As a business owner, you face numerous challenges every day and this never-ending list can be overwhelming. The good news is your bookkeeping and accounting processes don’t have to be part of the daily stress. Here are the top five accounting challenges small business owners face and how to fix them.
1. Using the Best Accounting Software
With so many options for accounting software, selecting the right one can be a confusing process. There’s always a learning curve which can turn something helpful into a big headache. To combat this challenge make sure to choose software with the best key features for your company but one that won’t overwhelm you. Work with a CPA firm which can help you identify the right solutions and get them setup correctly, so you can use the software to its fullest potential.
2. Hiring the Right Accountant
While it may be easy enough to find an accountant, it’s not so easy to hire the right accountant for the job. The key is finding someone who fully understands your industry and type of business. For example, if you’re a small advertising company, you want to work with an accountant who knows and understands the advertising industry from the inside out. The right accounting person will be able to address your specific business needs, offer tips and advice to improve your workflow and keep your business running smoothly.
3. Creating Effective Systems
Running a business isn’t easy, and once you think you have your systems figured out, the industry changes or your business starts growing. This is why it’s important to regularly review your current accounting and bookkeeping systems. Pinpoint any areas within your business that are holding you back and hire a business advisor who can recommend solutions.
4. Staying on Top of Cash Flow
The true testament of a successful business is cash flow. You won’t remain in business for long if you’re not getting paid. Balancing follow-up with customers, or vendors, to ensure on-time payments is extremely important. This is where having the right accounting professional comes in very handy! They can put a payment process in place for consistent cash flow, as well as offer ideas for tracking unpaid accounts. More money in the bank means less stress and more opportunity for growth.
5. Keeping a Pulse on the Business
Another accounting challenge business owners face is not fully knowing the true health of the business. Having a good flow of cash is great, but that doesn’t make up the entire financial picture. Take time to understand all of the components of your business, and how they work together. Perform regular reviews of your financials, and take everything into account including growth, profitability, cash flow, assets, and liabilities. It’s also important to know the Key Performance Indicators (KPI) and Critical Success Factors for your business. Analyzing these benchmarks regularly and making adjustments necessary can lead to continued success.
As your business evolves and grows, so will your accounting needs. There’s an important balance between creating structure but being flexible that needs to be struck, and a good accounting firm can help you accomplish this. If you have any questions on your accounting functions, contact your MarksNelson advisor at 816-743-7700.