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Stressed business woman running out of money - stock and market down
Accounting is the systemic and comprehensive recording of financial operations in a business. Business bookkeeping is the recording of financial transactions as a part of the accounting process.

The most common area where small business owners make mistakes is in accounting and bookkeeping. Small business accounting mistakes range from minor errors (e.g. to save a receipt of minimum amount) to big accounting and bookkeeping errors which cause serious threats to the business.

Entrepreneurs/owners often do not see the impact of the common small business accounting mistakes as a major threat to the growth of business in the long run.

8 Common Small Business Accounting Mistakes that Pose Risk to Business Stability

  1. Business owners mix personal finances with their business account

  • Business owners mix their personal finances with business expenses. Keeping these two finances separate is of utmost importance. If these two finances (personal and business) are not segregated then it cannot be known what was intended for business and what was used personally. The finances cannot be estimated correctly and the amount of profit generated out of invested capital cannot be calculated. 
  • A business credit card is utilized for personal expenses during a holiday trip or other excursions. Later on, this amount will be paid from the company’s income.
  • During purchase orders for inventory of the company, purchases are also made for personal or private use.

  1. Trying to manage all accounting and bookkeeping yourself

  • A small business owner is often an all-rounder. They constantly try to manage all business functions themselves. Accounting and bookkeeping are hectic and time-consuming jobs. If you spend all of your time in accounting and bookkeeping, you will miss doing other important business operations.
  • If you have an accountant to manage this, you will be able to keep a second eye on accounting and bookkeeping, but also free up time for other areas.

  1. Infrequent bookkeeping

Entries are not done in time. Running behind in bookkeeping and the submission of entries of the expenses or sales will not yield an up to date picture of the business and allow you to make timely decisions. It can lead to a negative balance if expenses are made but no income statement is updated. Invoices to be paid by the company may go unnoticed and it can give your company a bad name. It can end terms with the suppliers. Business growth is halted or significantly reduced.

  1. Covering small expenses out of pocket without recording

Sometimes, it’s easier to pay small expenses out with your own money in business. And, often, these payments are small and not entered into the bookkeeping record.

Paying out of your pocket falsely makes your company appear stronger in income than it actually is.

  1. Starting new projects and ideas without a clear budget

If you start a new project in your business without planning for it, then you can run short of your budget for other business operations. You may have to quit the project in the midst of doing it if you don’t get the loan or find other investors.  It’s always best to plan ahead before you make a big move.

  1. Not saving the original receipts after entering them register/books

Keeping all receipts until all taxes are paid and an audit is produced is a must. Even after that time period, receipts are very important for matching data entries in a register or in software.

  1. Not using accounting software or cloud technology

Failing to set up a correct software as needed by your company leads to poor decision making, because installing the improper (more complicated than required or lacking crucial functions) software can lead to more complexity in accounting. Accounting software prevents accounting and bookkeeping errors. Many software applications come with guided help boxes to make the accounting process easier to interpret. Inventory control tools are provided in the software. Tax matters are made easier using accounting software.  It’s best to make the jump for your company and purchase the best software for your company. 

  1. Wrong interpretation of accounting information

  • Accounting information software is just a tool to use. Decisions must be made after completely checking the financial reports and interpreting the data. Data interpretation is made by comparing financial statements with the cash flow statements and the balance sheets.
  • Entrepreneurs/business owners/directors must focus on long-term consequences of decisions they make after getting a full picture of the company’s accounting information. Short term decisions after interpretation of accounts data do not provide the company with long term benefits. 

Conclusion

Small business accounting mistakes are not small and can dissolve the business in the long run.  Accounting and bookkeeping tasks should be managed by a trained professional and you must closely monitor your accounting and bookkeeping data. Use accounting software for bookkeeping. Neither mix personal expenses with the business account, nor pay out of pocket for business expenses. These small mistakes lead to big problems in the long run for your business.

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.

Closeup of hands working on computer keyboard
There is no denying the fact that small to mid-sized businesses are more vulnerable to cyber theft than are larger businesses. They are an easy target for cyber criminals as, often, these businesses have no IT department, simple networks, and are less likely to follow industry best practices to prevent their sensitive data from being stolen. This is causing US-based companies to lose billions of dollar each year, which is why the need for hiring top IT professionals for prevention of cyber fraud is becoming inevitable. Unarguably, a data breach can be costly to companies looking to expand their business operations in other IT domains. In short, cyber fraud is a curse that is kicking many multinationals out of the competitive race which is why companies need to come up with a sound theft prevention plan for achieving their intended business goals and ambitions.

 Cyber Fraud In Small Businesses

Prevention of cyber-fraud is critical to a company’s long-term success. The biggest dilemma is that many small business owners fall prey to the idea that their company is too small to be a playground for cyber criminals and mistakenly believe that their business won’t be a target. Regardless of the company’s size and scale, cyber attackers will exploit any opportunity at hand and steal sensitive information using sneaky tactics. They are smarter than you think and imagine and their hacking knowledge encourages them to get into this “so-called” profession and make the most out of it.

The age of digital evolution has brought vulnerabilities, strains, and repercussions. Along with it, cyber fraud is becoming much more common in today’s corporate setting. Generally, we hear news about multinational corporations that have been affected by malware infections, viruses, and other advanced persistent attacks costing billions of dollars each year. But, what about small businesses? Small business owners feel reluctant to accept the fact that cyber fraud can happen to them and they, too, can be under the radar of malicious cyber attacks.

What’s more?

According to a study conducted by one of the top IT firms in the US, as much as 63% of cyber criminals target small businesses. Cyber criminals are generally known to be magicians who know the art of stealing by skimming through online channels and networks. Therefore, small businesses need to change their approach and do something to prevent their sensitive information from leaking out of their company networks.

Why Are Small Businesses A Target For Cyber Criminals?

There are countless reasons why cyber attackers often target small businesses. Here are the top two reasons why small businesses are more vulnerable to cyber fraud.

No IT Department

Small businesses usually lack the resources to hire top IT professionals to secure their networks, devices, websites, servers and online operations. This is why they are more likely to face potential threats from cyber criminals every single minute of the hour. The biggest misconception about hiring IT professionals is that ‘they are expensive’. However, this is not the case. There are many IT professionals and start-up cyber security agencies that offer services at competitive rates. 

If you are doing it yourself, you need to update your servers and install the latest security software to take more control of the rising situation at hand.

Simple Network and Systems

Small businesses have simple network and systems compared to larger businesses. A small business generally lacks the room full of servers and network devices. Even if they have on, they are often outdated and non-operational. New networks and systems now have advanced security and layers of encryption that prevent leakage of information. Cyber criminals find it hard to break into advanced networks and systems which allow businesses to identify the intrusion and gives them time to secure their data.


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.

Hand holding envelope  of cash
Embezzlement is the theft or misappropriation of funds placed in one’s custody. In other words, it is stealing something from an organization that is not yours. Regardless of the scale or magnitude of a business, embezzlement of funds exists in almost every organization. Therefore, you must come up with a prevention plan before it drains your small business.

Employee fraud and embezzlement can occur in any organization. Small businesses often lack experience and knowledge, which prevents them from having the right checks and balances in place. According to studies, businesses lose approximately 8% of their annual revenues from theft and embezzlement, making it the biggest reason why most start-ups fail to create an impact. Employees can make or break a business. They have the potential to take a business to the top or break it apart to pieces. Employees can determine the fate of a company and it’s long-term survival.

Employee embezzlement can drain your small business, perhaps making you lose everything within a short span of time. The portion of assets than an employee steals each month accumulates to a huge amount, which eventually leads a business towards its gradual demise. Stealing from an employer raises serious moral and ethical concerns; it’s not a legal activity under any circumstance. Moreover, it may lead one to face serious repercussions such lawsuits and jail time.

Embezzlers can often get away with their actions because they are smart and steal at a suitable time of their own choosing. They know the processes of their organization and have a clear picture of how to steal without getting caught. However, with increased technology and advanced accounting software, now you have options to prevent maximum leakage or data theft in your company. Below are our suggestions on how to stop embezzlement before it drains your small business.

Look For Financial Discrepancies

An unusual fall in profits or a squeezing profitability index are symptoms of embezzlement. By keeping a highly advanced system in place, you can prevent embezzlement or data leakages. In doing this, you will get to know your profit shortfalls and even catch culprits for further disciplinary actions.

Regularly Check Company Records

No matter how much trust your accountant, you should always regularly check your company’s financial records to obtain a clear picture of the finances. Any discrepancies found in the records should be taken care of wisely. Financial books and bookkeeping records reveal the true status of a company’s finances.

Respond to Client Complaints

This is one of the major ways to find out if embezzlement is occurring in your organization. Clients often complain when their order is not dispatched properly or doesn’t justify their expectations. Therefore, if you start to receive a lot of complaints, it is wise to look into the matter. It may show you if something suspicious is happening.

Notice Employee Habits and Behavior

Pay attention to any significant changes in the habits and behaviors of your employees. To stop embezzlement before it drains your business, you need to develop a mechanism that may discourage employees from participating in such malicious and unethical deeds.

Leverage Control over Financial Decisions

In the core of every successful business lies well-established and ethical teamwork. You can’t expect to excel all alone. You need to empower your team to help with the prevention of fraudulent activities. Although most organizations are affected by this disease, you need to come up with suitable preventive measures in order to stop and save your organization from embezzlement.

Leverage control over your organization’s finances to establish your leadership over all aspects of your business, especially related to financial decision-making. Stopping embezzlement in it’s tracks is extremely important for winning the competitive business race.

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.

Interior Of Factory With Empty Work Benches
Cataloging the problems and growth patterns of small businesses in a systematic way that is useful to entrepreneurs seems, at first glance, a hopeless task. Small businesses differ widely in size and capacity for growth. They are characterized by independence of action, differing organizational structures, and varied management styles. However, on closer inspection, it becomes obvious that they experience common difficulties arising at similar stages in their development. These points of comparison can be organized into a framework that increases our understanding of the nature, characteristics, and problems of businesses ranging from a corner dry cleaning establishment with two or three minimum-wage employees to a $20-million-a-year computer software company experiencing a 40% annual rate of growth. For owners and managers of small businesses, such an understanding can aid in assessing current challenges; for example, the need to upgrade an existing computer system or to hire and train second-level managers to maintain planned growth.

Developing a Small Business Framework

Numerous researchers over the years have developed models for examining businesses. Each uses business size as one dimension and company maturity or the stage of growth as a second dimension. While useful in many respects, these frameworks are inappropriate for small businesses. As great as start-ups can be for macroeconomic development, they can also be chaotic for a couple of reasons.

  1. The risk for start-ups is extreme and the total cost can be exorbitant. Founders put in more time, energy, emotion and capital than they ever thought would be required. And, since most fail, the total cumulative cost to launch start-ups that succeed is enormously underestimated.
  2. Start-ups disturb the price structure. While trying to get a position in the economy and before they know what it takes to capitalize business growth, a classic start-up exercise is to enter the market with low prices. This sounds like honest opposition and good for customers. However, established corporations do know what they must charge to sustain their business. And, even after a startu-p runs out of investment and leaves the marketplace, damage to the price structure remains.

Small businesses that lasted the financial crisis and aftermath did so by establishing exactly what it takes to run their business in the leanest and meanest terms. One of the consequences of this trial by fire is that these firms have emerged in better shape than after previous significant economic bookkeeping downturns. Here are six reasons:

  1. Fewer start-ups. There has been less price structure disruption since 2008.
  2. The banking industry has confirmed an unparalleled lack of business loan demand which is ironic in that interest rates have never been lower.
  3. Stronger balance sheets. Reduced debt plus methodical retailing, inventory, and supply chain practices that prevent inventory creep all improve important financial ratios.
  4. More gross profit. Rigorous expense control relieves pressure on gross profit from flat sales and pricing pressure.
  5. Enhanced capital and cash. All of the above practices contribute to profitability which, in the current environment, is more likely to be retained. Retained incomes push capital and cash in the direction of sustained operations and long-term success.
  6. More credit worthy. Firms that grow beyond organic funding will be more worthy of credit and preferred terms and rates.

Signs that your Start-Up is Maturing into a Small Business:

1)   Customer needs do not appear to be evolving rapidly.

2)   Consolidation by leading competitors is reducing economical intensity.

3)   Disruptive innovations and new applicants are gaining share only gradually and top out at relatively low levels.

4)   Marketplace shares of leading contenders have hardened and are changing gradually, if at all.

5)   The price, brand, and/or channel stratagem has replaced product innovation as key value drivers.

6)   Cash flows are progressively turning positive and being returned to investors rather than investment in the market.

Final Note:

Small businesses play an important role in any civilization. When they are first recognized, they represent ways that corporate owners test their business ideas in a market. Small businesses that create jobs for labor, in addition to the owner, offer even more economic stability. Providing a steady source of income for business owners and employees is just one reason they are important.

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.

 

 

Closeup portrait of nervous middle-aged beautiful dark-haired woman looking away and covering mouth with fists. Panic concept. Isolated front view on white background.
Small business owners are hesitant to report an employee stealing from their company as they do not want to involve the police, new research finds.

Employee theft may not be the number one concern that keeps a business owner awake at night, but it can bring about negative impacts on a company. Besides hurting the morale of employees and damaging a brand name and reputation, it can drain a significant portion of annual revenues and profits that eventually kicks a business out of the competitive race. In the wake of challenges and the ever-evolving mindset of stealing, companies cannot expect to survive for long. So, companies need to come up with loss prevention strategies and implement the proper tools and techniques to prevent employee theft and embezzlement.

Statistics Reveal a Different Picture

According to the study conducted and reports filed by the University of Cincinnati, research shows that 64% of employees steal from small businesses while only 16% of employers report the theft to the police. There is certainly no denying the fact that cheating employees are ever-ready to steal from a company whenever they get the opportunity. Small businesses are more susceptible and vulnerable to employee theft and embezzlement.

One report finds that companies with fewer than 100 employees have a higher percentage of theft and embezzlement cases. A staggering 92% of theft cases bear testimony to the fact that employees feel more inclined to steal from small companies due to their freedom to handle important business affairs like business management, bookkeeping, or accounting on their own. The University of Cincinnati research also found out why employers are reluctant to get the authorities involved and you may be surprised to know the reasons which include concerns about the criminal justice system and emotional ties.

What Makes Small Business Owners Hesitant to Report Theft?

There are reportedly four reasons why employers feel reluctant to report employee theft to the police and we will discuss those below.

No Real Victims

The nature and approach of business owners plays a significant role in determining the fate of an employee stealing from a company. Some owners are more concerned about recovering their losses than actually reporting the fraudulent activity. This category of people may even forgive their employees and give them another chance to prove their worth and loyalty or perhaps, under extreme cases to set a precedent, fire them after recovering their losses without reporting them to the authorities. Many business owners do not see victimization as a serious offense to be prosecuted officially and causing troubles beyond firing the employee stealing from the company. They believe that are many more things to worry about rather than this.

Attorney Advises Against It

The costs of prosecuting a perpetrator may be much more than what an employee actually stole from your company. Small businesses usually have scarce resources to deal with employee theft that restricts them from prosecuting a case in court. However, for large businesses and corporate level frauds, $20,000 or more, prosecuting a case is advisable.  Still, the slow restitution could take ages when you recoup the stolen funds. Therefore, many attorneys advise against reporting employee theft to law enforcement, especially if the successful prosecution outweighs any likely benefits that the employer intends to attain for their time and efforts.

Emotional Ties

Since trusted and seasoned employees often have a long work history and good reputation, they tend to steal more from a company than those who just joined the work force. Because of this, business owners often forgive the convicted employee based on emotional ties and history. This is probably one of the biggest precincts faced by small business owners that prevents them from reporting a crime to the local authorities.

They See the Criminal Justice System as Ineffective

Small business owners are often reluctant to get involved with the police in complicated issues involving employee theft. Obviously, the police are going to investigate the matter and may look for evidence of theft, which may involve interaction with coworkers that will create a negative vibe in the organization. On the other hand, there are some business owners who consider criminal justice proceedings as ineffective or incompetent. Quite often, there have been reported cases of law enforcement personnel caught in taking bribes from perpetrators which poses a question on the credibility of the justice system. So, rather than getting involved in lengthy and complicated prosecution methods, small business owners bare themselves from the trial.

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.

 

Woman wearing white apron and rubber protective yellow gloves, holding rag and spray bottle detergent. MORE FROM THIS SERIES IN MY PORTFOLIO
A spring cleaning refers to the ritual cleaning of homes in the spring. In the winter, everything is packed due to the brutal nature of the cold weather. When spring comes around, people open their windows, doors, and clean their homes out completely.

In business, this term ‘financial spring cleaning’ refers to the actions which are performed to streamline all aspects of the business. In this routine, you are primarily focused on increasing sales, revenue generation, and managing daily operations. You should take the time to refresh your finances.  Notice of pending invoices, old bills, and a revision of business plans should all be examined to take immediate and necessary actions. All of these steps will not only save the business from loss and complications but also benefit you greatly in the long run.  So, how do you open your proverbial windows and doors to rid your business of the clutter?  Let’s take a look.

Re-examine payment policies:

Increasing cash flow is the key to grow a business and enjoy a debt-free company. A small business owner should sit with their accountant with bookkeeping records. From transactions and customer history, determine the number of customers whose payments are pending and for how long. Generate an aging table for accounts receivable to know the period for which each payment is pending. Categorize the customer according to the time of outstanding payment, i.e. 30 days, 90 days or 120 days. This aging table is used to collect outstanding payments, to evaluate payment policies, and have a solution for the customer who is habitual in making delayed payments. If you get payments from a customer early, you may be saved from borrowing money or going into more debt.

Assess pricing models:

The other crucial part of a financial spring cleaning strategy is an assessment of your pricing. The pricing of your small business should be comparable to your market competitors. Pricing should be at levels which are profitable and you are not at a loss. But in fact, pricing is a difficult area for many small businesses. Many market conditions affect pricing and it is not easy to manage price, but the best strategy is to keep pricing of products and services comparable to your market competitors.

Review cash balances:

The coming of summer characteristically causes many businesses to postpone their huge purchasing decisions until the fall. This is typically a crucial time for small businesses because they have to pay fixed expenses like utility bills, office rents, etc. whether revenue is falling and you are at a loss. During this slow business period, you must prepare yourself well for the fall, maintain enough cash balances to get through successfully until your normal business is back. Reviewing of sufficient cash balances is a significant step for financial spring cleaning. If you contain adequate funds, it’s sensible to go for a working capital loan or a new line of credit.

Discover opportunities for re-negotiations:

Almost all business need to do long-term contracts. These contracts may include leasing a costly piece of equipment long-term instead of purchasing it or making a long-term service contract. All of these agreements are done to save money, sometimes a huge amount of fixed costs are allocated each month to pay for the fees of these contracts. These contracts should be reassessed and opportunities for re-negotiation should be explored so that money can be saved.

Analyze your subscriptions:

Many small business subscribe to different types of software. Some of them are only required for a specific project or a limited time, but due to hectic business routines, you don’t remember to cancel that subscription after it is no longer needed. In many cases, these are automatically renewed, as software companies have your credit card numbers. Each month, subscription fees are deducted and you may not even notice. A financial spring cleaning provides you the opportunity to re-evaluate all recurring expenses and cancel such subscriptions which are not in use.

Final thought:

Just like spring cleaning is necessary for cleaning your home and enjoying the refreshing feelings of doing so, a financial spring cleaning is also a good step to refresh the productivity of your small business and improve it’s financial health. To keep your business prosperous, a periodic and detailed review of the business and making adjustments accordingly is necessary.  And, good news!  It doesn’t have to be spring for you to start!

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.

It's nice to see the company grow!
Most small business owners come up short on cash flow despite the fact that their businesses are gaining revenue. Cash flow is the net amount of cash and cash-equivalents moving into and out of a business.

The simplest and quickest way to sort out cash flow problems and improve cash flow in your business is to collect receivable income as soon as possible and slow your payments down wither your suppliers without burning bridges. But, this formula cannot be applied for long and without proper planning. 

Plan and implement policies to improve cash flow in the company.  Here are five ways to improve your cash flow:

1. Bookkeeping

Keep an eye on your Budget.

  • Keep a strict check and balance on the expenses going on in the business. Do not sign any reimbursement application before double checking the purpose, date, and invoice number.
  • Avoid frauds.
  • Cut down on unnecessary expenses.
  • Manage business operations more effectively.

Decrease Expenses in the Business.

  • Eradicate unnecessary expenses in your business. If your advertising is costing you too much, then utilize social media and directly interact with your potential customers on those outlets.
  • Try not to borrow money for a rapid growth in business.
  • Do not mix your personal expenses with the business expense.

2.  Delayed Customer Payments and Discounts

  • Many customers delay their payments. In small business, if you are running short on income, quickly generate invoices and send them to customers immediately. This will minimize the delayed payments by the customers to some extent.
  • Offer offering your customers some discounts if the payment is made within a given time frame before the deadline. Always encourage your clients to pay quickly.
  • Keep a check on discounts being given to the customers. Reducing prices often negatively affects the net profit ratio and revenue in your company.

3.  Overstaffing

  • Business owners have to manage a lot of business operations. Especially, at the start of business, many small business owners hire more staff than is actually required. Overstaffing has a negative effect on small business income and growth.
  • If your business wins a project and you need more staff to accomplish the task before the deadline, you have to increase the payroll of your company. A temporary project also increases the expenses in a company. This is a common scenario in construction companies, landscapers, and designers. Construction businesses often outsource their employees depending upon the complexity of projects. This process is predictable and calculable. Prepare in advance and plan out the finances and other issues. You can set money aside for the last season in business or borrow money for the project funding until the next season yields revenue.
  • You can manage your employees by re-arranging shifts or paying overtime until the project is finished.
  • This management is a way to improve your cash flow

4.  Clear Debts and Liabilities Early On

  • List all of your debts and other liabilities that your company has to pay.
  • Make a priority list.
  • Keep monthly savings in another account for the payment of debt if taken or for making other on-time payments by your company.
  • Keep the money for monthly payment of the debt. Do not use this money for any other purchase. Otherwise, the debt with interest will keep piling up.
  • Sacrifice the fast track for slow growth or you will have to take debt for your small business.
  • Managing your liabilities and paying them on time will also improve your cash flow.

5.  Section Your Customers, Suppliers, and Inventory

  • Focus on your inventory. “Was the purchase made necessary, is the stock not ‘too much’?”
  • Manage your inventory. Do not purchase extra stock.
  • Focus on your suppliers. Who supplies you on time and on better terms and conditions?
  • Focus on key customers that give your business a big margin in profit and generate great revenue.

Conclusion

Cash flow problems are very common for small sized businesses. Business owners should know the ways to improve cash flow in a company. Managing expenses, keeping an eye on accounting and bookkeeping, on time payments and receiving payments on time, and clearing out debts are ways to improve cash flow in a company.

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.

 

Businessperson in office work together with network effect. concept of partnership and teamwork. double exposure
Accounting is key for small business owners, however, it can be overwhelming and stressful. The easiest way to manage business finances is to utilize the tools available in the market. There is accounting software available that helps you manage cash flow, generates invoices, have an audit-ready business, and make preparations for tax time. These tools make handling your small business customers and expenses more efficient.

Following are the eight top-rated small business accounting tools which are used to manage your finances and bookkeeping functions in the business.

  1. QuickBooks Online

QuickBooks is a bookkeeping and small business accounting tool used to handle accounting operations. QuickBooks is developed and marketed by Intuit. QuickBooks is used to:

  • Generate invoices with the logo of your company and with all details required by your customers
  • Process payrolls according to HR policies
  • Manage all business transactions, including bills from suppliers and vendors
  • Manage your inventory
  • Track expenses

QuickBooks can be accessed from your laptop from anywhere you want. QuickBooks is used by small business owners to simplify accounting operations and manage finances in a short amount of time. It is affordable and easy to use software that can easily be learned and used by small business owners with no financial background.

  1. Freshbooks

Freshbooks is a well-known software used by small business owners, freelancers, and entrepreneurial agencies to handle accounting processes. It is a user-friendly tool and is preferable for a service provider.

Following are the features of Freshbooks:

  • Generating invoices
  • Managing expenses
  • Accepting payments from customers
  • Generating automatic reminders for payments
  • Managing clients of each project with pricing
  • Stellar customer services

  1. Xero

Xero is a wonderful software with a wide range of small business accounting tools. It is a good choice for online product sales.  Xero is used for:

  • Bookkeeping
  • Paperless management of expenses
  • Payment in 160 or more currencies with the ability to convert and update exchange rates automatically
  • Generating invoices and quotations
  • Tracking and managing inventory
  • Generating purchase orders
  • Automatic reconciliation of accounts
  • A dashboard with bank balances, expenses, and invoices
  • Customized reports required by the small business
  • Tracking cash flow in real time
  • Graphical presentation of data
  • Data can be shared and accessible to accountant and others
  • Generating customized reports and reminders to customers
  • Scheduling of Payments and returns

  1. Zoho Books

Zoho Books is a good choice for both a product seller and service provider because of having CRM and time-tracking features. Bookkeeping is also available in Zoho Books.

  1. Xporter Data Export Tool

Xporter isn’t specifically an accounting tool. It is used to export stored data to an Excel file. Any kind of required reports can be generated and automatically emailed to desired contacts.

  1. SimplyCost

SimplyCost is simple and economical Shopify app used to create profit reports. It tells you the actual profit you are gaining from the sale of a product. It also keeps track of worth of inventory.

  1. Profiteer

Profiteer is an app to track the cost of goods sold and variants. It is able to export a CSV report of the total value of inventory and profits. Currency fluctuations are also catered by this app and an accurate report of profit is generated for a specific period.

  1. GoDaddy

GoDaddy is also simple and economical to use. Mobile access and time tracking are present. But, the payroll option is missing. It estimates quarterly taxes. Live support is also present in this small business accounting tool.

Connector apps are used to connect and integrate accounting software. By integration apps, data can be transferred automatically from one application to another and to other partners. This is a time saving and easy to use application and used to export all kinds of data related to tax matters, customers, and expenses on a single click.

These connector applications are for:

Conclusion

While purchasing accounting software, detailed homework of your business needs should be done. Invest wisely in the purchase of a small business accounting tool according to the nature and volume of your business.The more specific requirements for a business also require an efficient and effective accounting software to manage finances and bookkeeping in the business.

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.

Close-up Photo Of Businesswoman Hand Giving Cheque
Many bookkeeping software solutions are more alike than they are different, in terms of features. Standard components include overall ledger management, invoicing, and payment processing. Every association has different requirements and needs. They can be customized for their size, kind of employees and clients, and the particular industry they are in. For these reasons, no system can proffer perfect functionality out-of-the-box. If you need a lifeline when it comes to processing payroll—and avoiding the feared late payroll tax—not to worry. Plenty of small business owners struggle with those exact same problems: you’re not the only one. Check out these top-notch payroll-focused accounting tools listed below.

1. WagePoint

WagePoint is a simple online payroll application designed for small businesses in North America. Managing payroll is important for small and mid-sized companies and WagePoint gets the work done quickly and easily. WagePoint can manage government remittances/reporting, direct deposits, and all year-end reporting for both hourly and salaried workers. WagePoint is an instinctive, easy to use, web-based payroll software. It is perfect for small businesses seeking to pay their employees or contractors while remaining compliant with IRS regulations. It is an ideal app for companies in a wide range of industries.

WagePoint is used by thousands of small businesses and it offers an easy-to-use interface that allows establishments to set up the app in a few hours. The salesperson offers a service called “Switch It” – for businesses with more than ten employees, to help them switch over their existing payroll system to WagePoint.

2. Gusto

Gusto (previously named ZenPayroll) is a completely featured payroll, welfare administration, and compliance management platform. It has been designed to assist mainly small businesses. Gusto provides tools to manage core HR needs such as time tracking, hiring, onboarding, and training, among others. With devoted online accounts, employees can fill out their personal details into the system and track all paperwork in one chief place. Companies can mechanize their payroll operations by scheduling payment and benefits release. Payments can be made via direct bank deposit or through check. The solution automatically delivers electronic pay slips to an employee’s inbox upon completing the transaction.

Employees even have the choice to make charitable donations to their association of choice, directly from their paychecks. The solution mechanically calculates, pays, and files a company’s local, state, and federal payroll taxes. Some of the supplementary features include custom reporting, multiple pay rates, multiple pay schedules, and third-party calendar integrations.

3. SurePayroll

SurePayroll is a complete online payroll solution for every business. On top of that, SurePayroll has also created an administration platform in its payroll software called One-Click Payroll. It simplifies all of the procedures related to payroll in just a few seconds without bargaining accuracy and reliability.

The bookkeeping software comes with an interactive, customizable dashboard. Another highlight of the system is that it supports multiple payroll types and calculates and delivers payroll taxes. Many businesses choose SurePayroll to handle their payroll processes because of its extensive set of payroll-processing tools and unparalleled recordkeeping. SurePayroll is built to streamline the payroll process with its awesome tools and excellent third-party integrations. It is a solid option for any business that is looking to get software that will make payroll faster yet very accurate and reliable.

With SurePayroll accounting software, workers can easily check their payroll information, including paychecks, vacation leaves, pay stubs, and more. They can also do all of these via their smartphones, tablets, and other mobile devices. The system also takes care of taxes by automating the processes while maintaining compliancy with the company’s payroll services. Customer support is also credible. The software fields knowledgeable and responsive support staff as well as an easy to access support center.

Conclusion

Aside from key features, when choosing the best bookkeeping payroll software for your business, consider these other accounting aspects: ease of use, compatibility and integration, and security. More importantly, you should prefer a cloud-based software model.

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.

 

LOAN DENIED CONCEPT
Nobody likes rejection, whether it’s from someone you love, a job interview, or a bank loan. As a small business owner, the feeling is relatable as only half of all small business loans are approved. Despite the fact that small businesses have many lending options, it is still an arduous task for them to acquire any type of credit. The high number of lending options might actually be making things worse rather than better.

Surveys reported that almost 45% of small businesses loan appeals have been rejected more than once and about 23% of them have no idea why. To clear the dilemma, here are the most common reasons that contribute to the rejection of small business loans.

Bad Credit Scores and Financial History

A credit score is one of the most imperative measures of a person’s creditworthiness. Banks heavily rely on credit scores to make decisions regarding approval. Therefore, they set interest rates accordingly. Credit bureaus are responsible for keeping track of credit scores. A bad credit score is often due to several reasons which include late or missed payments on credit cards, loans, vendors or any of the sort. Banks will approve small business loans after looking at credit history to minimize their risk. If your business has a bad credit score for any reason, you should immediately take measures to improve it.

Some small businesses are too new to have any sort of credit history. Such a situation is harmful when it comes to scoring a loan. To elevate their personal and business credit scores, business owners must make payments on time, spend well under their credit limit, and keep their credit accounts open. However, this requires business owners to make smart financial decisions that will eventually lead to higher credit scores.

Lacking Collateral

Banks and other lending associations require a collateral, typically a fixed asset such as property, to guarantee that the loan is repaid. A start-up venture often does not have resources to put up as collateral and might not be willing to risk their personal assets for the purpose. The amount that is approved as the loan is equivalent to the value of the collateral.

Homes and cars are the most popular options for collateral among new businesses. However, that can be a big risk and must be thoroughly analyzed before advancing. Online lenders are a better option when it comes to securing small business loans without the collateral, however, the interest rates are significantly higher.

Weak Cash Flows

Lenders want to see businesses that have enough money to sustain their daily business operations as well as make monthly loan payments. A healthy cash flow is absolutely vital for the survival of any business and lenders know that. However, small businesses often struggle to keep a steady balance in their bank accounts because they have to make advance payments to vendors.

If the amount of money going out of your business is more than what’s coming in, it can be hard to acquire a small business loan. Business owners need to implement changes into their current business model so that the cash flows improve. Lowering expenses and looking for ways to grow your business are the only ways to improve cash flow and eventually qualify for securing a loan.

Pursuing Small Business Loans

Small businesses often look for loans that amount to less than $100,000. Banks, on the other hand, want to approve larger loans because they are more profitable for them. The cost of processing a $20,000 loan is the same as processing a $1 million loan. Therefore, the predisposition.  It does not mean that you have absolutely no chance of getting a loan approved, merely suggesting the way banks look at small business loans.

Small businesses, however, can acquire a loan from other sources such as online lenders and personal contacts if the amount is relative to the size of the business. You also have a better chance of getting a loan approved from a community bank, provided you have good relations with them. Having a banker that recognizes your business can be a blessing, as your chances of approval raise significantly.

Avoiding the possible scenarios mentioned above will ensure that your small business loans are approved by lenders. Always ensure that the applied amount of the loan is fitting to the needs and requirements of your business. Don’t go for a higher amount just for the sake of it. Instead, calculate the exact amount you need to maneuver your business towards its mission.

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.