3 Necessary Tools for Accurate Accounting

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Image result for Accurate AccountingProperly prepared, intelligently planned accounting lies at the heart of every successful business. Whether you choose to prepare your accounting in-house or whether you decide to outsource the work to a qualified firm, there are a few tools that sit at the heart of all accounting services.
1. Monthly Bank Monitoring and Account Reconciliation
If your bank accounts aren’t balanced every month and gone over with a fine toothed comb than you open your business up to potentially serious financial situations.
For starters a monthly bank reconciliation is going to give you an accurate overview of how your company is financially faring. Without a regular and thorough reconciliation you’re going to have to estimate how your business is doing financially, which hardly provides the knowledge necessary to make well informed decisions and predictions about how to proceed.
Regular monthly reconciliation of your bank accounts will also help you keep track of any accounting or spending errors that need to be dealt with immediately, and will provide you with the information you need to decide whether to make any significant changes to your company’s banking or investment strategies.
2. Monthly Income Statements
Your income statement is going to provide you with the most detailed and accurate breakdown of where your money is coming from and what you’re spending it on. There is no more thorough tool for understanding your company’s finances, line by line, and you should have an income statement prepared in full once a month.
In addition to providing you with an incredibly detailed understanding of your company’s expenses and revenue, your income statement will also help you identify how each department within your company is meeting, exceeding, or operating below their assigned budget, which is crucial when it comes to managing expenses and comparing your expenditures to industry averages.
3. Regularly Updated Balance Sheet
Your balance sheet will provide you with information that is specifically tailored towards helping you make actionable decisions for your company. One thing your balance sheet can and will provide you with is a quick and easy way to notice outstanding balances and debts that you owe, providing you with the information you need to adjust your payment schedule and the level of aggressiveness with which you approach collection and payments of your company’s debts.
More often than not, though, your balance sheet exists to help you spot trends in your earnings and payments and to quickly predict your cash flow in the coming months and years. This naturally provides you with the information that you require to make intelligent decisions about the financial future of your company, including how to prevent or plan for potential cash shortages.
Overall it is always a better idea to hire a qualified and properly trained accountant or accounting firm than it is to attempt to tackle this work on your own. Keep in mind that the above 3 tools represent a bare minimum, and that great accounting incorporates many more tools to make sure your company is optimizing its financial realities and planning for the greatest possible future growth, expansion and profits.

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