BEST PRACTICES IN ACCOUNTING & FINANCIAL PLANNING:

Every business owner wants the numbers of their business to be accurate and precise. If business figures are inaccurate, underestimated, or overestimated, they will give a false impression of the business and lead decision makers to make poor decisions for the growth of the company. Thus, a business should adhere to a few fundamental practices in order to make sure that its numbers give a clear and accurate picture of the company’s current financial position.

Here are some of the practices that a business should adopt in order to get accurate figures:

1. Follow one accounting method: One mistake a lot of businesses tend to make is that they follow more than one accounting concept or method at a time. This can cause serious disadvantages for the business. Using more than one accounting principle can result in inaccurate conclusions. Having understated or overstated results will result in poor decision making, which can sometimes lead to losses.

2. Keep your account and the business account separate: This is a very straightforward concept that every founder knows when they start in business. However, after sometime, founders can lose track between the business and ‘their’ account, losing track of capital they have introduced and funds they have withdrawn. This can lead to a shortage in cash flow or mistrust from other stakeholders or potential investors. A shortage in cash flow can cause serious problems and sometimes question the business’s survival as well.

3. Keep track of all expenses: A business has to face a lot of daily, monthly and annual costs. This can include overheads, variable costs, selling expenses, transport costs and maintenance expenses. It gets really difficult for a single person to keep a record of so many daily transactions, especially when the business is in its growth phase, which is why proper financial management is essential. When expenses are not recorded correctly, serious misconceptions can arise and can cause wrong impressions amongst the stakeholders. Having upset stakeholders can distract founders from focusing on growing the business. 

4. Do not hesitate to acquire professional help: When a business expands beyond a certain extent, it is difficult for the founders to keep track of all the daily transactions. He or she does not have the expertise to record so many transactions and prepare detailed reports regularly as they have to look at the operations of the business as well. Therefore, at that point you must not hesitate to employ professional help. You can hire a full time professional or even a part time freelancer who can prepare part of your final reports. You can also take help from online professionals such as Numeric, who make use of modern technology and software like Xero, to regularly highlight the business’s financial position.

Even though the points above are simple and fundamental, nailing them down can make or break a business, and can be of great help to someone who wants to start their own business and wants to know how to manage their finances properly. By following these practices, you can prepare accurate statements and keep detailed records of all business activities. 

At Numeric, not only can we take over financial management burdens or fix financial management pain points, but we also have the ability to produce executive reporting packs that give stakeholders the ability to guide their company’s growth on a monthly basis.

Are you a founder or decision maker looking to get a better grip on your finances and meet your #KPIs? Then contact us today!