These tips focus on how to strengthen your business and become better prepared for growth. They are really easy to implement and they can have a very big payoff. Ready? Here we go.
If your accounting records for 2012 haven’t been closed out, pull out all the stops with your accounting staff and get any last minute journal entries completed. Not doing so is backing things up in your accounting department and that spells overtime and mistakes – both are expenses that can be avoided by getting 2012 put to bed. In the process it is absolutely positively essential that every number in the 2012 year-end balance sheet be reconciled to something tangible. For example, cash should be reconciled to bank statements and a count of cash on hand as of December 31st; inventory should be validated with a physical inventory of stock on hand; payables should be validated with vendor invoices; etc. You get the picture.
Once 2012 is closed out by your accountant(s), hold a meeting to review the financial statements for 2012. Include in that meeting a review of your accounts receivable aging report and your accounts payable aging report. Are you collecting money faster than you are paying it out? That would be a good thing. Then plan on holding this meeting every month in 2013 and use those meetings to do three things: (1) to look at where you have been and what trajectory you are on for revenues, expenses and cash; (2) to look ahead at what you can expect in those same terms in the next 3 – 6 months; and (3) to determine what decisions you need to make now in order to achieve your objectives for the year.
If one hasn’t yet been created, it isn’t too late to create a budget for the year. A budget is your plan of action and will be a hallmark against which you can measure your actual performance as you go through the year. It will help you stay on track.
Make sure that you have at least basic financial controls in place. These will help you ensure that no one is tempted to take advantage of a lax environment and that the cash you earn stays in the business and with you. One of those basic controls is the reconciliation of bank statements by someone other than the person who pays bills and writes and/or signs checks. Another basic control is to have a third party oversee the activities of the bookkeeping and accounting staff. A CFO or someone who provides CFO services on a part time or interim basis is ideally suited for this function. The last basic tip is to make sure that your accountant / bookkeeper / controller takes regular vacations so that someone else has an opportunity to really see what has been going on in your books.
Last but not least, ask an expert to evaluate your accounting and financial reporting system. Is it adequate for what you need? Is it too much, too little, or just right? If it is the right program for your organization then make sure it is up to date with the latest version. If it isn’t capable of supporting your needs, find a program that will or find an add-on program that will add the functionality you need. Many companies use QuickBooks and the maker of that program, Intuit, has an extensive marketplace of add on programs that were made specifically for QuickBooks and that offer a wide range of functions that aren’t part of the basic QuickBooks package.
I hope these tips will help you realize and surpass your goals for the year. Let me know what you think of this article. Is it helpful?
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