Bookkeeping procedures make businesses stronger, more valuable, and efficient. Follow these best practices and it can save thousands or tens of thousands of dollars in the long run.
Set up a list of accounts to classify all of your transactions. Doing so will allow the summary of the accounts in the form of financial statements. Analyzing these useful data tools gives management or ownership the power to analyze money made and money spent. Furthermore, they compare periods so financial anomalies can be found quickly and addressed immediately.
Some businesses handle mostly cash transactions, and conversely, some handle primarily credit or debit card transactions. Then there are some that take only online forms of payment. No matter what form of payment a business accepts payments or uses to pay its bills, reconciliation of balances drives bookkeeping procedures. If a running balance does not get reconciled periodically, businesses handicap themselves with the inability to see if they lose money or make money.
Every operation that gives their customer terms for payment has accounts receivables, or funds owed from customers for sales. Because receivables represent hard-earned revenues, they require close monitoring and maintenance. The more stale, or old, a receivable gets, the harder it is to collect those debts. Money takes time and effort to earn. Staying on top of owed funds ensures payments in a timely fashion.
Paying bills on time and in full remains mistakenly highly underrated. No one wants to wait on money they earned. Similar to receivables, accounts payable need monitoring regularly to asses their age. Overdue payments make vendors angry. They will care less when the business contracts them to do a job the next time. In contrast, vendors paid quickly will work harder, respond faster, and reciprocate with a positive attitude.
Human psychology says checklists and to-do agendas give a sense of fulfillment and pride. Accordingly, clearly outlining revenue targets and milestones will product desired results ten-fold. Without goals to work towards, owners, management, and employees find themselves lost and without purpose.
Create budgets for expenditures and compare performance to the forecast regularly. In doing so, owners and managers can save a business from failure and give it staying power through difficult times.
Exercise hyper vigilance when watching the financials for variances and anomalies, especially regarding revenues and expenditures. Awareness prevents losing income and overspending. Additionally, a careful eye on all transactions will catch mistakes that throw off your financials, so diligence and review is crucial.
Don't ever sit on inventory because in most cases, inventory can have a shelf life. If inventory does not moving out the door, it rots in a warehouse. Track inventory with a fine-tooth comb so capital doesn't get stuck awaiting sale.
Furthermore, constantly take actual inventory counts weekly or monthly. This prevents theft, spoilage, and provides an accurate picture of what inventory needs to move.
Always pay sales taxes and employee withholding taxes on time. These "trust" taxes do not belong to the business; they belong to the local, state, and federal governments. Due to this, businesses failing to pay these face severe consequences that will jeopardize everything.
Following these basic rules of bookkeeping could determine the success of a venture, while neglecting these fundamentals could bring detriment to even the most promising enterprise.
In the world of business software, there are certain fundamental tools constantly used. One of these is a POS, or Point of Sale, software. Whether you are a retailer, wholesaler, manufacturer, or a producer, the right software is an integral cog in the wheel of success. The following are 5 features your POS (Point of Sale) absolutely must have.
It may seem obvious, but a POS software that accurately tracks sales is the number one priority. It is shocking how many POS systems are unable to calculate a sale, apply a discount, or apply a tax correctly. These are just basics.
Coming in at a close number two on the priority list is customer support. It is arguably just as important as revenue tracking. In an ideal world, we don't need help from others; however, the world is far from perfect. More often than not, support takes a backseat in the exploration process.
At some point in the lifespan of a POS system, you will undoubtably need assistance. Whether you have immediate questions about getting everything set up, or a year later once the system is fully integrated, a helping hand gives peace of mind. Accordingly, there are certain attributes you should expect from your support team.
First, 24/7 availability is a must — via phone, email, or live chat (our preference). At any time of day, a human needs to be available to answer your most pressing questions within a reasonable amount of time. Not having the necessary support could result in an inability to accept transactions and a loss of sales. There is absolutely no excuse for missing out on revenue. Secondly, support should be unlimited and included in your subscription. Be weary of companies trying to charge additional fees for their support.
Another crucial function of a POS system is inventory management. Inventory "leakage" and lack of tracking remains one of the biggest vulnerabilities for businesses that hold a stock of products to sell. Employees steal and customers are not always honest about what they receive. These sad truths ultimately lead to reductions in your bottom line. The best way to keep a handle on this is with good inventory tracking features and protocols that limit losses.
Whether an operation is making products, buying products, or selling products, inventory is at the core of every transaction. The POS system must have the ability to keep track and list all products. It should run reports that give inventory valuations on a cost basis, and it should notify when it comes time to order more. While looking around for options, be sure that the POS software can differentiate products with variations like size and color.
There but two certainties in life, and we know them all too well; death and taxes. Sales tax is complex, especially when selling goods in multiple states that have different rules and rates. A POS must have an accurate and up-to-date method of tracking sales taxes at the time of sale.
An important note to remember; sales tax is a "trust" tax. This means it is not a tax that a vendor pays, but a tax businesses are "trusted" to collect from customers on behalf of the state. What does this mean? It means that if an entity underreports sales, the state considers that act as withholding their tax revenue. Unlike income taxes, "trust" taxes can endanger owners' personal assets and livelihood. For this reason, sales tax payments are calculated and paid with the utmost care.
Missing payments and penalization from the inevitable audits can not only jeopardize a business, it can threaten everything owners' have built to this point. All businesses should hiring a professional to assist with tax payments and filings. Spending money on these experts could save thousands or tens of thousands of dollars in the long run.
Without reporting, management is like a ship lost at sea with no compass in a stormy night. Consequently, sales reports, cost of goods reports, tax reports, and inventory reports are just a few of the must-haves in a POS's reporting system.
Other reports to look for are ones that help with your receivable accounts. That is, money owed from customers that did not pay up front and have payment terms. Knowing who owes what, when a payment is due, and how long it takes to receive payment will secure revenues, both in past and in future. It is essential that there is a system in place to track these fundamental accounting reports.
Similarly, payable account report show is owed to vendors. Like receivable reports, taking into account the payables report will give a realistic picture of what is being made or lost. Often, businesses neglect including payables in the balance sheets and the change in payables in income statements. This exclusion of information could skew profits and be detrimental to management's decision-making abilities. If a company doesn't realize its debts, profits are irrelevant.
Some tracking and POS systems will link to accounting software account(s), export excel sheets, and integrate with other useful systems like employee time tracking. These integrations make workflow more efficient and save valuable time.
That being said, beware of how systems integrate. Many business owners and managers think the perfect solution lies in linking software, only to find the developer of the POS was not competent. Sometimes mistakes are made in linkage, and if someone is not monitoring the imports and exports closely, it can completely ruin all the data that kept the books accurate.
If you are looking for a reliable solution for your selling and tracking woes, and you feel overwhelmed by the features and options available, reach out for a consultation. NATIVE RECORDS has worked with the best and the worst. Being masters at assessing software, we can point you in the right direction.