needed to be confident in the work that they are doing. If this describes you, you’ve come to the right place! This guide will give you a quick overview of what is most important when it comes to managing your company’s books and overseeing its accounting functions. It will also offer additional resources for each topic so you can gain a greater understanding of the places where you need the most help, allowing you to feel better equipped to lead in these areas.
Keep in mind, this is meant to provide general high-level guidance for people who are new to accounting and need a crash course in accounting basics. There could be (and are) entire articles, blogs, and books dedicated to each of the areas we are going to mention. So, if you would like more in-depth information about anything that you read, please reach out to us and we would love to help you dive in deeper with any of these topics. But, right now, let’s get our feet wet together with some basic accounting framework…
Perform Reconciliations Regularly
A general ledger contains a record of a company’s cash transactions, and a bank statement tracks all money moving in and out of a company’s account. While the general ledger indicates how much money a business should have, a bank statement indicates how much money a business does have because it is a true picture of all the completed transactions over a specific time that affected the company’s account. Businesses need to perform regular reviews, called reconciliations, to ensure that these two documents balance. Therefore, a bank reconciliation is the process of matching information regarding cash accounts from accounting records to the corresponding information on bank statements to make sure the business has the cash it thinks it has. To prepare a reconciliation, you will need to obtain the ending balance for your bank account, match checks and deposits that have cleared, verify funds that are in transit, subtract fees, add interest, and flag any undocumented withdrawals. Reconciliations can also be performed on credit accounts in the same way.
Understanding Reconciliation Statements
What is Needed to do a Reconciliation?
How to Fix Reconciliation Problems
Clean Up Month-End Close
Accurate financials require accurate records, which means that if bookkeeping closing procedures are disorganized, prone to error, or not being followed, a company’s financial records will be inaccurate. The best ways to improve close are to:
Month-End Close Checklist
Year-End Close Checklist
Understand Your Financial Statements
Anyone running a business needs to know which financial statements are important, how often to prepare them, and what to be aware of when looking at them. The most important financial reports for small businesses are:
Do You Need Audited Financial Statements?
What Would a Financial Assessment Reveal about your Business?
Tracking the right KPIs allows business owners to evaluate their overall performance, address problems proactively, tie specific efforts to results, and understand where the money is going. Common KPIs include:
A Comprehensive Guide to KPIs
50+ Critical Business Questions You Should Be Asking
How to Monitor Business Results
Actively Manage Accounts Receivable and Accounts Payable
Managing accounts receivable (AR) and accounts payable (AP) is not simply about sending invoices when work is performed or products are provided and paying bills when they come in. Active management requires a strategic approach to cash inflows and outflows – collecting on outstanding invoices and timing payments to vendors. This may necessitate activities like utilizing a collections agency and/or negotiating more favorable payment terms.
How to Eliminate Accounts Receivable Delays
What is a Chart of Accounts?
Implement Internal Controls
Internal controls in accounting are the policies and procedures companies use to ensure accuracy and reliability across accounting activities and reports. The most common types of internal controls include:
Internal Controls for Remote Work
How to Create an Accounting Policy
IRS-Recommended Financial Safeguards
Cyber Security Best Practices for Accounting
Who is Responsible for Internal Controls?
Invest in Software
The right accounting software for your needs is worth its weight in gold. Conversely, the wrong accounting platform can spell disaster for a business trying to operate smoothly and grow. While many companies use cloud-based versus traditional accounting software, there is no such thing as the “best accounting software.” The best technology is going to be whatever is the best option for your specific business. Ensure that whatever solution you are using fits your skill level and meets your company’s needs.
Basic Accounting Software Options
Moving to a Less-Complicated Accounting System
How to Find Better Accounting Software
Top Ecommerce Accounting Tools
Where Should You Use Accounting Software Automation?
If you have found yourself managing your company’s finances unexpectedly, you don’t need to do it alone! When you need accounting help, reach out to us. We have a team of highly experienced accountants ready to come alongside you to keep your company running smoothly. We can maintain your books, run financial reports, oversee AR and AP, implement internal controls, and get you set up with the right financial software for your needs. We can offer as much or as little support as you need – everything from ongoing accounting support to part-time bookkeeping help to one-time accounting training. Find out more about how we can help today!