"Success is not final; failure is not fatal: It is the courage to continue that counts." It’s not every day entrepreneurs think about the accounting processes within their business. Accounting is not all about just collecting revenue but more so about the steps it takes to ensure the process to collect money does exist and is clear to the leaders and staff. There are no shortages of details to consider when you’re a small business owner. Getting the back-office basics of accounting in order can make or break a business as it exist in any phase -- start-up, growth or expansion. Let's think about it, fees alone can be “atrocious” thus many experts recommend using an accounting software that will capture all accounting aspects of the business. It is important to pick a software that will suit your business needs not those of a colleague or friend. I say this because what is good for one business owner may not be good for another. However, if you are a business that cannot afford the cost of an accounting software and would rather maintain control in Excel worksheets then it's highly recommended a procedure guide is developed. The guide will provide direction and transparency to an important process within your business. Get your small business in order by starting with these tips:
1. One of the obvious and repeated suggestions is separating business and personal expenses. When it’s time to tally up deductible expenses, you want to be ready. Start today! 2. Understand when it’s time to pay for support. Choosing to hire a consultant or outsource a part of your business process can make a big difference. Not only do you get some of your time back to use on bigger projects you are also investing someone who speaks the professional language in those specific areas. 3. Dedicate time to update your records. Many business owners may choose not to hire a professional consultant to support with updating their accounting records or performing data entry. However, this decision can make a difference in the business. 4. Follow Up on Invoices and Receivables. Many business owners still invoice their customers and wait for payment. It will be key to plan for necessary follow-up calls to ensure the expected revenue remains consistent as budgeted. These accounting tips are all great ways to make small changes. Remember that proper, responsible time management of any task, especially accounting, is key. If you need support to get transition roles, Fontenot & Associates Solutions LLC, can work one to one with you on getting started.
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As a business owner it is an unpleasant fact of business that some customers will shoplift, some vendors and suppliers overcharge, some employees embezzle or steal assets, and some partners commit fraud against the business. None of this is new news but it is low priority news for small medium business owners. To protect against these threats, a small business should put into place and vigorously enforce internal controls. Monitoring the internal control system is used to locate weaknesses and improve controls. Monitoring often includes observing employee behavior and accounting system for indicators of control problems. Some indicators are below: Warning signs with regard to people:
Evaluation of controls are often performed too late. Establish your policies and procedures to ensure a reference guide for your employees and also for management so that they understand and have additional assurance on how the financial statements are being prepared. Fontenot & Associates Solutions LLC offers unique solutions for your business, visit our website to learn more and start today. Various precautions can be established to prevent or at least minimize losses from all types of dishonesty! Let’s be BOLD together. The best preparation for tomorrow is doing your best today. All achievements, all earned riches, have their beginning in an idea. – Napoleon Hill The accounts payable process (also known as A/P) or function is immensely important since it involves nearly all of a company's payments outside of payroll. Regardless of the company's size, the mission of accounts payable is to pay only the company's bills and invoices that are legitimate and accurate. The amount of invoices paid daily within a company will depend on the size and activity.
Key items an Accountant should look for when reviewing invoices are:
Research has identified a few tips related to accounts payable that may allow your business to run a bit smoother.
Find more solutions today, Fontenot & Associates Solutions, LLC. Don't Be Confused About the Importance of Reconciling AccountsWhen I speak to small business owners about account reconciliations I often get the look of, my business does not need that. But, as a small business owner do at least have an idea of when you may need it? Is it documented in your business plan of when you will execute the process and train your assistant or staff on how to complete the task? These are the questions I would like many small business owner who are busy with building their business to consider and think about for a moment. I would like to share a great example of a standardized process I read recently in an article published by Journal of Accountancy, which was golf courses. Can you imagine the chaos that would exist if holes weren't numbered and golfers could choose to play any hole they wanted at any time? The same holds true with a company's account reconciliation process. In our August 2016 "Fontenot News", we share our knowledge, research and identify the importance of account reconciling for your business. Enjoy it! I encourage you to share it with one of your colleagues today and increase the awareness. Your business deserves clear goals and processes that will define just how sustainable your business is, will or can be. Fontenot & Associates Solutions LLC, we bring business visions to reality . Click here to schedule your consultation. “Make your team feel respected, empowered and genuinely excited about the company’s mission.” The life of a business owner brings along the duty to wear many hats each day. Just think, you must juggle the ideas of new projects, the color selection of your office, customer service, the business attire culture, marketing and of course the finances of your business. Finances are the critical aspect of your business and everything else follows suit, wouldn't you agree. If the finances are not managed, reviewed, outlined and budgeted the day to day operations will be a bit more challenging to sustain in a competitive market. Now is a great time to learn more about budgeting and expand on the basics of what it really means to a business minded individual just like you. Budgeting has been a way of life for many of us. Think back -- as a student, you budgeted your study time and your money. Governmental agencies budget revenues and expenditures. Businesses use budgets in planning and controlling their operations. Through budgeting, it should be possible for management to maintain enough cash to pay creditors, to have sufficient raw materials to meet production requirements, and to have adequate finished goods to meet expected sales. A budget is defined a formal written statement of management's plans for a specified future time period, expressed in financial terms. It is known to represent the primary method of communicating agreed-upon objectives throughout the organization. It promotes efficiency and serves as a deterrent to waste and efficiency. Accounting information makes major contributions to the budgeting process. Just think, from the accounting records companies can obtain historical data on revenues, costs, and expenses. These forms of data are helpful in formulating future budget goals. It is time to ask yourself as a business owner, how you plan to measure success? How will you plan ahead for the business? The budget itself, and the administration of the budget, however, are entirely management responsibilities. A great start to the success of this process is by establishing an extensive policy and procedures guide to ensure those responsible for gathering the details of what management needs for reporting and compliance is accurate and retrievable. It is never to late to get started! Success is in the eye of the beholder and Fontenot & Associates Solutions LLC is available to get you started. Visit our website today and join our mailing list to ensure your getting the information you need directly into your inbox. “Success is walking from failure to failure with no loss of enthusiasm.” – Winston Churchill Can we all agree that debt is just one of those things that sort of creep up on you? In the beginning phase you feel in control of it all but all along the way you start to notice things like -- invoices are not being paid, revenue is not be posted to the correct accounts or a vendor is being overpaid due to duplicate payments. These are all errors that can and will allow for debt to become your number one priority in business instead of the least concerned aspect of the business as a whole. The first moment many business owners think about the word "debt" is when they are deciding if a business-line-of credit is right for them are when completing their first bank loan application for their business after already consuming huge amounts of debt. While the moment of creating business debt may be inevitable, Fontenot & Associates Solutions, LLC is here to share a few tips on how to handle it and stay on track.
In addition, business owner's should consider determining their debt ratio before committing to more debt. The current formula to this equation is Debt Ratio = Total liabilities/Total Assets. The debt ratio should be compared to competitors and industry averages. Industries that have stable earnings can handle more debt than industries that have cyclical earnings. These are the evaluations business should have consistently in order to know what needs to be improved. If as a business owner, you are unsure of how much of incoming cash flow is used to pay liabilities each month -- than you are to far away from the reality of your business. One of the key tools to improve this starts with implementing extensive policies and procedures. These procedures would be designed not only to ensure accuracy from the staff handling the day to day finances but used also as a great reference tool for management to understand more of the details with-out being hands on into the day to day details. It's never to late to get started with improvements -- choose to start yours today! If you know of a business seeking to identify the allocation of their cash flow and/or improve current processes, Fontenot & Associates Solutions, LLC is here to support with their business needs. “There’s lots of bad reasons to start a company. But there’s only one good, legitimate reason, and I think you know what it is: it’s to change the world.” – Phil Libin, CEO Evernote Analysis is a KeY Tool to Pointing Out A Financial IssueBeyond the belief of many business owners who hire employees with 20+ years of experience, not all professionals are skilled to analyze data without management direction. The skill of analytics has been identified as beyond necessary as well as critical to the compliance and financial position of an organization. The analysis of financial data employs various techniques to emphasize the comparative and relative importance of the data presented and to evaluate the position of the firm. These techniques include ratio analysis, common-size analysis, review of descriptive material and comparison of results with other types of data. The information derived from these types of analysis should be blended to determine the overall financial position. The American Management Association research has shown that analytics are important today and will be even more important in the future."Overall, 58% of company leaders say analytics are important to their organizations now, and 82% say they will be important in five years. Less than 1% of companies say analytics will not be important to their business in five years, an unambiguous indication that analytics will be a ubiquitous part of the business world by the end of the decade." Business owners must remember that financial statement analysis is a judgmental process. One of the primary objectives is identification of major changes (turning points) in trends, amounts, and relationships and investigation of the reasons underlying those changes. Often, a turning point may signal an early warning of a significant shift in the future success or failure of the business. Knowing this, ignites the importance of establishing extensive policies and procedures for staff professional development and process improvements. It's a fact that absolute figures or ratios appear meaningless unless compared to other figures or ratios. Having 60% of total assets composed of buildings and equipment would be normal for some companies but disastrous for others. One must have a guide to determine the meaning of the ratios and other measures. One type is trend analysis which studies the financial history of a business for comparison. By looking at the trend of a particular ratio, one sees whether that ratio is falling, rising or remaining relatively constant. The factors help detect problems or observe good management. A great example of the month to month financial comparison analysis is provided below by Illinois Small Business Development Center. A businesses ratios are more than just numbers to your investors and banks and should mean the same to a companies professional staff. Take the first step in improving the business culture plus the professional skills and knowledge base of staff which can lead to the prevention of costing companies millions due to preventive errors or non-compliance matters by developing an extensive reference guide tool. Click here to let us know when you would like to get started! Embrace what you don’t know, especially in the beginning, because what you don’t know can become your greatest asset. It ensures that you will absolutely be doing things different from everybody else.” Keeping up with small day to day expenses can become overwhelming for a small business owner. A company often has to pay small amounts for such items as postage, office supplies, or minor repairs. Although small, such payments may occur often enough to total a significant amount. Writing a check for such small amounts in not practical and using your bank card could cause you bank balance to reduce to an unexpected amount and important payments may go unpaid. Thus, instead, a business owner may choose to maintain a special cash fund, called a petty cash fund. Generally, a petty cash fund is established by estimating the amount of payments needed from the fund during a period, such as a week or a month. A check is then written and cashed for this amount. To ensure this special account is managed on a daily basis, business owners will choose a responsible team member to disburse money from the fund as needed. For control purposes, the company may place restrictions on the maximum amount and the types of payments that can be made from the fund. Each time money is paid from petty cash, the responsible team member, records the details on a petty cash receipts form. The petty cash fund is normally replenished at periodic intervals, when it is depleted, or reaches a minimum amount. To illustrate, assume a petty cash fund of $500 is established on June 1. June 1 Petty Cash 500 Cash 500 A key thing to remember is that the only time Petty Cash is debited is when the fund is initially established, as shown in the preceding entry, or when the fund is increased. To support with the control of the petty cash account a business owner should establish clear business goals with the development of an extensive guide. This guide will outline the purpose of a petty cash account, applicable expenses the funds should be disbursed for and how often. An established guide would be a great reference tool. If you need support with reconciling your petty cash account -- we are just a click away. It's never to late to get started, click here to schedule your FREE consultation. Source:CorporateAccounting
Source:SBA.gov
The only place where success comes before work is in the dictionary. – Vidal Sassoon Before deciding to start your new business, entrepreneurs should consider completing the task of determining their net worth. The process is pretty simple but a path rarely traveled by entrepreneurs before launching their business. Taking the step to create a foundation for the creation of a financial plan that reflects who you truly are says a lot about your future success. Just imagine how many professional before you wish they would have slowed down and taken a step back in order to take a huge leap forward. Think about it, once you start your journey of turning your dreams into a reality when does that process ever slow down? It doesn't. Each new day gets you a step closer to your dream goals, so why would you stop. Understanding this, now is a good time to "stop" and define what success means to you especially financially. Start with gathering all of your most recent important documents such as retirement statements, bank statements, insurance documents, home-owner deeds, investment accounts and automobile titles. This will provide you an idea of your current net worth (Assets - Liabilities) before making the decision to use personal funds to fund your business start-up. I encourage you to not be afraid to know this fact about yourself? It's nothing to be ashamed of - it's more of a stepping stone and a first step in establishing future goals. Consider how you can improve your net worth with the tips below.
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AuthorMy mission is to offer the best accounting and operations solutions and tips for entrepreneurs and small to mid-size companies worldwide seeking to close their process gaps with actual solutions. |
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