As you work tirelessly to manage your operations, develop your product or service, attract new business, pursue your long-term vision and handle the everyday responsibilities that come with running a company, it’s easy to let your accounting needs fall to the bottom of your priority list.
It may seem like the big-picture decisions and emerging challenges are more important to tackle, and your accounting functions can be put on the back burner for now.
The problem with this kind of thinking is that it has the potential to wreak havoc on your financials and, ultimately, stifle your business growth.
From accounts payable and receivable to payroll, cash flow, taxes, and everything in between, the overall health of your business is tied closely to the way you approach your accounting tasks.
Consider the following five ways that diligent, daily accounting practices can actually strengthen your business and deliver invaluable benefits.
1. Accuracy And Visibility Regarding Critical Business Metrics
How many orders or bookings is your business experiencing on a daily, monthly, or weekly basis?
What’s the status of your billings?
What are your overhead expenses?
These are some of the essential metrics you need to be tracking consistently.
Without up-to-date accounting records, you risk accuracy and visibility into these numbers, which means you’re making uninformed business decisions and hindering profitability.
When you prioritize daily accounting practices, you have the means to leverage this financial insight to improve your company and grow the business.
2. An Understanding Of Your Business Drivers
Do you know what’s driving the business?
If you’re not practicing proper accounting, the answer is undoubtedly “no.”
Your accounting records provide the necessary data to determine how much cash you have on hand, whether a sufficient amount of orders are being received and whether you’re attracting enough customers.
You must also be able to track your company’s financial progress against stated objectives.
Whether you’re meeting these goals or failing to match your projections, you need access to this information in order to move the business forward.
3. Preparedness For Peak And Slow Periods
Your company is likely to go through ebbs and flows over the course of each year. If you’ve been tracking your accounting information consistently and accurately, you can predict these changes in business pace.
Tracking metrics will help your company prepare for spikes in business so you can staff and supply accordingly, as well as forecast dips in income so that you can allocate resources appropriately and prevent financial hardship during slow periods.
Otherwise, you’re leaving the business susceptible to challenges that it’s not fully equipped to overcome when they arise.
Read More: How to Prepare Your Business for a Recession
4. Minimize Surprises
The numbers you see on your financial statements should not be a surprise to you. When you apply a rigorous accounting effort, you have the most current information at your fingertips.
This keeps you in the know of your financial standing at a granular level. If you track your numbers on a daily basis, you’re in a better position to pivot when necessary and adapt successfully to changes.
With this base of knowledge, you can make smarter decisions on refocusing people, efforts, and funds -- instead of putting out fires that arise as a result of your inability to see what’s coming.
5. Clear Business Direction
Your accounting metrics are your business GPS. They tell you where you are headed for the month. If you are hitting your booking targets each week, you know the company is going to have a good month. If you’re not bringing in sales, you’re headed in a negative direction.
The only way you can foresee this kind of turnout is by diligently tracking your KPIs. And if the numbers are pointing toward a slump, you may be able to take corrective action before it’s too late. Leverage good accounting practices to steer the direction of your business.
If all of these business benefits sound wonderful but you don’t have the bandwidth to support proper accounting on a daily basis, consider outsourcing these services.
An expert financial team has the knowledge and resources to:
- Keep solid, consistent records
- Provide error-proof calculations and statements
- Identify and communicate cash flow realities
- Track financial progress against the company’s devised plan
- Manage tax-related responsibilities
- Coach you on making smart budgetary adjustments
- Make recommendations based on both historical figures and future insights
- Deliver valuable insight as to where your bank and auditors stand
Whether you take advantage of outsourced accounting services or handle this responsibility in-house, do not let the effort go unprioritized.
One of the best steps you can take to build or grow a profitable and successful business is to implement a plan for robust daily accounting practices.