In today’s competitive environment, information is power. With these 30 tips, you'll have the beginnings of a custom-designed small business accounting process.
- Send out customer statements on time so you can get paid
- File all customer invoices so that nothing gets lost
- Track late payments in order to resolve these problems quickly
- Ensure that you stop serving customers who aren’t paying their bills
- Safeguard good customer relations by properly recording all payments
- Accurately calculate interest, and collect it from overdue accounts
- Reduce the need to borrow money due to poor cash flow
- Ensure that you don’t lose sales because items are out-of-stock
- Avoid rush delivery charges to obtain out-of-stock items
- Stop wasting money buying more of what isn’t selling
- Set your sales prices based on profit instead of conjecture
- Concentrate on selling the most profitable items instead of the easiest ones
- Identify profitable cross-selling opportunities
- Avoid selling products at a loss because you don’t take markdowns on time
- Know which money-making product lines to expand, and which ones to drop because they’re money-losers
- Discover theft before it becomes a problem
- Never pay a bill twice by mistake
- Never lose a discount by paying a vendor late
- Reduce the need to borrow by planning for your payment due dates
- Maintain your good credit rating and keep your borrowing costs low
- Obtain better credit terms based on your good payment history
- Know how much payroll and sales taxes you owe, in order to avoid penalties and interest
- Never write a bad check
- Never pay another bad check service charge
- Make sure all your cash receipts are credited to your account
- Know when you have excess cash so that you can put it to work
- Track your expenses in detail so you know which ones can be reduced
- Never spend beyond your budget
- Get the maximum tax deductions for the expenses of running your business
- Learn how much profit you’ve made, and what your business is worth each month in order to:
- Know when it’s the right time to grow
- Know when it’s the right time to hold back
- Plan accurately for taxes
- Save hundreds to thousands of dollars on your year-end tax return
- Comply with the reporting requirements of any business loan
- Respond immediately to any supplier’s or customer’s request for financial information
- Figure your profit on a cash or accrual basis so you pay the lowest taxes
- Track revenues and costs by job or project (contractors, landlords, attorneys, etc.) in order to:
- Know on an ongoing basis which products are profitable and which ones aren’t
- Get paid on time as you complete the job
- Avoid working on projects where progress payments are behind
- If you manufacture or assemble products (machine shops, bakeries, clothing manufacturers, etc.):
- Know what it costs to make each item
- Set a selling price to cover your costs and achieve a fair profit
- Know what product lines to expand because they’re profitable
- Know what product lines to drop because they’re money-losers
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