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Business woman with question mark on a blackboard
QuickBooks is a complex accounting software that requires proper knowledge and training. The nature of the application is quite multifarious which can create problems for users with little or no prior training.

Every department of business has multiple software for managing their workload online.  A sales force of a business uses a CRM system (Customer Relationship Management) to manage their customer feedback, connectivity, customer complaints and all other customer-related tasks. Similarly, to manage accounting and bookkeeping related tasks of a company, businesses often use proper systematic software that can help them in managing their finances. QuickBooks is one such amazing accounting tool that is mostly adopted by small to medium scale businesses.

What is QuickBooks Software?

QuickBooks is an accounting software designed by Intuit Inc. The software provides a set of accounting solutions to businesses which help in managing the payroll, inventory, sales volume and multiple other small business functions. The software’s key features are:

  1. Marketing based tools
  2. Products and supplies
  3. Services for the merchant
  4. Training solutions

However, every solution is designed in accordance with the needs of the business and industry they are operating in. The best thing about Intuit’s business solutions is that they have customized products for every contractor. For example, construction contractors get:

  1. A QuickBooks Enterprise solution for contractors
  2. A QuickBooks Premier contractor
  3. A QuickBooks Pro
  4. A simple starter plus pack

All of these products are specifically designed to meet the needs of the contractor to small to medium-sized companies. This makes QuickBooks the most powerful software which cannot be learned by using a trial and error method. Learning this software requires extreme practice and proper training. However, even trained QuickBooks users skip a few essential tips and tricks that can help in making the accounting and bookkeeping processes easy.

4 Things that you Didn’t Know you could do with QuickBooks Data

  1. QuickBooks is a gold data miner with different versions with different prices and features

As you already know, QuickBooks does not only come with one single software to fit every industry. Rather, it provides multiple solutions to its customers according to their needs. The features available in QuickBooks depend on your business type and the growth of your business. The data you will record through QuickBooks will be all yours. Once your data file is created, you have free access to all of the data which can be later used in a business analysis for your customer survey.

  1. Integration with other business applications that can indicate critical information about your business

Most small-scale businesses have multiple desktop or cloud-based software that help them in carrying out their business operations. By integrating this software with QuickBooks, you will be able to utilize your QuickBooks data with other business software. There are many other business applications that are now providing QuickBooks built-in integration.

  1. Utilizing QuickBooks Data

QuickBooks data has all of the major information about a business’s customers, products, employees, productivity level of employees and the volume of business sales. To best use this data:

  • You have to eradicate the data from QuickBooks and place it in the analysis database.
  • Then, you will need the tool for reporting and analysis process which is properly integrated with QuickBooks data. It will then allow you to see any type of data you need.
  • For bookkeeping purposes, you will be required to create a QuickBooks report that will help you in visualizing the data on a regular basis.

  1. It helps in decision making

As you save and monitor the data of QuickBooks in the shape of reporting files, your company will make more accurate decisions. You will be provided a clear picture of your business that will allow you to make wise decisions for your company’s success.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Man calculate cost and expenses and using laptop for search data result.
Various management tools are used by businesses to ensure that their business functions run smoothly. These tools are quite efficient in doing what they are supposed to do and offer business owners key insights into their financial information and business processes. Budgets are one of the most common financial tools that are used by businesses to manage their finances. A budget is created with advanced forecasting tools and is useful in predicting your future expenses. Companies heavily rely on the accuracy of their budget because most of their key decisions are based on it. There are all sorts of budgets, including departmental and company budgets.

Performance reports, on the other hand, are generally an assessment of a specific function of a business. However, an overall performance report is also generated at the end of every fiscal tenure. These reports, along with budgets, are extremely critical to every business. Highly professional people should be appointed to work on them, including professional bookkeepers or accountants. The finance department is usually allotted the task of creating a budget, while a performance report may highlight specific attributes associated with the budget and should be created by an expert.

Performance Reports and Budgets Help Plan for Expenditures

Your current budget is an important indicator of how you should plan your future budget. Based on previous experience, business managers can indicate overspending as well as allocate the proper funds to specific departments. The growth of your business depends on your ability to allocate your budget correctly and efficiently.

A budget also helps you determine the number of sales that are required to meet a specific target. You can then allocate your sales resources accordingly so that the target can be achieved. Reviewing the budget and adjacent performance reports helps businesses understand the specific elements in their mode of operation.

Tracking Spending Variances

Tracking a company’s spending is an important aspect of any business. If you do not regulate and control spending, you will soon lose control of your cash flows and negative balances will start popping up. Small things matter, therefore, the expenses need to be checked. A budget can highlight important aspects of your spending. If your expenditures are not resulting in the estimated amount of sales, it is highly likely that your money is not being fully utilized. Performance reports and budgets help you identify these cases of spending variances which are responsible for under utilization of your resources. Therefore, their roles are vital for a business to achieve it’s fullest potential.

Performance Reports

Though a budget holds a significant amount of key information, it cannot offer you additional information related to budget variances. This information doesn’t necessarily have to be financial and can go outside the realm of budgets. Additional costs of acquiring the resources or poor economic conditions are various factors that need to be considered before a budget is approved. Government changes of laws and regulations related to your specific business are something that can impact your budget and information regarding that is included in performance reports. Some of these indicators are financial while others may completely depend on something else. Therefore, a performance report has to be provided to ensure that there are no surprises in the future.

Suggestions

It is suggested that businesses use accounting tools and software for the creation of budgets as they offer a broader picture of your company’s financials. You can view the information in graphs, plots and any other medium of choice which makes it easier to understand. Maintain accurate records from the beginning and uphold them throughout the bookkeeping periods so you do not have to rush at the end. The process is also quick and efficient, therefore, it will save you precious time and resources. You can also hire professional accounting and bookkeeping services that will make highly accurate performance reports and budgets. If you are in doubt or your accounting skills aren’t spot on, always opt for that option.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Businesswoman making to do list on diary
In traditional business accounting, the term overhead expenses refers to costs that are not directly associated with the production of specific product units, specific service engagements, or specific sales. “Overhead”, instead, denotes the supplementary costs of production, service delivery, or sales activities. The overhead costs have to be paid regularly, irrespective of whether the company is engaged in a high or low volume of production. It is vital, not just for the sake of budgeting and bookkeeping, but for setting an optimum price for the products and services to make a profit.

Firms plan, quantify, and examine overhead expenses. As a result, overheads, like other expenses, eventually influence how an income statement proceeds. With the increase in expenses, the profits decrease. Your income statement is affected, as a whole, because of these expenses and you have to make required adjustments to cater to them.

Overhead Expenses in Business Accounting

Overheads are either fixed, which means that they stay the same month after month, or they can be variable, which means that they can vary depending on the business activity for the specific month. Some overheads fall into the semi-variable category, which means that they are incurred regardless of business activity, and some are related to the circumstances. Utility bills can be categorized as semi-variable because some of the base charges are fixed while the remainder depends on your usage.

Overheads can be general as well as departmental. A general overhead would be distributed among the whole company while departmental overheads are charged strictly to the specific department. Typically, a service-based business will have more general expenses in the form of insurance and utilities.

Categorizing Overhead Expenses

Overheads can also be applied to many operational categories such as administrative and marketing. Administrative overhead costs are related to the administration of the business and include costs associated with hiring and keeping a receptionist or bookkeepers. Branding for your company also involves certain costs that fall into overheads. Your business accounting needs require you to identify these materials, commercial, printing, and other expenses and charge them into overheads.

Reporting for Overheads

Because the overhead expenses directly affect the profitability of the company, they appear in the income statement of the company. You must account for overheads in order to determine the net profitability of your company. These expenses will be deducted from the revenue and the remaining income, after taxes, will determine your profits.

Applied overhead is generally recorded under the cost accounting method and is charged to a specific department or production job. They are quite dissimilar to general overheads and usually cater for depreciation and insurance expenses.

For business accounting purposes, applied overhead expenses are charged according to a specified formula over multiple departments. For example, if the expense is incurred by marketing, it may not be fully allocated to it. Instead, it will be distributed among various departments according to a specific percentage.

Overhead Rate

To allocate overheads, an overhead rate is applied which determines the resources used in the production of each product and then distributes the expenses accordingly. One way to accomplish that is by setting a fixed rate based on the machine hours required for the production of a product. This is a simplified approach, however, real-time business accounting scenarios require you to account for several cost drivers and then set an overhead rate.

It can be difficult to accurately estimate the overhead expenses. Therefore, the costs are generally estimated depending on the overhead rate for each cost driver.

Under Applied Overheads

Sometimes the assigned cost of work in progress goods does not equal the assigned amount and therefore has to be reported as a prepaid expense on the balance sheet.  Debiting cost of goods sold at the end of a year offsets the discrepancy. Under applied overhead costs are also referred to as unfavorable variance.

Adjusting your books for overhead expenses is an important task that must be undertaken by every business if they want to correctly estimate their profits and set an optimum price for their products.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

Businessman being depressed by accounting in his office
Accounting and bookkeeping are the key jobs in any business. Accounting is the systemic and complete recording of financial operations in a business. Business bookkeeping is the recording of financial dealings as a part of the accounting process.

Small business accounting errors range from minor errors to big accounting and bookkeeping errors which cause grave danger to the business. Accounting problems start with irregular bookkeeping and accounting. This will not give a true picture of the business and no good decisions can be made. Entrepreneurs/owners often do not realize that common small business accounting errors are a major threat to the growth of their business in the long run.

Here are some common accounting errors that actually damage the businesses.

NOT USING AN ACCOUNTING SOFTWARE

Manual work is always the toughest and is at risk for errors. A small accounting error can lead to big damage in businesses. Small and medium-sized businesses should use an appropriate accounting software according to the type of business they run. Cloud accounting is an emerging technique in accounting software and has its benefits in small to medium-sized businesses. 

Manual accounting is time-consuming and the chances of errors are much higher. While using an accounting software not only diminishes the chances of errors, the software also take much less time for accounting operations.

Choosing an appropriate software is an important and challenging step in business according to your needs. You should consider its cost, usability, and extra features when choosing a suitable software for your small business.

Features of an accounting software must include

  1. Inventory management
  2. Sales tracking
  3. Contacts management and contact history following
  4. Account to accept credit card payments
  5. Producing invoices
  6. Financial statements, cash flow statements, and balance sheet,
  7. Budget planning
  8. Payroll
  9. Taxation matters

INFREQUENT BOOKKEEPING

Bookkeeping and accounting statements must always be kept up to date in any business. Running behind in bookkeeping and submission of entries of the expenses or sales will not produce an up to date picture of the business and allow you to make timely decisions. It can lead to a negative balance if expenses are made but an income statement is not updated. Invoices that have not yet been paid by the company may go unnoticed and it can lead to a bad reputation for a company. It can end terms with your suppliers. Business growth is ceased or significantly reduced. Not producing financial statements monthly is common in small business accounting problems.

MIXING PERSONAL FINANCES WITH THE BUSINESS ACCOUNTS

  • Business owners combine their personal cash with business expenses. It is of utmost importance to keep the personal finances and the business finances separate. If these two finances are not isolated then it cannot be known what was planned for business and what was consumed personally. The amount of profit that was produced out of the invested capital cannot be assessed properly.
  • A business credit card is operated for personal expenditures during a holiday trip or other payments. Later on, this sum will be funded from the company’s income which is a bad idea.
  • During purchase orders for inventory of the company, procurements are also made for private use.

COVERING SMALL EXPENSES IN A BUSINESS OUT OF POCKET

Business owners take it upon themselves to pay small expenses for the business out of pocket as it saves their time. However, these expenses are not listed in the business bookkeeping. The business looks stronger in income when this accounting error is done. While in reality, the business is not that strong.

INTERESTS ON DEBTS FOR MANAGING PAYROLL

Small to medium-sized businesses get loans at the time of monthly payroll. The income of the business ends up paying back the loans with interests. Sometimes, the debts increase as well as the interest on those debts. Businesses, instead, can get the services of payroll companies to avoid heavy long term loans.

CONCLUSION

Small business accounting errors range from minor errors to big accounting and bookkeeping errors which cause grave danger to the business.Accounting problems start with irregular bookkeeping and not using accounting software.

Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Young asian businessman carrying heavy box of TAX. Taxation concept
Remember the old saying ‘when pigs fly’? You may have heard your parents mumbling this phrase in response to your allowance increase request. You may also recall it when you saw a casual, unwanted email promising your business 1000 new clients. And, you have possibly even said it when someone recommended that you improve your bookkeeping habits in your business.

You might consider tax preparation a part-time job. However, the key to refining your tax season experience is continuous preparation for the entire year, not just at the time of filing. Developing healthy financial habits should be engraved in the entire culture of your organization. Someone who has suffered from a heavy tax burden would surely understand that ignoring financial responsibilities always results in misery. Bruises may still hurt but they remind you to embrace clever accounting habits, which will ensure the success of your business.   

Get Rid of Outdated Accounting Systems

If you have been struggling to manage a chaos of sales receipts, invoices, and financial reports, you definitely need to redefine your bookkeeping model from scratch. Cloud-based accounting software offers a realistic solution as they allow you to generate, send, and receive receipts and reports in real-time. You can also synchronize the software with your bank account to send or receive payments. All of this is possible remotely, from anywhere. Developing healthy accounting habits should always be a top priority.

As these cloud-based platforms have easy accessibility and functionality, your business will habitually adapt and develop healthy accounting practices that are key to surviving the tax season.

Develop Contemporary Accounting Habits

Most top businesses today have invested in developing a sagacity among their employees that allows them to stay current and engaged. Staying in touch with the latest laws and tax changes is crucial for any business and it is important that you know about them in time so that something could be done before it is too late. The latest tax reforms are a contemporary example, which need to be thoroughly investigated by a team of seasoned professionals. Though you might be outsourcing your business bookkeeping, you should still put an effort into learning about the changes so that you can comprehend things clearly.

Developing contemporary accounting habits also means that you stop procrastinating and start categorizing your expenses on a weekly basis. Leaving things on the back burner only cause them to add up and, when it’s time to file taxes, the situation becomes a fire drill for your whole team. Keeping a regular and consistent record of all of your financials will ensure that you avoid any such situation.

Separate Personal and Business Expenses

Using your business account for personal use is never a good idea. The expenses will continue rising without you noticing and eventually they will add up to your tax bill. You may not consider it a big deal and think of it as a onetime thing. However, over the course of a year, the expenses may accrue to be substantial. This is one of the worst accounting habits you can adopt.

When you use business debit and credit cards only, it will create a paper trail for bank reconciliation which will eradicate the reimbursement process altogether. Don’t stop with only reconciling your bank accounts. All accounts that have an ending balance must be reconciled. Your bank accounts, loans, lines of credit, credit cards and payroll liabilities must all be reconciled on a daily or weekly basis and shouldn’t wait until the end of a month.

Have your Books Reviewed by a Professional

You may consider hiring a CPA an expensive and insignificant endeavor. However, that decision can prove to be one of the most valuable accounting habits that saves you from a hefty tax burden. Just because your books are reconciled, it doesn’t prove that they are also accurate. Having another set of eyes looking at your financials won’t hurt you. Instead, a CPA will offer critical input which could reduce your tax bill considerably. Because these are professionals who have the experience of looking at thousands of financials, they will surely catch any ambiguities and can offer you valuable advice to manage your taxes in the future.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Man and woman working behind the counter in a clothing store
The need for bookkeeping and accounting will never die. They are the two most basics needs and goals of every business, regardless of size, scale, or industry in which a retail business operates. Since businesses need to keep track of their income and expenses to improve their chances of increasing profitability, they need to implement sound bookkeeping and accounting practices to help their business grow in such a fierce environment. The slightest financial miscalculations or projections can cost significantly and can even kick a business out of the competitive race. For better financial decisions, businesses need to collect the necessary financial information as well as document and review their bookkeeping records accurately.

What Is Bookkeeping?

In simplest terms, bookkeeping is the process of recording business transactions as they occur, which means documenting daily transaction in an accounting system. It helps businesses track their finances, cash flow, income, and expenses and come up with a sound game plan to increase profits. In short, it reveals the financial status of the company that can further be matched against long-term intended goals.

Most small to medium-sized retail businesses prefer to do their own books as it saves money. However, the idea that hiring the expertise of professionals is costly is just a mere perception. There are many individuals and agencies who offer unique bookkeeping and accounting services at competitive rates. Therefore, it is recommended that small to medium-sized retail businesses search for professional, yet affordable, individuals or agencies who can help them achieve their intended financial outcomes.

The Use of Advanced Software in a Retail Setting

There is no denying the fact that advanced accounting software can be as helpful as hiring a professional accountant to do the job. For a small to medium-sized retail business looking to maintain and manage its accounting in-house, accounting software is one of the most convenient and cost-effective ways to record, handle, and manage important business books and financial records. Some accounting software used in retail businesses can be purchased for $300-$800 dollars. Businesses can even buy monthly subscriptions to record transactions, manage their payroll, sales, inventory tracking and have a clear picture of their finances.

Why Is Accurate Record Keeping the First Step towards Success?

As someone rightly said, accurate financial records lead a business to make ideal assumptions and wise decisions. Whether you are using a credible accounting software or not, you must always keep backup of important financial documents like receipts, sales records, bank statements, loan status, past tax data, etc. A tangible file and hard copy of financial records as well as bills and invoices need to be maintained properly to handle situations such as data loss.

According to accounting veterans, it is ideal to plan for the worst scenario to happen to your business. The records of a retail business need to be backed up properly in order to avoid problems that miserably drag you into a severe financial crisis.

Accounting Expertise

Hiring someone with the proper accounting knowledge and skills can help you reduce your tax season troubles and save you a lot of money and time. For retail businesses that consider investing in accounting services as troublesome and expensive, the investment made on hiring an expert will always pay off in the long run, with accurate results. 

It is important to remember that acquiring an accounting service tailored to your business needs can be extremely helpful to your business in many ways. You can leverage more control over your company by concentrating more on core affairs of running your business and allow your accountant to ensure accounting and financial data is handled properly.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Businessman shows concept hologram Save money on his hand. Man in business suit with future technology screen and modern cosmic background
There is no denying the fact that cutting business expenses and controlling costs has become extremely challenging in today’s business environment. Modern trends indicate that companies need to reduce their expenses to effectively achieve their business goals and objectives. However, establishing control over your business and finances requires a large amount of motivation, knowledge, skills, and expertise. Why? Because only a clear-cut strategy and well laid-out plan can make cutting down your monthly expenses hassle-free.

Cutting business expenses? Not a problem!

Moreover, reduction in business expenses and an increase in revenue can have a big impact on a company’s profitability and are two ways by which companies can maximize their profitability index. According to industry experts, increasing sales and revenue is hard because it requires a lot of planning and strategy. It takes time and effort to come up with a brilliant execution plan. On the contrary, cutting business expenses is something that can be done easily, without much stress. All that it takes is a little bit of your time. Moreover, it is important to review your bookkeeping and accounting records to establish a clear picture of your company’s standing prior to making any solid decisions regarding controlling your costs.

Reduce Supply Expenses

If you expect to reduce supply expenses, you need to look outside of your pool of traditional vendors. Look for the vendors, manufacturers, or suppliers who can offer you the best price as large discounts help you cut business expenses and costs. Bulk purchasing is ideal in each and every sense. Always seek multiple bids to get ideal rates and never make a long-term contract for supplies with a single party or vendor as saving can have a big impact on your bottom line.

Lower Financial Expenses

Hiring an in-house accounting or auditing professional can be a costly decision. That’s why most businesses rely on external accounting agencies or individuals who offer competitive rates for their services. Cutting back on your business expenses means saving money on insurance and additional bills. To meet financial emergencies and consider a business expansion, you need to regularly contribute to your savings account. Lastly, don’t take on unnecessary debt to make ends meet because you may eventually find it hard to pay back the money you borrowed from the bank with interest. Prior to making such decisions, you must do a thorough cost-benefit analysis and future forecasting.

Take Advantage of Social Media Marketing

Traditional marketing can cost you a fortune. This indicates that you need to look at some cheaper alternatives like social media marketing such as Facebook, Twitter, and other similar dynamic platforms. You can build your customer base there, as studies have revealed that social media marketing is more effective than traditional marketing on the mainstream media, ultimately reducing your business expenses.

Try To Achieve Economies of Scale

By maximizing your productivity in manufacturing, you can expect to take your expenses to a minimum level. Improved R&D and market knowledge will help you achieve economies of scale, which is ideal for maximizing your profitability.

Review Your Finances and Business Books Quarterly

To get a clear picture of your finances and business condition, you need to review, maintain. and manage your business books, if not on monthly basis, then quarterly. Moreover, to cut business expenses, you need to audit your monthly subscription billing. Switch to the software applications or talent that are worth your investment and money.

Look For Affordable And Suitable Office Alternatives

You can always consider relocating your office to a more affordable area to cut business costs. Often times, in the age of digitalization, companies don’t need to have their office located in prime, expensive locations. You can move your office to a convenient location that offers affordable rates to reduce commercial rents.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

businessman working on desk office using calculator business financial accounting concept
Creditor days is used for the purpose of calculating the days a company is required to pay all of their creditors, whereas debtor days measure the average amount of days it will take for a business to obtain all payments for the products or services they have sold. It can also be termed as accounts receivable days. Bookkeeping will provide all of the necessary and relevant information from which all of your accounts are formulated. 

Creditor Days

Creditor days is a way for a company to show its creditworthiness to its creditors and suppliers. These days are a way for the company to know how long their creditors and suppliers will wait for their payments to be made.

Within reason, a higher number of days will be better for the company. This is because all companies wish to conserve their cash. Still then, a business that is found to be especially slow in paying all of their bills (for example, taking 100 days or more), could be a company that has trouble generating cash. Maybe the company is having trouble financing its operations with their supplier’s funds. In the end, a business whose creditor days are in excess will eventually have trouble in obtaining their supplies.

Debtor Days

Debtor days is a way of indicating a business’s efficiency in collecting all of their money owed. In such cases, it will be beneficial for the company if their debtor days are lower. When the number of debtor days is high, it reflects on the company’s inefficiency. It may also point towards the company’s bad debts or doubtful sales figures.  

Different Ways to Reduce Creditor and Debtor Days

 

  1. Negotiate and Discuss Payment Terms and Conditions with Suppliers

You pick your suppliers based on your specific needs and requirements, whether it’s about price, quality of the product, or simply speed of delivery. In most cases, the payment terms and conditions are the last thing considered when selecting suppliers.

If you have built a good relationship and rapport with your suppliers, negotiating better payment terms should not be a problem for you.

 

  1. Offer Discounts and Concessions For Prompt or Early Repayment

If you use invoice finance in your business, you end up paying 3% for the first 40 days of the invoice, with 4.5% for 80 days. You could offer this discount to your clients in cases of payment upfront vs. delivery.

  1. Change Payment Conditions And Terms

Although the majority of businesses in their early lifecycle are found to be flexible in terms of their payment conditions, over time this leads to problems with working capital. Just as your client/supplier payment terms start to stretch, you might face difficulty running your business. New businesses start to apply short, new payment terms to all of their new clienteles they have on board. When they are confident that there is no such issue, they revisit their clients and change their terms and conditions. 

  1. Set Up Chasers, Automate Credit Control

With the introduction of cloud accounting, like Geniac and Xero, there are now several solutions available that help a business with automating timely reminders.  

  1. Credit Control Externally

Although automated credit chasers can be extremely helpful, credit control cannot be beaten. If you happen to have a bookkeeper who works part-time, you are likely to find out that you have lengthy debtor days. With the help of external credit control, you will not only have confidential, but quick results.

  1. Boost Stock Control

In order to reduce the necessity of working capital, a business must become effectual and efficient in their sales/purchasing cycle.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Young man working with tablet, man's hands on tablet computer, business person at workplace
There are many measures that need to be taken towards the end of an accounting period. Adjustments to income statements and balance sheet accounts are of utmost importance. Although automated accounting systems take care of most procedures, it is vital for businesses to understand what exactly happens towards the end of a period. While most of the tasks might be automated, there are always certain aspects that require manual attention. Here are certain vital elements that every business must look after at the time of closing.

Closing the Accounting Period

Temporary Accounts – Income Statement

All revenues and expenses that have occurred in the period must be accounted for in the same period and should not be left to be included later. Both the revenues and expenses are recorded in the same period as defined by the matching principle because, otherwise, your closing income statement would contain anomalies. Ask your vendors to provide you with work in progress figures so that you can include them in the income statement. All of these accounts will be closed at the end of the accounting period, hence, giving them the name temporary accounts.

Knowing how much money you spent to make what you earned will help you make key strategic decisions in the future. You will realize if you need to cut the costs to lower the expenses or increase the price to bulk up the revenues. Whatever the case is, closing temporary accounts is critical for your business operations.

Permanent Accounts – Balance Sheet

Permanent accounts need to be managed actively throughout the accounting period. It is important so that the current capacity of the business can be determined correctly at all times. No balance in the account will go away unless it is written off. Every transaction has to be tracked and adjusted accordingly. While some of these tasks are performed automatically, inventory changes and depreciation need to be adjusted manually. All of your assets must be reevaluated at the end of an accounting period and any changes should be adjusted likewise.

Reconciliation of bank statements is another vital task that needs to be performed before the end as you have to prepare for filing tax returns, too. Amortization of the prepaid assets to determine the value of future payments needs to be completed for a specific accounting cycle. A well-maintained balance sheet allows you to determine the current standing of the business, which is imperative to its success.

Trial Balances

The remaining trial balance in each account has to be determined before the end of an accounting period. It helps to ensure that all debit entries are equivalent to credit entries and any anomalies are updated through the adjusted trial balance. The trial balance reports will help you to determine the opening and closing balances of many accounts, which will help you understand the abnormalities in your bookkeeping system and what needs to be addressed.

Closing Entries

Typically, your accounting software will perform the closing entries on the books. However, it is vital to understand how the process actually works. An income summary account is created by closing off the revenue and expense accounts. This means that your income statement is wiped clean and is ready to be reused for the next accounting period. The income summary accounted is further closed into a retained earnings account, which is basically represented as equity on your balance sheet. After the tax deductions and everything, the retained earnings are then transferred into the net income account which is distributed among the shareholders as equity.

Conclusion

The wrapping up of an accounting period is indispensable because you never know where the business stands without these closing adjustments. You have all of the information but it is scattered and you cannot make sense out of it unless all of the closing entries are performed for the accounting period. Businesses should use the help of a professional if they are unable to perform these steps on their own because of their significance.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Young desperate business woman with her head squeezed between laptop computer and a rock. Student university education loan debt concept
If your company or business has been in trouble for a while and you cannot seem to pay off your corporate debts, your collectors may start looking for money. They can do this by threatening lawful action against you or your company. The way your industry is set up and whether you or your business guarantee any debts or recompenses will predict how much your creditors will be able to get from you through your bookkeeping records. Furthermore, whether you choose to file for insolvency may also change how much a creditor can obtain.

Protect the Company

Understandably, the first possibility in trying to save a business while handling its debt is taking money out of your own pocket and putting it into your business. This is a premeditated risk that possibly has failed as many times as it has prospered and should only be done if you can validate it as a short-term bookkeeping approach that promises the probability of a long-term payout.

Cut Expenses

If you cannot bond out your business with private assets, you need to recognize areas where you can condense costs. Maybe you can sublease the unused space or sell off unused equipment. While lessening your employees is not a striking option, it may be essential to keep your business alive.

Contact Clients and Providers

Stay associated with your consumers and seek out ways to upsurge your exposure and/or develop your business model, thus possibly increasing your profits. Offer your best clients discounts if they can pay you quicker. You should also contact your dealers to arrange discounts and/or deferred expenditures.

Contact Creditors

Contact every collector and advise them of your pickle. Ignoring your money lenders can only make matters worse, while confronting a debt problem is easier when you act timely. Since it’s in everyone’s interest to find a resolution, request that your investors work with you on bookkeeping to lower interest rates, increase your credit line, or streamline your repayment options.

Amalgamate Loans

You can merge your business loans into one reimbursement, which may reduce monthly costs without negatively affecting your credit. A business debt consolidation loan can allow you to deal with a single collector, rather than many, and perhaps get a loan with a lower interest rate. The process can be facilitated by a debt consolidation company hired to take accountability for conveying the new loan, gathering payments of your business, and paying off your former creditors. The loan may be unsecured or secured by business assets.

Bankruptcy

As a last resort, liquidation is a route you can take to salvage a company, especially if the business’s debt challenges are temporary and the company is otherwise viable. Liquidation can always be measured when your company is deep in the red and you may be facing collectors coming after you. There needs to be a lot of thought before filing for bankruptcy, but it may be able to provide you with the period you need to get the whole lot straightened out. There is no assurance what possessions you will be able to keep after insolvency, so you have to prepare yourself.

Benefits of Bankruptcy: How it can Help You

One of the main gains that can come from filing for liquidation is time. Once you have filed for insolvency, the bankruptcy court of law normally puts an automatic stay on all debt collection, meaning that none of your collectors can ban or recuperate your assets.

In addition, liquidation can wipe out unsafe debt (debt that is not protected by property, like credit card debt). Though, fortified debts (e.g. home mortgages, car loans) are another story and must be deliberated individually. Because you put up possessions as a security for the loan, your creditor is still possibly authorized to take it, even if you file for insolvency.

Final Note

If you think you are in imminent danger of losing your business, however, and you need help quickly, bankruptcy might be your best option. But, before you file, get advice from a knowledgeable small-business attorney with bankruptcy experience.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.