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Accounts Receivable & Accounts Payable:
Every business owner or entrepreneur needs to understand the vast difference of these two accounts. If someone mixes up the two accounts; this could be detrimental to someone’s business.
The accounts receivables are considered as current assets. These are the amounts owed to you from your customers. While the accounts payable are funds that you owe to your vendors or suppliers and are considered as current liabilities.
In short, accounts payable is where you owe some-one and accounts receivables are where they owe you.
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Small Business Accounting:
Accounting plays a huge role in providing important information to help the growth and development of ones business. Most small businesses follow the basic accounting principles which are essential for the success of your business. The key to growing your business is to review your financial statements regularly and establish a detailed budget that allows you to discover operational inefficiencies and profits.
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Keep track of your business cash flow.
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Understand the concepts of fixed costs, variable costs and the effect this has on the business growth.
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Understand and review balance sheet accounts, income statements and cash flow statements.
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Detect and avoid fraud from customers, employees and suppliers.
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Prepare for financial audits.
Bank Reconciliation:
Everyone should be doing a bank reconciliation whether its for your personal accounts or your business accounts. A bank reconciliation is the verification process of matching the cash account records against the bank statement. This process identifies if there is a variance between the two accounts. In reconciling accounts, it identifies fraud, outstanding checks (checks that have not yet been deposited) and so much more.
Bookkeeping Clean-Up:
All businesses should make sure they have a clean set up books. Most companies contact us to conduct a massive clean-up. Below are a few tips to start your bookkeeping clean-up.
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Don’t comingle funds (keep your personal accounts and your business accounts separate.
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Invest in your business. Purchase a good accounting software or hire a bookkeeper or accountant to maintain your books.
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Establish internal controls – This will help with fraud and other tasks not being completed.
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Break the bad habit of procrastination – Most businesses procrastinate with task they aren’t familiar with and/or don’t like doing. Make your financials a priority!
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Get familiar with your financial reports. Pay close attention to your aging reports, your accounts receivable reports and your balance sheet accounts. These reports let you know who owes you, who you owe and where you stand financially.