Apart from accountants themselves, it’s fair to say that nobody starts up a business with dreams of being an excellent bookkeeper.
Whatever your company is, you’ve set it up because it reflects your area of interest and skill. If your business sells books, for example, it’s quite understandable that you want to be an excellent provider of that service first and foremost, and that’s going to take up of your efforts.
The need for savvy accounting, however, is one constant that remains crucial in all businesses, regardless of what products or services they sell. Managing accounts may seem a chore, but this is the financial backbone of your enterprise. Without a sound knowledge of where your money is going, where you’re generating profit and where you’re misspending, your enterprise ceases to become a business and becomes more of a hobby.
The phrase ‘work on your business, not in your business’ may be overused among company leaders, but that’s only because it’s so true. Poorly conducted bookkeeping and accountancy are one of the main drains on company time, as well as a stumbling block to enterprise owners who could be using that time to generate leads and ramp up growth.
Here are three of the main reasons why getting your accounts in order can give you greater control of your business:
1. It makes for better use of your time
Just last year, a study by the Federation of Small Businesses (FSB) concluded that the average company owner’s time spent on tax administration equated to a loss of 12 days of productivity every year, and this was holding back our recovery from the recession.
This loss of time only serves to limit the control you have over your business, and the less effective and well-drilled your accounts procedure is, the more time you will lose through playing catch-up and rectifying errors.
While a full-time accounts team is a route down which some companies go to ensure that records are kept immaculate, this comes with the all the costs that are associated with taking on staff. As employees come and go, mistakes are liable to creep in. Many company owners therefore prefer to outsource their accountancy instead, thus freeing up their time and allowing them to use it on upping the value and deciding upon the direction of the business. After all, you didn’t start your company so that you could study numbers.
2. It can help increase cashflow
Savvy accounting can help with your forecasting, thus assisting you in making commercial decisions. It’s one thing to review accounts every quarter, but identifying patterns, perhaps on a month-to-month or even week-to-week basis, can go further towards making sure that you don’t overspend or underspend.
Business is fast-moving, especially in this digital era, so it’s vital to be in the know of how your company is performing in the short-term, as well as the long-term. We hear that ‘time is money’, but money can also buy you time, including the breathing space needed to allow you to take greater control of your business without the immediate concern of cashflow issues.
3. You gain a greater understanding of your company
Some business owners only look to do the bare minimum as far as accounts are concerned, but you get out what you put in. With well-maintained and detailed accounts, you can see exactly where the money is coming and where you might be able to shore up your outgoings.
Identifying strengths and weaknesses goes a long way towards increasing your control of the venture, because knowledge is power, and intelligent accounts management can go hand-in-hand with the learning process of running a business.
So, ‘accounts’ really shouldn’t be a word that makes you groan, but one that you see as the fiscal gateway to greater understanding and control of your commercial dream.
Andrew Mault’s passion for accountancy and desire to broaden its horizons led him to set up Sollertia – a provider of innovative outsourced accountancy solutions with clients from all over the UK and parts of Europe.