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Back to the Basics in 2016: Getting Your Accounting House In Order

01/06
2016
Author: 
administrator

2016 is here and we all have resolutions, personal and professional.  One resolution that should not be tossed to the wayside after a few months is one relating to your small business...your books!  The below captures 2 reasons why NOW is the time to get things in order and keep them that way.  Cheers to a successful 2016!

 

1.  Receive timely information in order to better manage your business

It's difficult to talk intelligently about your company's financial well-being without current, up-to-date records.  Keeping your records current not only gives you a handle on the immediate health of your business, it also provides the foundation to forecast your future financial position.  You will be able to identify red flags in your balance sheet that may suggest an unfavorable trend in your business (e.g. reduced liquidity, aged AR, growing current liabilities, etc).  This allows you to understand your cash flow and how you can optimize it going forward.  For many business owners, accounting is not their cup of tea and outside help from a CPA is usually required.  Once your accountant gets your books in order, he or she will most likely be able to implement a dashboard.  Dashboards allow you to have current and up-to-date financial and management reporting at your fingertips.  What a beautiful thing.

 

2.  Position your business for a critical event

It may seem like common sense, but having your Accounting House in order is a must for any significant event in your company's life.  You may be about to land a game changer client who wants to verifiy your company's financial health before signing on the dotted line, or you may be looking to take out a loan to grow the business, or you are ready to sell and sail off into the sunset.  All of these events require solid financials.  And, what most do not realize is you need to be prepared years ahead of the critical event.  "Really?" you ask yourself.  REALLY.  Having poor financials going back two years may result in a missed opportunity that will cost you much more than the cost of getting your books in order.  Counter-parties such as banks, investors, & customers are likely going to want to see several years of financials and will want some level of assurance these financials are on an accural basis and are compliant with generally accepted accounting principles.  This is where it is valuable to bring in an accounting firm to assist in your accounting process.

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