Many of the small-medium business owner or business start-ups treat accounting as an administrative function that adds little value to the business. It’s just a good-to-have instead of must-have services. However, a good accounting process will provide a deep financial and business insight that directly impact your expenses and revenue.
In the real world, a business that doesn’t use proper accounting services or procedures can cause some missed income and needless losses. Here are some troubles commonly experienced by SME who try to operate without the proper bookkeeping services in place.
Delayed accounts payable
Accounting process has to be well managed in order for a successful business. Without a proper accounting process, your company might not able to detect your creditor aging correctly. If your company fails to pay the invoice on time, your business may have incurred with the late payment charges, decreased creditworthiness, losing preferred rates or losing a supplier completely. The more complex the account payable, the more attention you should keep in all the accounting data with a proper structure.
Delayed account receivable
Besides that, your company accounting structure should not only focus on the outgoing expense. It also has to make sure that money keeps flowing into the company. Any of the non-paying clients, slow paying customers, and overlooked invoices can put a company out of business overnight. A business owner should be careful and oversight on their cash flow and debtor aging reports, once the debtor has exceeded the term, you should immediately take a proper action to collect all the unpaid debt.
Lack of financial information help on decision making
An effective accounting data will show a big picture for current company performance, things need to be improved, and how the decision made for the next forecast. Most of the business plan and key performance index can be measured against the balance sheet. Without an accurate data for current financial performance, management will be like planning a route with using map and GPS device, and last it will take longer time and face more obstacles to complete the journey.
One of the common mistakes that done by SME is overlooked in their taxes planning. A proper management shouldn’t be a problem for the company, but poor planning on the taxation forecast will limit the cash flow spending on other resources of business development. When there is bad planning on the taxation forecast, your company will always underestimate the actual tax charges, even not enough of cash flow to clear the taxes. A company should have a proper financial team that plans for future tax implication as their regular routine. One of the best ways is to hire the professional bookkeeping service for an effective payroll tax payments and quarterly filings.
In a study of business fraud case show that, most of the SME company owner lack of their internal fraud control like proactively monitoring their financial data. One of the largest fraud contributors is from financial statement fraud; many of them will try to adjust illegally because their management always overlooks the real account data. The best way to prevent this type of loss is to ensure consistency, transparency and regular oversight in the accounting department.
Last but not least, a good accountant must be able to tell you how your business is performing and the real meaning behind every single number in your books, not just entering data and crunching numbers. You can also easy to find out the errors in calculation or data entry, and that your hard-earned profit won’t be spent on fines or penalties. Do you want to keep your SME Business financially healthy? Find out AG-Singapore, if outsourced accounting is right for your business. Give us a call today, and let’s start a conversation. Or click the link below for more information http://bit.ly/AGSGHOME