Great business owners always take the time to monitor their company’s expenditures and income, regardless of the amount of workload they have. This particular task is important to ensure that their accounting books remain as solvent as possible and avoid going in the red.
It’s also a good tactic to help them analyze how and where their expenditures go, as well as to monitor potential sources of revenue in the future. In order to maximize cash and revenue inflows, entrepreneurs must adopt the best practices related to accounting and bookkeeping into their operation.
Here are a few suggestions you can implement to increase your chances of having a healthy bottom line.
1. Double check records to correct any errors.
Set aside a few minutes per week to run a fine-toothed combed through your records to spot mistakes. While it might sound tedious, it’s very efficient because you can immediately course-correct it before it’s too late.
Take a look at the little details such as banking information, invoice amounts, and the like.
2. Hire professionals.
If you don’t have the time or the inclination to check your books, consider hiring a professional or a firm that provides accounting services in the Philippines.
Aside from being experts in double-checking figures and keeping track of any budgetary constraints, an accountant or bookkeeper can give you expert advice on what your next steps should be. They can give you tips that are tailor-made specifically for your own needs while considering particular issues you have with your company’s books.
3. Ensure invoices are delivered for completed orders.
Set up a Sales Order report based on the approved estimate or purchase order. Verify that you review it as well so that you can see all the services or products that have been delivered in one place.
This is also where you can check for unintended oversights, such as products that have been delivered without preparing an accompanying invoice to reflect that transaction.
4. Do regular inspections of Accounts Receivables.
Review the receivable collections process right after invoicing. It’s best to monitor this process regularly, so that whoever is responsible for collections stays accountable and that anomalies can easily be traced.
There should also be a process in place for following up any delinquent invoices.
5. Review Quickbooks reports and perform comparisons.
Do this on a monthly basis and use the report to compare it for any improvements over a set period. Seeing this report allows you to implement changes for the better.
For example, if you spot an overspending in payroll during the previous month, check where those extra expenses went. Once you’ve isolated where the leakage comes from, you know which area to focus on when moving forward.
Doing regular comparisons, ideally from month-on-month reports will allow you to see which part of the business to invest in while letting go of expenses that don’t add value.
6. Provide a variety of payment methods.
Aim to shorten the time spent between invoicing to actual payment. If you can give customers the option to pay through an Automated Clearing House (ACH) or credit card transactions—then do it. The time it takes to fill out and send a physical check can be cut short with those other methods.
There’s also the option of making electronic transactions using a mobile device, which makes approving payments even easier.
As they say, an ounce of prevention is worth a pound of cure. Take the time to monitor your cash diligently flows to ensure that you’re running a tight ship. Your company’s accounting books is a reflection of your company’s financial performance, so it’s important that the contents are as accurate as possible. This will help you make strategic decisions that will boost your revenue in the long run.
Danella Yaptinchay is the managing director of Full Suite, a service company providing back end support to small businesses. She is a cofounder of Co.lab, a coworking space, and of the media company Homegrown.ph. In constant pursuit of balance and self-development, she tries to apply the practices of yoga to her daily life.