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Cash Flow sign
Whether your business is developing or going through tough times, managing your business cash flow efficiently is absolutely vital and, for many, the key to business subsistence. You’ve perhaps heard the figure that over 40 percent of businesses that go broke are profitable, but just run out of cash.

From a cash perspective, a business is like a sponge — it sucks in snowballing amounts of cash and, to get money out of it, you have to give it a good squash. If you are unable to manage the business, the sponge is likely to grow bigger with each squeeze, making it tough for you to keep it in your hand. Successfully managing your cash flow will ensure that your business stays right on track to achieve its objectives. Here are some ways to do that.

Set Business Cash Flow Targets

Preparing and maintaining a cash flow forecast is a great way to understand the flow of money in your business. The forecast should be regularly updated to get an accurate picture of how the business is performing. Set specific targets for credit controllers that will encourage them to work hard to achieve them and, as a result, will maintain a positive cash flow for your business.

Set Clear Payment Terms

Businesses that deal on credit are often more vulnerable to declining cash flows because of late payments or other issues. They must set clear and standardized payment terms and plans that must be regularly followed to ensure that business cash flow targets are met. Even businesses that only occasionally deal with credit should have a payment plan. If you are unsure about the payment terms yourself, it will be hard for your employees and even your creditors to correctly access the right time to pay. The payments will be delayed, which ultimately means a decrease in cash flow.

30 days is generally considered to be a good time to make a payment for many businesses. However, based on the type of business and market situation, you have the liberty to set your own terms and conditions.

Generate Quick Invoices

Certain factors to improve the cash flow of your business are in your own hands. If you are efficient, it is likely that the cash flow will be positive. Invoicing your clients is one of the deciding factors and the sooner you do it, the better. Typically, a client will take a week or two to clear the generated invoice and, if it is delivered late, you must expect a further delay. Therefore, set up an automated bookkeeping system that automatically generates and sends invoices right on time so that your business cash flow is unaffected.

Install Easy Payment Options

Offer your clients the quickest and easiest ways to pay you. Online payments are a better option than checks as they take more time to actually show up in your bank account. Linking your bank account with accounting software will make it easier for you to keep track of cleared and pending payments. It also allows for quick transfers as banks already have all of the information needed to ensure a safe transaction.

Use Technology

Cloud-based accounting software is a great time saver for businesses, as it has brought efficiency to almost every business function. Tracking the cash flow of your business is just a click away with the help of this software. You can see, filter, and prioritize credit payments, depending on your need, from anywhere. The ease of accessibility that is offered through these cloud-based accounting services is just unmatched. The data is automatically backed up so you don’t have to worry about any loss or theft.

The fact that everyone in your company has access to all of the information at their convenience automatically speeds up the overall process. By using technology in your business operations, you will observe that the business cash flow has also increased considerably.

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.

 

 

 

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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.

 

 

 

 

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Hiring a good accountant or bookkeeper is your secret weapon for faster growth and they can truly add real value to your business. Besides helping you to manage your accounts, they will help you grow your company with better financial decision making, employ legal tricks to minimize your tax bills, reduce accounting errors and save you a lot of time on admin.

Most MNCs (Multinational Corporations) have in-house accounting teams usually working around the clock all year to ensure that taxes and other corporate debt(s) are paid on time, salaries and bonuses are being disbursed, profit potential is evaluated, financial reports are created and balanced-out, and the growth is managed successfully. It is the job of a good accountant/bookkeeper to get things moving in the right direction, resolve all financial discrepancies, and make sensible monetary projections year-round.

On the contrary, small-scale businesses, are also now looking to hire the services of professional accountants because they know they can only grab a significant market share and survive in the competitive market if their financial equation is favorable. It doesn’t matter whether you’re in the initial phases of business creation or have an established business, the need for hiring a pro-level accountant never dies. Your accountant and/or bookkeeper is the backbone of your business and, undoubtedly, your secret weapon for faster growth. Any small-scale business with a sound game plan and business execution strategy can expect to reach the top in no time if the business has a good accountant to look after its financial operations.

Planning and Forecasting Your Cash Flow

Planning and forecasting prior to decision-making makes sense but, once you start to take a ride on the sinking boat, it isn’t helpful at all. Businesses—small or large, almost always strive to achieve a perfect balance in cash flow, especially when they structure the operations of business on a DIY accounting model. The influx and outflow of cash have to be maintained properly or else the lack of effective financial management can be fatal to the future of your business. On the other hand, a good accountant and bookkeeper can make your business move in the right direction and help you achieve faster growth. A professional accountant with superior bookkeeping services will help you in better financial decision-making which will allow you to succeed in a very short span of time.

Reduction in Taxes and Financial Discrepancies

Professional accountants and bookeepers have superior accounting knowledge, skills, and experience which helps them to stay on the top of cash flow, taxation rules and regulations. They know the tricks to handle tax-related issues and help you reduce them, up to a great extent. Hiring a good accountant is more of a need than a desire because, without them, you cannot expect to achieve faster growth or strategic goals. The theory of tax reduction is quite simple, the more relief you can claim, the more you save, the faster you grow.

Sharpen Your Focus

Obviously, hiring a professional bookkeeper allows you to focus on the core business operations, which ultimately sharpens your focus. Small-scale businesses usually do everything on their own—from conceptualization of ideas to business establishment to managing their finances. However, little do they know, they can help their business to achieve faster growth if they define a way to manage their finances well. For that, a good accountant or a professional bookkeeper seems like a fair choice as they help you with better decision-making, reduce accounting errors, and find financial discrepancies.

Compare Your Numbers with Industry Benchmarks

It is the duty of a good accountant to let their clients know about their current financial standing and what financial decisions they have to make if they expect to achieve faster growth and success. KPIs (Key Performance Indicators) are a good starting point to know whether you are performing better or worse and what possible measures you can take in order to keep the financial equation favorable. Comparing your numbers with industry-specific benchmarks helps accountants sketch a clear picture of your financial standing for suitable measures.

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.

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An extraordinary accountant is not only responsible for compliance and issues related to your taxes but steers you towards success by carefully analyzing data and offering you strategic insights into your key business decisions. Evolution in the technology front has given rise to big data, cloud computing, and many other tools that are transforming the accountancy services to full-time consultancy for many businesses. You may be thinking that this might not be the case for your small business, however, the progressions in the field allow you to benefit from their specialized services at a significantly low cost.

An Accountant – More than just Preparing your Taxes

Tech-savvy business owners today expect a lot more from their accounting professionals than just fixing their tax issues and keeping the books. They are constantly in touch with key personnel of their business through smartphones and other gadgets. They demand quick responses and solutions to existing problems and situations faced by the business. With the availability of advanced accounting software, accountants do not have to manually enter data, therefore, can emphasize on formulating business strategies and contribute to driving profitability. Here are some of the ways that an accountant can help grow your business.

Breaking it down

Apart from handling your taxes, accountants can help you identify those high-end customers who are not contributing significantly to your profit margins and, instead, are using a lot of your valuable resources. For example, you are a contractor and are able to win large contracts, however, you undervalue the project, leading to underbidding and cutting your margins. With the right person guiding you, you will be able to accurately estimate the cost of the project and bid so that your profitability is not compromised.

A similar approach can be applied to your products and services. An accountant would be able to identify the products and services that are putting a burden on the business and the ones that are outshining. Based on the numbers, you can make important decisions regarding continuing or making changes to certain products and services. Therefore, your taxes are not the only reason you should hire professional accounting services.

A reliable partner, driven by technology

When you are making key business decisions and sharing critical information about your business with someone, you are trusting that person to keep the information private and also help you along the way. With advancements in cloud computing, an accountant is able to monitor the given information at a minuscule level and manage it from anywhere and anytime at ease. Moreover, the data can be updated, along with a recommendation, from anywhere without the actual need to be physically present.

Any trends or inconsistencies in the data are easily traceable and the accounting professional would be able to tell you if it is just a bad patch because of poor market conditions or if there is something wrong internally. With all of that in mind, it is really up to you how you choose to use your accounting professional, as just someone who looks after your taxes or a trusted partner who can help your business be successful.

Leveraging your strengths for financial plans

Getting the most out of an accountant really depends on who you choose to be your partner and how the chemistry is between you two. Initially, you are solely responsible for all issues related to bookkeeping and other financial matters of your business.

As your business grows, you require the help of a trained professional who can collaborate with you to devise a consistent policy for recognizing revenue and leveraging it to come up with financial plans. This is an important step for the growth of your business because you need to show a constant revenue stream to attract potential investors and business partners. Accountants must be able to identify your strengths as well as weaknesses based on numbers and should be able to help you plan for the future.

Connecting operations with finance

Just like other professions, an accountant often limits themselves to finance and managing your taxes. However, a well-reputed accounting service will view all of your business operations in a circle, tied to each other. Marketing, sales, HR, and finance all work hand in hand. The hired accounting service must be able to provide thoughtful insights into all operations. This comes from experience and not everyone will be able to help your business in all departments.

Once an accounting firm falls prey to the assumption that their job is to only look after your taxes, it is really hard to shift the focus somewhere else. Therefore, before choosing your accountant, you must guarantee that they will be able to align with the goals of your business and offer a non-conventional approach to managing your business finances.

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.

The report summarizes the result of business operation on computer screen and business people meeting.
Managerial Accounting, also called management or cost accounting, emphasizes on inside information received through financial accounting. Managerial accounting reports are used for planning, regulating, decision making, and measuring performance. These reports are continuously being generated throughout the accounting and bookkeeping period, according to requirements. Because many critical decisions depend on the authenticity of these reports, they should be carefully crafted by experts who are adept at bookkeeping. Managers then analyze these reports to highlight certain patterns and convert them into useful information for the company. Below is an explanation of certain such reports.

Budget Reports

Budget managerial accounting reports are very critical in measuring company performance and are generated as a whole for small businesses and, department wise, for large organizations. However, each company creates an overall budget to understand the grand scheme of their business. A budget estimate is made based on previous experiences, though, a great budget always caters for unforeseen circumstances that might arise. A company’s budget lists all sources of earnings and expenditures. A company tries to achieve its goals and mission while staying within the budgeted amount.

Managerial accounting reports related to budgeting can guide managers to offer better employee incentives, cut costs and renegotiate terms with vendors and suppliers. Therefore, a budget report is critical to any business.

Account Receivable Aging Reports

If your business relies heavily on extending credit, then account receivable aging reports are vital to it. Breaking down the remaining balances of your clients into specific time periods allows managers to identify the defaulters as well as find issues in the company collection process.  In the case that there are many defaulters, then the company may need a complete transformation to tighter credit policies as cash flow is critical to the operation of any business. There is always some bad debt that needs to be written off, however, you cannot make it a habit. You must always know who owes you what.

Cost Managerial Accounting Reports

Managerial accounting computes the costs of articles that are manufactured. All raw material costs, overhead, labor and any added costs are taken into deliberation. The totals are divided by the amounts of products produced. A cost report offers a summary of all of this information. This report offers managers the capacity to realize the cost prices of items versus their selling prices. Profit margins are estimated and monitored through these reports as you have a clear picture of all of the costs that went into the production or procurement of the articles.

Inventory waste, hourly labor costs, and overhead costs are also part of cost managerial accounting reports. They provide an exact understanding of all expenses, which is essential for better optimization of resources among all departments.

Performance Reports

Performance reports are created to review the performance of a company as a whole as well as for each employee at the end of a term. Departmental performance reports are also generated in large organizations. Managers use these performance reports to make key strategic decisions about the future of the organization. Individuals are often awarded for their commitment to the organization and under performers are laid off or dealt with as required. Performance-related managerial accounting reports also offer deep insight into the working of a company. If you think that you should be performing in a certain capacity but somehow that is not happening, these reports can point you towards flaws in the setup. The role of performance reports is vital for any company to keep an accurate measure of their strategy towards their  mission.

Other Managerial Accounting Reports

Order information reports, project reports, competitor’s analysis and many other similar reports are vital to every business. They are either generated internally or outsourced through professionals. The best course of action depends upon your capabilities to handle the reporting requirements of your firm. The ideal choice can differ for everyone but professional services do have the experience and skills to carry out this task better. In order to attain the most out of their decisions, your managers must have access to credible and authentic managerial accounting reports. 

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.

Handwritten Accounting ledger showing bookkeeping using pencil and calculator.
With the advent of accounting back in time, one of the most prominent words that made its way into the business dictionary was bookkeeping. Bookkeeping, in its broadest terms, is the process of keeping a record of all financial transactions of the business. This process requires drawing up several accounts that contain various transactions taking place within the business. The process of bookkeeping in accounting has been a tedious task since its inception, as it requires drawing up several individual t-accounts to record journal entries for the five major accounting elements – assets, liabilities, capital, expenses, and revenues. An important and commonly used classification is that of Ledgers, General Ledger and Sub Ledger. In order to advance the discussion on General Ledger, a brief description regarding the functionality of the ledgers is necessary.

What is a Ledger?

In accounting, a ledger refers to a record of transactions documented in a chronological order. These transactions are captured from the journal and are organized by account heads. These ledgers basically provide a historical and current summary of each transaction related to a specific account. This summary is considered to be the most reliable source for drawing up the financial statement at the year end. For instance, the sales ledger has all the sales related transactions. Sales return ledger maintains transactions related to sales returns. Therefore, the sales figure displayed onto the Profit and Loss Account may be verified from the sales ledger directly.

What is a General Ledger?

As previously identified, cash related transactions will have their own cash ledger and sales related transactions will be contained in a sales ledger. The General Ledger is one big master account that comprises of data from these individual ledgers, compiled together, in a single format. The General Ledger is also known as the book of final entry. The General Ledger is used to post information on financial statements – Balance Sheet and Profit and Loss Account of the business.

Sub Ledgers is yet another related category in accounting and bookkeeping, sometimes known as the subsidiary ledgers. Updating the sub ledger is similar to updating a General Ledger, however, unlike the General Ledger, Sub Ledger comprises of just a few accounts.

Format of a General Ledger

In recent times, automation and use of accounting software has made the traditional form of bookkeeping outdated. Traditionally, a General Ledger used to resemble a register or book, where all the transactional data was kept. Each account would occupy one page in the General Ledger and the General Ledger comprised of all accounts mentioned in the Chart of Accounts.

The format of a General Ledger included five different columns for each heading. The main headings would include Date, Transaction Details, Debit, Credit, and Balance. The header would usually include the name of the account and its given number. An updated General Ledger would demonstrate the current balance of each account as on that particular date.

Accounting Software

For all businesses, a traditional depiction of the General Ledger is likely to be more comprehensive, as given above. In the present era, traditional bookkeeping has become obsolete. The introduction of accounting software has made accounting and bookkeeping an automated process where numerous business transactions may be recorded and posted to their respective accounts simultaneously, without the need to manually post entries into the relevant account heads. This allows for speed, accuracy and cost saving. Enterprise Resource Planning (ERP) solutions, such as SAP and Oracle, have revolutionized the accounting world at its core. The computer software automatically posts entries onto the General Ledger from the respective account ledgers and calculates the current balances according to the specified date. 

Hence, understanding the functionality as well as the structure of a General Ledger is crucial to business accounting procedures. The simplest form of its explanation has been provided here.

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.

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CCH Wolter Kluwer, an accounting research manager, conducted a research study in 2013. It was a national research study commissioned by CCH. The study was “Cloud computing – a matter of survival for the accounting industry?” The findings of the study were interesting and expected.

CCH’s study approves that the change to cloud-computing software or platforms for accounting services is well proceeding. Acceptance has now reached momentous levels among accountants and small business owners and is predominantly high amid younger groups. Future intents show that within two to three years, a mainstream of SMEs and their accountants will be managing their accounting on the cloud. For the accounting industry, the change to cloud-based computing offers some direct threats, but also long-term prospects.

Cloud computing will mechanize much of the low-level, managerial facilities that accountants have provided to small and medium enterprise clients for so long. This is not lost on business owners, who show they will consider replacing much of the work their accountant now does with cloud software. A decent number also say that they will deliberate replacing their accountants if they do not work with a cloud computing system. This fondness for cloud computing is increasing abruptly amid younger groups of business owners.

Cloud computing cannot replace an accountant, by any means.  However, accountants who have a wide knowledge of cloud computing will certainly be given preference in future jobs in small to medium sized businesses.

Before understanding the benefits of cloud computing, let’s through accounting and cloud accounting differences.

Cloud Accounting

Cloud accounting is the same as traditional accounting and bookkeeping procedures done on an accounting software. The cloud accounting software is hosted on remote servers, similar to the SaaS (Software as a Service) business model. Data is sent to the server into a ‘cloud’, where it is processed and sent back to the user. All application functions are done off-site, on the cloud, not on the desktop. The accounting functions are done online and not on the desktop software. The internet or another network is used for the process. Users access the cloud accounting software through a cloud application service provider. The software does not have to be installed onto a computer. It can be accessed from any place in the world, provided the cloud applications service provider is present.

Benefits of Cloud Computing for Businesses

1. You have access to your accounting and bookkeeping data anywhere and anytime in the world. You can spend time on other activities related to business operations or spend your quality time with family. You can go online to access cloud accounting software while sitting at home and stay updated with the accounting and bookkeeping functions in your business from the comfort of your own home. An up to date view of the financial status of your business enables you to make the right decisions at the right time

2. Go paperless in accounting and bookkeeping. This step is Eco-friendly, too. Paperwork takes a lot of time and resources for accountants and business owners. Small business owners need time to interpret accounting information. Accounting software makes it easy to interpret this critical information.

3. Cloud accounting software offers multi-user access.

4. A better relationship is built with your accountant. You can access accounting data online and give quality time to your accountant for discussion related to business bookkeeping.

5. Cloud accounting software is automatically updated.

6. Cloud accounting reduces upfront business costs. You do not face regular maintenance fees.

Conclusion

Cloud computing is the future of accounting procedures in small and medium sized businesses. Accountants must seek training to learn the cloud computing operations for their survival in accounting jobs. Cloud computing cannot replace an accountants. It only makes their jobs more efficient and time effective. The accounting industry is shifting from manual accounting to cloud computing in nearly all small and medium size entrepreneurships. This is the preference of business owners as well.

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.

 

 

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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.

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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.

 

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Businesses face several accounting costs when conducting day to day business operations that can easily be identified and calculated. Companies, however, also face other costs known as economic costs that are not displayed on the bookkeeping records and have a huge impact on the decisions made by management. Accounting costs are crucial for the external and internal reports of the company. Whereas, economic costs are applicable to the internal sector only.

Implicit Costs

Economic costs reflect both the implicit and explicit costs of a company that are encountered during the year. Implicit costs are linked to resources that are offered to a company without any price tag. If a company, for instance, is operational from a building that it owns, it encounters an implicit cost due to the rent that could have been earned by leasing off the building to some other company. The owner could have earned around $3,000 a month from a renter who was commercial. Therefore, in this case, the company faces an implicit cost of $3,000, which will be referred to as its economic cost.

Explicit Costs

Accounting costs are generated from the overall explicit costs of a business throughout the fiscal year. They do not include the implicit costs coming from resources that are unused. Explicit costs that have their monetary value defined are included in the accounting costs of a business in order to identify the net income.

Accounting Profit

If an accountant or bookkeeper wants to calculate the accounting profit of the financial year, they will only have to look at the profit of the company and its accounting costs. The economic cost details are not needed by the accountant to form an income statement for the company. For instance, accountants have no concern with the fact that the company could have made $3,000 by leasing off the building to some other business – making a total of around $36,000 during the financial year. This figure of $36,000 has nothing to do with the gross profit of the company during the financial year.

Economic Costs are not included in Bookkeeping

Economic costs are not written or mentioned in the accounting records or bookkeeping of a company. When creating financial reports, accountants are focused on the explicit costs generated from the business operations conducted throughout the financial year.

Economic costs, however, are generally considered when a company has to make strategic decisions that involve opportunity. For example, if a company has intended to close down an operational location and rent or lease it out to another business, the company needs to consider the economic costs of losing the money generated from business operations or the profit that might be generated from the rent.

In general, economic cost comprises of the monetary value of resources employed by the business. Also, it links to the opportunity cost that arises from the inputs used by the enterprise to make the business functional.

Accounting costs, on the other hand, are focused on explicit costs that are incurred by the business. The costs that are incurred by any company in normal, day to day market transactions are referred to as explicit costs. One common example of explicit costs include wages that are given to employees. The money spent on buying the resources needed by the business is also known as explicit costs.

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.

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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.