A business owner has a lot of responsibilities to take care of on a daily basis, and one of the most important tasks that needs to be accomplished is the management of the company accounts. Without the right accounting and finance staff in place, as well as the right tools on hand, a business can quickly lose track of the money that is coming into, and going out of, the organization every day. So if you are a business owner of a company of any size, continue reading to learn more about why every business owner should always make it a point to stay on top of their company accounts.
Customers Don’t Always Pay on Time
You may really enjoy working with your customers, and you may really think highly of them and be grateful for them, but the truth is that not all customers will be responsible enough, or able, to pay their invoices on time. Some customers may insist on very long payment terms of up to 90 days after an invoice is generated by your accounting staff, while other customers may only pay partially rather than in full and expect you to simply accept that. The worst customers, however, are those who habitually do not pay their invoices, yet continue to come back to you for more products or services. To fix this problem, all you have to do is employ invoice factoring, which is also known as invoice financing, into your daily accounting flow.
Invoice factoring works very simply: you create an invoice and then “sell” that invoice to the invoice factoring company that you are working with. They will then provide you with anywhere from 70% to 90% of the value of that invoice so that you get immediate cash flow to continue doing business every day. After the customer pays the invoice in full, you will receive the remainder of what you are owed and you will pay a fee that will be based upon the value and term of the invoice. This process is so simple, but it could be the best way to improve your cash flow and stay on top of your accounts.
It Is Easy to Lose Track of Receipts for Payments
A lot of business owners make the mistake of failing to save all of the copies of their expense receipts when they make payments for products and services that help their business grow. This is often just a matter of not being on top of their company accounts, but it could lead to serious consequences, such as cash flow problems, accounting inaccuracies, and tax issues. If you have ever looked at your monthly statement from your bank account only to find charges that you can’t associate with a product or service that you purchased, things probably got very confusing right away.
So whether you purchase supplies, equipment, or even a business meal during an important meeting, make sure that you keep the receipt and properly file the expense. You also want to stay on top of whether an expense is a personal one or a business expense, and you should make every effort to prevent paying for personal expenses with your business’s credit card. Again, you never want to deal with improperly reported expenses on your tax returns, as that could result in an audit that forces you to pay a higher tax bill than you expected.
It Is Important to Keep Track of Your Assets, Too
In addition to keeping track of your accounts receivable, accounts payable, and your expense receipts, you also need to keep track of the value of your assets. Accounting assets will often include tangible assets, which would be everything from your property and equipment, to your land, tools, and cash, as well as intangible assets, which would be your copyrights, trademarks, patents, and stock.
Knowing what your assets are, as well as what they are worth and how they are depreciating will allow you to keep track of their value over time, and you can use that information on your tax returns. Writing your assets off on tax returns will help you reduce the amount that you owe or perhaps even get a bigger refund.
There are a variety of reasons why it is so important for every business owner to stay on top of their company’s accounts. Setting rules that should be followed daily, and creating a to-do list that is easy to follow, will allow you to more easily manage your accounts without falling off track.