Keeping track of finance and accounting is often one of the hardest parts of running your own small business — but your business depends on it. Some parts of accounting are more challenging than others, and can take extra effort to understand and manage properly. So what can you do to simplify your small business accounting and run your business more smoothly?
We’ve brought together three of the main challenges that small businesses face, so you can manage the financial and accounting tasks your business requires without being overwhelmed.
Trouble Handling Accounts Receivable
Accounts receivable can be a significant headache because your small business needs money coming in, especially the money that was promised. Service companies generally get paid after the work is completed, but many businesses end up with unpaid invoices, at least for a portion of time. Missing that amount of money for any length of time and managing the process of collecting, processing and reporting those payments can all be challenging.
Difficulty Deciphering Cash Flow
It can be hard for many small businesses to have a complete grasp of cash flow. It can seem like the business has a certain amount of money coming in, but some of that money might not be paid until a future month or something could go wrong with a sale, meaning that the business shouldn’t count a sale until it is complete. At the same time, it’s essential to see every amount that is leaving the business due to various expenses, as well as amounts that need to go back into the business. Without proper tracking, it can be difficult to see actual profits.
Taking Care of Payroll
When your small business has employees, the payroll process can be another major headache. Some challenges in this area can include:
- using outdated payroll methods
- having trouble managing the time and effort involved
- keeping employees’ information secure
- having difficultly keeping up with laws, tax requirements and changes
What exacerbates the situation is that payroll needs to be completed on a constant basis.
How to Avoid These Headaches
A survey by Wasp Barcode Technologies showed that many small businesses do not seem to have enough professional help when it comes to accounting. While 71 percent of the small businesses surveyed outsourced their tax preparation to an accountant, only 50 percent outsourced their payroll process and just 14 percent outsourced bookkeeping. Also, only 25 percent of the companies surveyed with 11 to 25 employees had a CFO or controller, and 46 percent of companies with 26 to 50 employees did. At the same time, just 14 percent of the small business owners claimed to be extremely knowledgeable about finances and accounting.
Small businesses can work to rectify the financial headaches they face and avoid these challenges from happening in the first place by having dedicated professionals take over this role.
Some businesses might decide to hire an accounting department, while others will focus on outsourcing accounting and bookkeeping service in Atlanta to an experienced and professional firm. Professionals can take over this part of the business, so the owner and other employees will be able to focus on their own strengths. By choosing an accounting firm, the small business will ensure that financial experts with knowledge and experience are managing its finances.
These professionals are equipped to perform accounting services correctly and according to regulations and laws, while keeping up with changes in the field. Accounting services can help a small business streamline its accounts receivable, cash flow, payroll and other financial areas to help the business function properly and stay in business.