An entrepreneur has many hats to wear to successfully run a business. As a jack of all trades, he must fork out his time to manage and excel at all the aspects of the business, even the mundane and least glamorous ones like bookkeeping and accounting, which are the fundamental moving parts for a successful business.
Cash is king when it comes to business be it for survival for investments for business growth. And accounting is the language of the business and master key for its growth. While the bookkeeping and accounting processes at early stages of the business can be easily managed, as a business grows, it’s only a matter of time for a business to run into accounting challenges. if you are a start-up entrepreneur or a small and medium business owner it is very helpful to know these accounting challenges and the way they impact your business beforehand to plan your accounting strategy.
So, in this blog here we are going to list out common accounting challenges that most entrepreneurs run into, as they grow their business. We also help you with a simple and easy solution to overcome them all for improved performance and profitability of your business. So read on:
Poor Cash Flow Management:
Cash is the key when it comes to business which is why a whopping 82% of the small businesses in the US fail due to poor cash flow management. There are cases when even the profitable businesses end up failing due to cash crunch that usually happens due to poor and in-consistent cash flow. At its core, cash flow management is the tango between Accounts Payable and Accounts Receivable which must be streamlined and coordinated according to your cash requirements.
Balancing both Accounts Payable and Accounts Receivable is essential for maximizing the cash-conversion cycle to ensure cash flow whether cover bills or invest in growth. While Accounts Payable and Accounts Receivable are manageable in the early stages, as the business grows, these accounting processes need to be carefully planned, executed and integrated but this is where most small and medium business fail. As a result, most business experience a cash crunch and de-rail eventually.
While having adequate manpower is an issue in itself, both Accounts Payable and Accounts Receivable need expertise to carefully chart and execute a streamlined process that works well for business to maximize their cash cycle. If you are experiencing similar Accounts Payable and Accounts Receivable problems, then it serves well for you to consider outsourcing Accounts Payable and Accounts Receivable to back-office accounting firms with verifiable expertise and robust accounting technology stack.
Tax Compliance Problems – Overpaying Tax & Under-utilizing Deductions:
If tax compliance is tough, making the right use of tax deductions is tougher without adequate expertise on board. According to research, 85% of the small businesses overpay the tax and according to our in-house accountants, 100% of them do not make use of tax deductions and other tax-saving opportunities. And then a few businesses underpay the tax and end up on the wrong side of the IRS.
From business and employee classification to proprietorship, business structure, healthcare policies, taxation depend on plenty of complex aspects of the business. And on top of this, local, state and federal tax requirements vary and they change every year. And most small businesses are plagued by poor bookkeeping, lack of accounting and tax expertise and end up overpaying their share of tax and underutilizing tax deductions.
Oversights, Errors & Financial Discrepancies in Reconciliation:
As a business grows, transactions shoot up and numbers spread themselves all over the floor for you to pick up, spruce and put them in the right place in the reconciliation puzzle. Reconciliation is proof-reading the accounting that has to be regularly performed to avoid accounting errors, financial discrepancies and help you understand your financial position.
As the business grows, so do the business transactions; between the increased volume of sales, wages & salaries, purchased goods and services and a multitude of other transactions, the reconciliation over time becomes a complex task, especially if not reconciled regularly. Small and medium business with not enough expertise and manpower often are plagued by oversights, errors, duplicate payments and even other financial discrepancies.
The simplest way to avoid the reconciliation problems if fall short of enough manpower or expertise is to outsource bank and credit card reconciliation to back-office accounting firms with expertise in providing dedicated Bank & Credit Card Reconciliation Services.
How Back –Office Accountants can help you solve the above problems?
Whether you are facing problems in bank and credit card reconciliation, copping troubles in Accounts Receivable collection or unable to optimize your Accounts Payable for better access to capital, Back Office Accountants are here to help.
With a team of expert accountants, Accounts Payable, Accounts Receivable experts and highly-trained accounting resources, Back Office Accountants can help you successfully improve your accounting performance with our Accounts Payable, Accounts Receivable and Bank and Credit Card Reconciliation Services. If you are only starting out and are in need of complete integrated accounting services, we also offer Full-service Back-office Accounting Services that can cater to all your accounting requirements. For more information on our services, you can find us here: https://www.backofficeaccountants.com/
