According to the SBA (Small Business Administration), around 35 million small businesses are operating in the United States. However, with the business environment being as saturated and competitive as it is, the survival rate for small businesses has decreased significantly.
Small business owners always need to be looking for an edge over their competition. They need to find every advantage and use it to their fullest extent. For many small business owners, one of those advantages comes in the form of advanced accounting software. It provides many benefits that can give small business owners a leg up on their competition.
Many people get into the business world because they have the ability to efficiently manage day-to-day operations. While this is an important aspect of running a business, it only scratches the surface. To be a successful business owner, you must also focus on sound accounting and bookkeeping practices. These financial pillars will keep your business running smoothly and profitably.
Here are some common financial management mistakes made by small business owners:
Incorrect record Bookkeeping
Financial record keeping can be tedious, and it's easy to see why new business owners might want to cut corners in this area. However, poor financial record keeping is one of the most common mistakes made by new business owners. While efficient record keeping can add to your expenses, it’ll pay for itself many times over in the long run.
Too much inventory can be a real problem for small businesses, especially if they have initial success. More inventories can mean more revenue, but it all depends on sales. If sales stay high, then it's no problem. But if sales drop, that extra inventory just becomes wasted money. When you have too much money tied up in things you don't need, it can cause cash flow issues for your business
Shortage of contingent funds
Having a contingency fund is vital for any business. Why? Because things don't always go as planned and you need to be prepared for when they don't. If you make any of the financial mistakes mentioned below, your business could lack the funds for things like bad debts and asset depreciation. Plus, your business might not be able to afford insurance against fire, flood and other accidents.
How Accounting Automation Can Help Achieve Long-Term Organizational Success?
Poor financial planning and data organization can lead to a lot of financial mistakes. If your company's financial data is a mess, it will be hard for the owner to get a clear picture of the business's finances. This can cause them to make bad decisions about the business. Also, when a business's finances are disorganized, it can slow down the workflow and hurt productivity.
Automated accounting is a great solution for businesses that need to improve their inventory management, customer relations, and cash flow. Accounting software like QuickBooks enterprise cloud hosting can help you plan for your business's future and keep track of your finances in one place.
It is a great bookkeeping tool that enhances an organization's financial and accounting processes. The software organizes your business's financial data and combines it into a single, convenient interface. Accounting automation allows you to easily consolidate your organization's data, so that you can have all of your business' finances at your fingertips. This saves you time and money, and reduces errors and mistakes. Vendor or customer calls you with a query, or you require some critical details to solve a problem yourself, it provides you with the information you need instantly.
Accounting is more than just a numbers game. When used correctly, this provides a plethora of benefits that can make your business run more smoothly.
But how do modern day accounting tools manage to do all of this? Let’s take a closer look.
Helps you find the right balance between expenses & income
Before you can even think about improving your business's cash flow, you need to figure out where the financial bottlenecks are. Cloud based accounting tools such as QuickBooks enterprise cloud highlights this information in your emails for both expenses and income. Not only can you easily view all your past-due invoices, but it also allows you to automatically send reminders and automates the process of delivery as well.
Better & improved customer interaction
Your customers are the bread and butter of your business, so you need to have a clear understanding of their payment history and details, as well as all current, past, and future transactions. Customer Information Records template not only provides all of that, but also gives you access to customer contact information and real-time status updates of their payments and invoices, time activities, etc.
More profitable & stable inventory
Maintaining proper inventory levels is the key to success for any business that sells goods. Overstocking unnecessarily ties up large portions of your resources, while under stocking will turn away potential customers and result in lost future business. Modern accounting software’s helps you keep track of your inventory so that you always have the right amount on hand. Its inventory tracking feature gives you a complete picture of your stock levels and sales, so you can tell when it's time to order more and how much to order.
Helps your business to grow & scale
Being prepared for growth is essential for any business, even if you have no intention of expanding. Opportunities for expansion can pop up at any time, and being ready with the necessary capital is crucial.
If you’re in the business of pitching proposals to investors or applying for business loans, then you know that a lot of financial information is required. This information comes in various formats, and in addition to regular financial statements, your potential lenders or investors might ask for specific types of reports. Accounting software like QuickBooks enterprise hosting has templates for lots of financial reports and statements, like Profit/Loss Statement, Balance Sheet, Cash Flow Statement, etc., and it can generate them quickly.
Accounting automation with the help of modern day accounting software’s can help you not only keep track of your finances, but streamline a variety of business processes. By putting all of your data into one user-friendly interface, you're able to get a 360 degree view of your company's finances. This allows you to make sound decisions that will help your business be successful in the long run.