There’s a great deal to consider regarding corporate cash management. For any business looking to enhance their finance and accounting department to grow the business, there’s no end to tips and hacks on how to do so.
We can simplify the top accounting best practices by checking out some of the essential ones, including improvements and routines targeted to increase your productivity and success throughout the year and beyond.
Develop and maintain a chart of accounts- Finance and Accounting Tips
A chart of accounts provides a clear snapshot of your business’s financial health. It’s likened to a health summary received after a doctor’s visit. Here’s what a chart of accounts contains and its importance to your business.
- Assets – owed money to outstanding invoices.
- Liabilities – debts a business owes.
- Equity – ownership interest in a business.
- Revenue – what a business earns from offering a product or service.
- Expenses – money a business spends to earn money.
After creating a chart of accounts, you’ll understand where all the money in your business comes from, the money your business owes, how to develop better spending decisions, and how to make tax season more efficient.
Start with your budget
Every company requires a budget for startups, mid-size businesses, or global organizations. A budget serves as a roadmap to how a business will proceed with cash management planning. Before implementing a budget, consider the following:
- Anticipated expenses – expected expenditure for the year.
- Projected income – money a business intends to make during the year.
- Unexpected purchases – emergency funds and unforeseen but necessary spending.
Creating a budget isn’t a one-time event. It must be a habit monthly to ensure your business is on track to attain its goals.
Set a routine of closing your books on time
Closing the books sounds simple from the outside. However, regularly, those who do it understand that it’s a grueling task. Blocking out the time you need monthly to reconcile your books will benefit the business tremendously. Reconcile accounts as soon as possible and develop a routine to avoid a month-end fire drill. You can follow these steps to incorporate them into your monthly closing process.
- Set a date – find a date and stick with it.
- Create a checklist of closing tasks –assign tasks and due dates before the close date.
- Audit your balance sheet each month to avoid discrepancies down the road.
- Use standard journal entries – including fixed assets and lump-sum payments.
- Have a comparative analysis of your income statement – compare months to find any inconsistencies.
Work with a reputable bank
The worst thing a business can do is disregard cash management. Accounting is a vital function of a business, and based on the nature and size of your company, mere in-house or staffing options may not efficiently work. Furthermore, most companies will reach a stage where they need a third party’s help with cash management, and that’s where outsourcing and working with financial institutions come into play.
When looking for a financial institution, find one that offers a range of digital cash and liquidity management solutions to assist you in managing your treasury and finance operations with ease and efficiency. Proper cash management techniques will allow you to more effectively innovative accounts, payables and receivables management services, and liquidity.