Category: Content

Every organization generates delivery notices, invoices, memos, purchase orders, and documents during daily activities like production, distribution, sales, and procurement. In the accounting sector, all these documents create a bulk of papers for bookkeeping. In most cases, these documents contain sensitive information, so throwing them is impossible. It would help if you had proper files, space, and many more expensive and time-consuming things to store them. To save time and money, you can go paperless by using paperless office software.

Going paperless means converting your paper documents into digital ones. It is not an easy step, but once you take it with the help of the exemplary document management service, you can scan and save your documents quickly and accurately. 

Usually, it takes 2 minutes to take a file out of the cabinet. But in real life, it is never 2 minutes because there are many distractions along the way, like going to the bathroom, taking a glass of water, or talking to someone makes it a 20-minute task. In these 20 minutes, we do not include the time if the file is misplaced or stored in a different storage unit. A paperless office does not only save trees but also saves jobs. According to a study, there are many benefits of going paperless. Companies can expect to have more favorable outcomes on their financial reports, and the efficiency of employees also increases. Here are some of the benefits of going paperless in the accounting sector. 

It is Time-Efficient

The manual system of storing documents takes a lot of time. For example, when you receive a purchase order, you must make a new file and set it aside. Eventually, you will add invoices, check copies, and many more documents to that file. All these steps take a lot of time and staff. Instead, if your office is paperless and digital, this task can be done with a couple of mouse clicks. Modern technology has made it easy to store the data in less time and with less effort.

Saves Space

Storing papers and files takes up a lot of space. For example, you must make a separate file for each client and store it separately with the client’s name, order date, and other details. Files take up a lot of space, and as the data is sensitive and essential, you cannot throw them away. You must make new cabinets to store new data and documents. Organizing all those papers, documents, files, and books in your office is also difficult. And, if your things are not indexed, your office will look messy, and you may seem unprofessional.

Digitizing files allows you to store all the files on a computer or cloud. You can organize the files by making folders for each client.

Easy to Retrieve Documents

If you are operating manually and must find a specific client’s file, it will take a lot of time. And it might be possible that you have misplaced a paper out of it. With electronic file management, your staff can easily find any file without having to go anywhere or find that file in a cabinet.

Saves Earth and Reduces Cost

First, trees are needed to make paper, and paper documents create tremendous waste. With hard copy storage, you will need five copies of each document to store it in multiple locations. At the same time, you can keep just one copy of that document in the digital repository and use it anywhere you need. It also reduces the cost of the printer’s paper, folders, files, cabinets, and ink. 

Using less paper saves trees and is also helpful in reducing pollution from the Earth. It also reduces the use of harmful chemicals to the environment and planet. 

Conclusion

In conclusion, transitioning to a paperless office offers myriad benefits for organizations, particularly in the accounting sector. The advantages are significant, from saving time and space to enhancing document retrieval and contributing to environmental sustainability. Embracing digital solutions streamlines operations and fosters efficiency, cost-effectiveness, and a more eco-conscious approach to business practices.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Cash registers are available everywhere. Today’s modern and advanced point-of-sale (POS) systems are versatile and can manage everything. However, as an entrepreneur, you must still manage the store’s cash professionally. These internal controls are significant in preventing mismanagement of loss or theft. 

Not only do these versatile internal controls encourage efficiency, but they also ensure reliable financial records that will be needed for tax calculation. One of the most apparent causes of loss in your business is the mishandling of cash and the lack of appropriate procedures and controls. 

The cash management system can be crafted while business policies are developed. Numerous advanced POS systems have step-by-step guidelines for closing the cash drawers to guide the employees and workers. 

How and When to Implement a Cash Register

Balancing a cash register occurs at the end of the period or the cashier’s shift. The contents of a cash drawer must be taken to the office or another area to prepare the reports. If you balance the cash after closing, do not forget to switch off the lights and lock all the doors. Often, cashiers and salespersons get in a hurry and start the closing process before the actual closing of the office premises. This is undoubtedly not a safe practice. However, if you have a team of employees, closing one of the cash registers during working hours would be feasible. 

Any shortages and overages must be investigated. Human nature must be considered for minimal errors and lesser amounts. Still, instant dissimilarities could indicate employee theft and might indicate if additional training is required for the cashier. 

The beginning cash-on-hand is held back in the cash drawer and stored later while the cash is prepared for bank deposit. All credit card statements, terminal reports, and other receipts can be stored in the regular cash drawer report and filed with the date. 

Benefits of Maintaining a Cash Register

Cash registers play a significant role in counting money, reconciling receipts, balancing the cash drawer, and measuring everyday transactions. Many sole proprietors’ policies are crafted to lubricate a cash management system that would decrease in numerous areas. Cashiers are responsible for adding up everything. Otherwise, things might go wrong instantly. 

Not only does maintaining a cash register bring stability to a business, but it also provides further insights into cash flow internally and externally. Cash registers refer to a monitoring system of money movement, and in case of some missing contents, we can predict theft or carelessness. 

Primary keys to success include being precise and providing accurate facts regarding cash flow. For safety purposes, a considerable amount of cash should never be kept in the register. Due to the increased possibilities of theft and burglary, only a minimal amount of money must be left. 

Additionally, the entire sales report can be pulled up frequently during any part of the shift. Documentation keeps the cash drawer safe from any misconduct and works in favor of your business.  

Division of Duties

For additional accountability, consider assigning two individuals to balance the cash register. One person will count the money and create the regular cash report. While the other one will prepare the bank deposit, both members sign the account, mentioning they oversee the figures. While no system can entirely prevent fraud, this audit will discourage employee collaboration. 

At the debut of the next shift, each cashier should be allotted a separate cash drawer. Have the cashier review the available cash to verify the beginning balance. The money will stay in the drawer overnight if you are a small business owner with a single register. If you have a comparable situation, the process will be the same. 

Moreover, human error is mandatory and a significant part of the game. Make sure you include cash differences in your profit and loss statement. Add a line to the information that shows a loss from miscounting. This is another feasible way to manage and audit the loss. 

Conclusion

In conclusion, the ubiquitous presence of cash registers underscores the importance of professional cash management for entrepreneurs. Implementing robust internal controls enhances efficiency and safeguards against loss or theft, ensuring reliable financial records essential for tax purposes. Crafted alongside business policies, these controls, integrated into modern POS systems, guide employees through proper cash handling procedures. 

Balancing cash registers at the end of shifts or periods, investigating discrepancies, and dividing duties for accountability is crucial. Maintaining accurate cash flow records, minimizing cash in registers, and documenting transactions contribute to business stability and security. While human error remains inevitable, incorporating cash differences into financial statements helps manage and audit losses effectively. Ultimately, meticulous cash management, supported by stringent controls and division of duties, is key to ensuring any business’s financial integrity and success.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

A design firm or an organization with engineers and architects does not only mean having two jobs- the architect, whose job is to design the buildings, and a contractor who builds the building the way the architect designed it. These firms also include the architectural (or structural) engineer, who helps the architect with the designing process, helps them analyze blueprint buildings, creates templates or patterns to detect flaws, and then suggests ways to improve them, ensures that the designs are safe for construction, they give ideas to increase efficiency, and how to decrease costs.

These firms require very skilled engineers as these tasks are overly complicated and require deep analysis. They also help with exploration and performing surveys before or during projects by visiting the buildings or construction sites to inspect systems, foundations, and facilities. They are often assigned as the on-site managers. These firms also hire part-time workers and function as an agency to provide others with professional designers and constructors. 

Design firms’ financial and accounting systems of engineers and architects differ significantly from other businesses. The employees working for these firms have quite distinct roles. Financial ratios indicate any business’s financial performance and different ratios identify different results and performances. The key economic indicators and ratios for engineers and architects are:

 Net Revenue Per Employee

This ratio is calculated by dividing a company’s total income by its current number of employees. This ratio determines how much money each employee generates for the business they work for. An ideal net revenue per employee ratio is the highest result possible because a high rate shows that the workers are productive. 

Net Multiplier

This ratio identifies the percentage or multiple of the revenue generated by the total direct labor. This rate should be higher than the break-even as it will make the designing firm profitable. A low net multiplier indicates that your business is not performing well and is facing a loss if it is lower than the break-even point. 

 Break-Even Rate

This break-even rate is quite different from other business organizations. The break-even rate for architectural and engineering firms is calculated for each worker or employee’s break-even cost. It equals the overhead rate plus each person’s hourly salary, represented by the unit of 1.0. If a company wants to calculate an hourly billing rate for each employee, it could divide the break-even cost by the total profit margin.

Profit-to-Earnings Ratio

This ratio is calculated by dividing profit before taxes by net operating revenue. It determines the whole company’s efficiency and effectiveness in generating profits.

Cash Flow

A cash flow statement includes all the cash (or cash equivalent) activities happening in the business, including the company’s money and the cash coming into the industry. It helps you identify how much cash in hand you must pay your trade payables, such as employee salaries, taxes, insurance premiums, expenses, other fees, and other bills. Managing a balanced cash flow is an arduous task, even if the business is profitable. 

Overhead Rate

Overhead costs are the costs used indirectly in a business or the costs that were not directly created in producing goods. These are the other costs generated to run the business. An overhead rate is calculated by expressing the percentage of indirect costs to total direct labor. This rate is estimated to be added to the direct production costs to assess each product’s profitability.

Utilization Rate

This ratio calculates the amount of revolving credit the business uses and the total amount of revolving credit the company has available. It is also the percentage of hours spent on a project billed to the total number of hours utilized. To simplify the billing process, this does not identify productivity but the ratio of employed hours.

Conclusion

These are essential ratios and financial indicators for designing companies to measure their performance and obtain other financial results for their firm.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

According to history, accounting was established thousands of years ago using different methods (clay tokens) to record the data for livestock and other valuable things. However, changes occur occasionally in accounting or bookkeeping, which developed the best accounting practices to embrace.

Accounting practices are an activity of analyzing and recording routine-based or day-to-day operations of business related to finance. Accounting practices are essential to developing a company’s legally required financial statements. Companies use different accounting methods for separate accounting transactions. Accounting practices are recorded according to accounting principles established by accepted accounting principles (GAAP). Especially publicly listed companies are mainly required to follow GAAP.

Since every business’s nature is different, each requires additional accounting practice, which can be historical or modern. Companies deal with large transactions, so you should be ideally suitable in accounting practices and principles to record these transitions as accounting information must be registered under the right head, required regulation, and systematically. All of these can be achieved if you are aware of the historical prospects of accounting.

However, if you want to adopt best accounting practices, you are on the right page here. We have five historical prospects to embrace high-quality accounting practices.

Ledger Accounting 

General ledgers are the most basic accounting practice often used by sole proprietors and small business owners. It is used to keep financial data to prepare financial statements. Each transaction is recorded in a sub-ledger under a separate account head (Account receivables ledger). Transactions are recorded using the double-entry method to validate the trial balance. Ledgers are a summary of the general journal’s entries. This summary is used to make a trial balance to check the accuracy and avoid account errors.

Double-entry Accounting of Transactions 

Accounting practices require double-entry accounting for transactions rather than single-entry accounting. This accounting uses heads of debit and credit where an increase in assets or expenses is recorded in debit. An increase in capital, revenue, and liabilities is recorded in recognition and, inversely, when these accounts decrease. Double-entry accounting is used to satisfy the accounting equations where credit is usually offset in Ledgers or T-accounts.

Assets=Liabilities + capital

Double-entry accounting is a standardized bookkeeping process that checks the accuracy of prepared financial statements and improves errors. It is one of the easy methods to check whether your calculation is correct or unbalanced, as it helps to keep the financial record balanced. Ensure the sum of the debit side equals the sum of the credit side. Hence, it will be used in financial statements.

Cash-Based Accounting 

Cash accounting is the standard method of accounting and bookkeeping practices. In cash-based accounting, expenses and revenue are recorded as received or paid, and transactions are made when cash is spent or received. It is the easiest method for small businesses where revenue is reported only when money is received, and expenses are reported only when paid. It accurately shows the company’s financial position, including accounts payable and account receivables.

Accrual Based Accounting 

Accrual accounting is based on the accounting principle of matching it to the revenue and expenses realization time. Under this accounting practice, the transactions are recorded when they are incurred rather than when payment is made. Revenue is recorded when a purchase order is made, even if the fund is not received. The same goes for expense transactions recorded when payment has not yet been made. However, it is a simple method. Companies prefer this method to the cash-based process. It provides a realistic and accurate picture of a company’s earnings and expenses for a more extended period, which cash-based accounting cannot offer.

Historical Cost Principle Accounting Practice 

The historical cost principle is a method used for fixed assets. It is a valuation measure used in accounting in which the value of a fixed asset is recorded in the balance sheet at its original price rather than the market price. It is the basic accounting principle under GAAP, as traditional accounting prevents the asset from overstating its value. Meanwhile, an investment with high liquidity can be recorded at a reasonable value on the balance sheet, such as marketable securities. Not all, but many impaired intangible assets can be written down on reasonable value, not historical cost.

Furthermore, the depreciation of fixed assets must be recorded below the historical cost daily and then subtract the accumulated depreciation from the historical price in a lower net asset value to ensure that the support is not overstated from its actual weight.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Today, business accounting is one of the significant challenges many constructors face in the construction industry. Construction companies are associated with laborers and costs, material costs, overhead expenses, project completion time, and other supplier-related costs. These all require business accounting management to run and build the project efficiently with little expense without compromising on quality. You can only achieve this success with the help of Chartered Public Accountants (CPAs).

Chartered public accountants (CPAs) specialize in construction accounting and know how to plan successfully for the construction business. CPAs help contractors complete the entire project without burden. They tell the constructor which projects are profitable and how much expense will be generated, and they provide the whole statement, which includes financial reporting to complete the project.

 

Working with a construction-oriented CPA is a golden chance for a construction company to win several profitable projects with the projection of cash flows. A constructor can quickly obtain the needed line of credit with surety for large and long-term projects by the guidance of CPAs who know how well and are experts in getting maximum credit from financial institutes. Meanwhile, many construction companies face the problem of how and where to invest and the selection of projects. Hence, an experienced CPA solves this problem as CPAs decide on investment and selection through capital budgeting tools and by looking into past financial information reports.

However, if you want to know the golden benefits of CPAs, stay focused. Here is a list of the benefits that you need to know.

Successful Financial Advice 

Please stay connected with CPAs as they evaluate and analyze the company’s internal procedures and finance-related functions to assess where the problem exists or how much betterment is still required. They also help you understand your company’s financial statements and interim or quarterly-based financial reporting. As experts in construction accounting, they advise tackling resources efficiently, limiting expenses, and controlling costs.

 We will guide you to minimize your current and future taxes through different strategies and cash flow management, such as how much cash you need in your hand during the project completion process. After an analytical calculation on capital budgeting, we will select the project, which helps the constructor with selection criteria and gives an idea about the profit percentage. These are all core things that the constructor needs to know before getting the project.

Helps to Obtain Bond and Line of Credit

Construction CPAs understand well what financial institutes and bond sureties’ companies would see in your financial statements to give you credit. To earn the confidence of the surety bond company, CPA prepares a financial report with pertinent information and a good personal credit score before underwriting a surety bond. If needed, they guide you to structure large transactions if you want to invest in a capital asset such as equipment or machinery or wish for debt financing to heighten the bonding credit line.

Update Overdue and Collect Overdue Receivables 

Many construction companies have done the whole project without taking a single penny from the owner. This sometimes implies that the constructor is using overhead money, which is already outdated from the aggregate impact of many small businesses, which will increase the overhead expense. So, it is the responsibility of the CPA to make an accurate report, keep an eye on overhead costs, and record it in the information to build the trust of owners in the constructor.

CPA holds weekly meetings for project payments until they collect the entire amount. They notify the project owner if the due date exceeds the payment date. They try every viable way to recover receivables as soon as possible.

High Chances to Win Project Bids 

The public construction project is highly profitable and challenging to manage as it requires special bond surety. However, bidding on the general scheme is done through a unique process where several competitive contractors and their sub-contractors put every effort into winning the bid. But if you work with CPAs, they know very well about winning-bid tricks as it is a highly burdensome process in which you cannot afford a single mistake in your financial statements and accounting records. Only a construction expert CPA helps you avoid disqualification and ensure the bid meets your job requirements.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Like everything else, an accounting cycle also has a specific time when a business owner must close it down. This is a necessary step in keeping a company’s accounting system free from complexities, but not all business owners understand this.

Closing an accounting cycle helps you smooth out any wrinkles and define the balances left at the end of the process. It allows you to stay coordinated with all the stakeholders.

When you begin closing an accounting cycle, you must follow specific steps. It would be best to go about it systematically to avoid any inconveniences later. But before jumping into that topic, we must first understand an accounting cycle.

What is an Accounting Cycle?

An accounting cycle records all the company’s financial data saved, analyzed, and recorded over time. In an accounting cycle, all the data, including payrolls, investments, payments to be made, profits, and any losses the business may have sustained in a specified period.

It assists a business owner in identifying all transactions revolving around the business, helping them analyze them, sort them out, and highlight the trial balance. Keeping the company’s finances clean and clear through an accounting cycle would allow the business owner far more than they can imagine.

Closing an Accounting Cycle and Why It Is Important 

The process of closing all accounting entries begins once an accounting cycle ends. Each accounting cycle stays in use for a specific amount of time before it is time to bring it to a conclusion. The job of closing entries is to clear out any dues and balances before a new cycle begins.

Clearing any due payments means that the balances are presented clearly, so no doubts are left in the equation. Closing an accounting cycle is one of the essential parts of having a successful accounts system for your business. Although accounting is based on sorting and keeping the finances organized, clearing dues and balances is an equally major step that would keep the company in excellent financial health.

Closing entries also highlight the company’s progress. Once the cycle is closed, all remittances are calculated, which can then be compared to the past year. It would be vital for the business owner to conduct their expenses if they know their company’s performance.

Steps to Close an Account Manually

1. The first step in closing entries for an accounting cycle is for the accountant or business owner to identify and locate all the revenue accounts under the company’s name.
2. Once located and identified, the accountant must calculate each entry made in the accounting journals for each account so that you can calculate the credit and trail balance.
3. At this step, the accountant is expected to return the accounts to zero credit so that you can clear the report.
4. The next step would be to locate all accounts that deal with expenses. Once these accounts have been discovered, as with the revenue accounts, the accountant must calculate each entry for all the expense accounts to bring the credit down to zero.
5. The calculations then move towards the income summary accounts. If there is a credit balance by the time the charges are cleared, that would mean that the company has profited. But if the balance is in deficit, the company has suffered a loss during that cycle.
6. Finally, the accountant must turn their attention towards the dividend as well as the savings accounts. Once these have been cleared, the company’s net income can be calculated.

Let the Software Do the Job

With the world undergoing a technological revolution, life has never been easier. Companies now invest in accounting and financial software to cater to their needs. The software does the job without making you go through the hassle of all the calculations, making the situation complex. Now is the time to invest in accounting software to make the job easier and save you the cost of employing an accountant.

Conclusion

In conclusion, closing an accounting cycle is crucial for maintaining financial clarity and organization. It ensures that all dues and balances are cleared, highlighting the company’s progress and aiding in better decision-making. Streamlining this process, whether through manual steps or software solutions, is essential for business success in the modern era. 

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

As a business owner, you expect your employees to maximize profit on their total efficiency. Unfortunately, employees are stuck sitting in front of a computer entering data, checking, and rechecking the entered data, and managing that data for hours on end, which not only prevents them from working on their total efficiency but also wastes time that could have been used elsewhere and helped the business. Managing a company’s finances can be a challenging and time-consuming task, especially when doing it manually. 

Therefore, you need accounting software for your business. Accounting software helps you track and record your company’s money as it flows in and out of your accounts and examines your financial condition. Accounting software programs reduce employees’ time entering the data into the system and make tasks like invoicing, report generation, inventory management, and tracking expenses effortless. Here are a few reasons to use an accounting software program for your business.

Automated Invoicing and Payments

Creating invoices can be exhausting for employees, considering most businesses have to make hundreds of invoices, many of which are recurring. Accounting software programs let you automate invoicing and payments. Payments can be processed quickly, reminders can be sent to vendors or customers for their pending charges and unpaid invoices, and digital fees can be tracked. Automated invoicing and payment can cut down on critical business time.

Maintain Control of Finances

Accounting software stores and organizes a company’s data in one place and lets you get a complete view of your company’s financial performance in real time. Instead of using Excel to create a financial statement, you can now use accounting software that includes all the relevant templates. You can easily automate your accounts for you, which is time-saving and eliminates human error.

Report Generation and Analysis

You can integrate your online accounting software with your business bank accounts, enabling you to track expenses, sales, and inventory. You can also generate reports like cash flow, balance sheets, and income statements. Another example of report generation is preparing each employee’s attendance sheet; this will save the time spent preparing the attendance sheets manually.

Inventory Management

Running out of a hot-selling product can be a nightmare for a business. At the same time, ordering products already languished on the shelves will be a waste of money. You need to track your sales and inventory and make sure you do not run out of a hot-selling product, as being sold out of a currently in-demand will leave a wrong impression on the customers.

Accounting software can help with that. Accounting software tracks sales and inventory and can automate ordering to avoid stock falling below the safety margin. It can also generate reports on which product is doing well and track all the products sold. It will prevent a business from being sold out of a product that is doing well and hoarding a product that is not doing well.

Track Expenses

Accounting software programs can automate expense tracking and track the cash flow from your bank accounts. It can also scan and record receipts, preventing any cash flow shortage.

Easy Collaboration

When you use accounting software, all your financial statements are organized in one location and are up to date. It includes scanned receipts, tracked inventory, balance sheets, cash flow statements, and tax forms. All employees must log in to the software and access up-to-date information to access this information. Moreover, many employees can work on the software simultaneously without getting in each other’s way. It will also be easier for employees and accountants to collaborate when everyone can access the data in real time.

Around-the-clock Access

All accounting software requires is an internet connection. If you have a good internet connection, you can access your account and sales, accept payments, and generate reports whenever you want and wherever you are. You will always have access to the software.

Conclusion

In conclusion, adopting accounting software streamlines financial management boosts efficiency, and empowers businesses to make informed decisions. Overall, with automated processes, real-time insights, and easy collaboration, accounting software becomes vital in driving growth and success for businesses of all sizes.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

The assets convertible into cash without the slightest decrease in market price is a company’s liquidity cash. Running a business sounds great, but it is a bed of thrones equally decorated with benefits and drawbacks. Moreover, a precise evaluation of a company’s liquidity is vital because a decline in liquidity leads to a higher chance of bankruptcy. 

A company without revenue is as motionless as a paralyzed person. Liquidity is an imperative factor for a business to operate successfully. Financiers and bankers traditionally look to the company’s financial and balance statement to estimate the synchronous or expeditious ratio to gauge liquidity. However, another lesser-known metric is the cash conversion cycle (CCC), sometimes called the net operating cycle.

The cash conversion cycle is a metric that calculates the number of days or time required for a company to convert its investment into valuable assets and merchandise from the generated sales. Although, you can calculate the cash conversion cycle by employing the following:

• How long does it take to promote and sell your business goods?
• How quickly can you gather accounts receivable?
• What is the turnaround time for reimbursing bills payable?

Three factors are involved with each cash conversion cycle:

Day’s Inventory Outstanding (DIO)

DIO is the average time required for a company to convert its merchandise into competitive market goods and then sell them in the market. Overall, the calculation of DIO is uncomplicated. You must exert the aggregate of your inventory, divide it by the cost of goods sold, and multiply it by 365.

Day’s Sales Outstanding (DSO)

DSO is the average number of days required to collect your account receivables. To calculate the DSO, take the average of the days needed to manage the receivables of the amount, divide it by the net credit sales, and multiply it by 365.

Days Payable Outstanding (DPO)

DPO involves the average number of days required for your business to purchase merchandise from vendors and then make their receivables. Moreover, the end amount received is divided by the cost of sold goods and 365.

You can calculate the Cash Conversion Cycle of your company using the following basic formula given below:

CCC = DIO+DSO−DPO

Here:

• DIO = Days of inventory outstanding (also known as days sales of inventory)
• DSO = Day’s sales outstanding
• DPO = Day’s payables outstanding

​ 

Importance of Cash Conversion Cycle

Estimation of the Cash Liquidity

The cash conversion cycle’s prime focus is its crucial role in estimating a business’s financial condition and credit health. Overall, the entire process has also been proven to detect any industry’s liquidity and goods assessments.

Low Cash Conversion Cycle

A low or negative cash conversion cycle indicates that you are working very well in converting your investment to merchandise and later into revenue. Furthermore, it also proves that you are striving competently.

High Cash Conversion Cycle

A too-high or positive cash conversion cycle indicates that your business is struggling with operational issues and that market demand for your product is rapidly declining. 

Estimation of Cash That You Can Ask for Lending

The cash conversion cycle is critical because it is a step ahead in providing ease to business owners despite countless downsides. Overall, this cycle helps to evaluate the amount of cash you can borrow from the lenders to score higher in the corporate world. 

To Maintain the Cash Collection Method of the Company

Internal management is the base of a sustainable and profit-generating business. Therefore, the Cash Conversion Cycle maintains the company’s core aspects and helps adjust lenders’ credit statements.
Sum-up

The cash conversion cycle estimates the time required for the production and sales process before it gets changed into cash received. The conversion of each net dollar is linked to CCC. Overall, the calculation of CCC involves three main steps, as it involves the aggregate time spent in the entire process of liquidity of cash of a successfully operating business.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

All businesses operating in a market face fraud at least once. Sometimes, even businesses commit fraud when paying taxes, providing financial information to investors, or advertising false images of their products. They do this to decrease their costs of taxes, attract investors, and trick consumers into buying their products to increase their sales revenue. According to the Association of Certified Fraud Examiners (ACFE), businesses lose around five percent of their funds or payments from fraud. The types of scams a business faces are as follows:

Inventory Theft

A business can face inventory theft from the employees in the industry. The company’s employees steal the inventory existing in the industry without paying for it. 

Expense Account Theft

Employees may record their expenses in the company’s expenses account and could represent them as the business’s expenses.

Cash Theft

Some employees steal the cash existing in the industry or may not record revenue and take the money themselves. 

Commission Fraud

Some employees could overstate their sales to gain more commission than they are supposed to earn.

Money Fraud

Sometimes, even the customers perform imitations. This type of fraud includes customers using counterfeit and fake receipts or bills to exchange or purchase.

Fraud Warning Signs

Due to multiple types of fraud occurring within a business, detecting or identifying them becomes difficult, so they face unnecessary or unknown losses. Sometimes, business authorities even fail to recognize the signs of fraud and ignore the source of the losses they face. At the same time, it is imperative to identify and acknowledge these frauds. Here are a few warning signs indicating your business is facing fraud.

Unbalanced Cash Accounts

When the cash accounts are not balanced, bookkeepers or accountants understand irrecoverable debts and record the unbalanced amount in those ledgers to balance out the debit and credit at the end of the calculations of all the transactions in the double-entry system. If your Accountant or bookkeeper is not even trying to identify the bad or irrecoverable debt, it could mean that they are stealing or committing fraud.

Protests Over Strict Rules and Having a Reporting System

Some businesses set up an anonymous reporting system to ask employees to report suspicious activity or fraud without revealing their identity. If some employees are unwilling to follow these practices and rules, then it is time to monitor them and observe their activities to detect any suspicious activity.

Signs of Over-efficiency

Suppose employees take up all the tasks for themselves and do not let other workers perform them. In that case, it could be a giant red flag for you that they are not trying to be productive but hiding their questionable acts. 

Track Down the Expenditure of Your Workers

Suppose your employee(s) is spending on expensive materials like cars and properties, which cost more than they are being paid. In that case, you must run a background check on them and interrogate how they can afford such expensive purchases. This could indicate that your worker is stealing money or committing any other fraud in the business.

Unusual Prohibitive Costs or Expenses

Suppose you notice a sudden increase in your costs and fees without a solid explanation or reasoning. In that case, it could mean someone on your staff is overstating the expenses or stating their costs in your business’s costs account. If partners run your business, then they can also commit this fraud. 

Secret Agreements with Suppliers or Customers

Sometimes, the employees dealing with the third party, such as suppliers and customers, make deals with them. They let the suppliers overcharge the business and then take a percentage of their gain. They may also give “discounts” to customers by agreeing with them to pay a part of their payment to the worker.

Conclusion

In conclusion, detecting and preventing business fraud is crucial for safeguarding a company’s financial integrity and reputation. With various types of fraud posing threats, it’s essential to remain vigilant and proactive. By recognizing warning signs, implementing robust internal controls, and fostering a culture of transparency and accountability, businesses can mitigate the risk of fraud and protect their assets. Regular monitoring, thorough investigations, and adherence to ethical standards are vital for ensuring business integrity and long-term success.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Money’s worth over time is closely related to time itself. Thus, it is proper to claim that the longer a period, the greater the activity of external agents or even the effect of macroeconomic variables on the purchasing power of a particular currency. Inflation contained in any system of a capitalist economy is a determining factor in the relationship between money and time, as a given amount of money in March of one year does not have the same purchasing value in March of the following year:

1. There is a need to consider the inflation rates in the capital during this period. Another simplified way to understand this fact is to think that the inflation rate that occurred in the period increased the prices of goods.
2. The external environment strongly influences the value of money over time, as it is an external macroeconomic factor that organizations or people cannot control.
3. Interest influences the value of money.

They are applied, whether through an investment that makes it pay off, the cost of raising it, or even the opportunity cost, when not invested. Interest, simply put, is the “rent” paid for the use of money. For lenders, interest is compensation for transferring the usufruct of capital. Already stop through an investment that makes it pay off, the cost of raising it, or even the opportunity cost when it is not invested. Interest, simply put, is the “rent” paid for the use of money. For lenders, interest is compensation for transferring the usufruct of capital.

To completely comprehend personal and commercial finance, you must first understand one of the most fundamental ideas in financial mathematics: the time value of money. The primary goal of financial mathematics is to learn and use the notion of the time value of money in economic choices. Financial decisions, in turn, primarily concern the allocation of income and costs across time.

A machine acquisition, for example, entails an initial expenditure in equipment, molds, support structure, and installation, in addition to the working capital required to run the business. The income streams arising from the sale of the items produced and their related manufacturing expenses are then shown.

There may also be initial inflows in the form of financial contributions from bank financing and monthly disbursements for amortization and interest payments. However, as a result, resource disbursements and inflows are dispersed throughout time.

Explain why interest is paid or gained by saying: Interest on a bank deposit or debt compensates the depositor or creditor for the deterioration of money’s value over time.

A Practical Example of the Time Value of Money

Let’s say the price of gasoline today is $3.50 per liter. So, with $ 140.00 today, we can fill our car with 40 liters of gasoline (140.00/3.50).

If, in 1 year, gasoline costs $4.00 per liter. We have two options: fill up less fuel, 35 liters (140.00/4.00), or pay more for the same amount.

We then concluded that the expectation of an increase in fuel resulted in a loss in our purchasing power. But, again, this is inflation; in this case, we have a price increase of around 14.29% (from $3.50 to $4.00).

Also, according to this case, whether we have $140.00 today or $160.00 1 year from now, we say they are equivalent amounts because they have the same purchasing power.

But let’s assume the price of gasoline remains the same one year from now or inflation equals zero. Does it matter if I have $140.00 today, one year from now?

Of course not, as we can invest this money, which will earn interest and have a higher value in 1 year.

If we have an investment at the simple interest that yields 2% per month on top of the amount of $140.00, we could say that if my opportunity cost was 2% a month (at simple interest) and zero inflation, for us, it’s as little as $140.00 today or $173.60 a year from now.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.