Even if your business is no longer a startup, the failure rates for businesses started in 2014 were as follows:
Many of the reasons for business failure can be prevented with good budgeting and planning. Here are some benefits of making a budget and managing to it.
Getting started with a budget is easy. If you’ve been in business for more than one year, you can start with last year’s actual figures and then adjust for the growth and changes you want. The numbers can be input into your accounting system so that you can get reports that measure actual progress versus the budget numbers. You can then make good business decisions based on your variances. When you take a little bit of time to create a budget, you really can enjoy the freedom of knowing you’re on track to make your numbers. If we’re not already working with you on your budget, feel free to reach out – we would be happy to assist.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.
Another benefit is built-in support offerings. As we are all too aware, while technology can be very beneficial with improving efficiencies and workflows, bugs and issues happen. New functionality may require additional training. Generally, support is offered for subscription-based services at no additional cost, so when those frustrating issues arise, there is someone available within a short time frame to address your issue.
However, as a firm focused on assisting our clients with business success through accurate and improved reporting and financial management as well as workflow efficiencies, check out our Resources page and this handy QBO pricing comparison chart to see how we might be able to help you save money on software and app subscriptions. If you are considering a tool that isn't listed, please send us an email with the name of the tool/app/software and the related website and we will be happy to check out what discounts are available through our Reseller or ProAdvisor programs. If you are interested in options that may help your business streamline and/or improve workflow and efficiency, please contact us or schedule a complimentary consultation to discuss your needs and goals. We would love to assist you to greater success!
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.
Do customers need to physically return the product in-store or via shipping? What if it’s a service? Are they refunded in cash or credit card? Or is it a store credit? Is there a deadline for refunds?
All of these questions should clearly be outlined in your refund policy. Your website is a great place to publish it. Customer Complaints If your customer has a complaint, how should they submit it? Is there a hotline to call, a suggestion box, or a form to fill out? If your business and employees are licensed, is there a government agency to write? A notice should be posted on your website and in your physical location describing where to submit complaints. Shipping Policy Not all businesses need a shipping policy, but you do if you ship physical goods to a customer location. What is the cost of shipping? What is the expected delivery time? A shipping policy explains this as well as what can go wrong: If the item was never received, what should one do? Must you sign for a shipment? If you return a shipment, who pays the shipping? If an item is received damaged, how do you file a claim? Payment Methods While not a policy this customer communication needs to be clearly posted. What forms of payment will you take? If you take a check, what ID does the customer need to show? Do you take some of the newer forms of payment such as Apple Pay or cryptocurrencies? How do gift cards work? Past-Due Accounts If a customer doesn’t pay their bills on time, they should know what to expect. Will interest be charged? Will the account be sent for collections? Will someone break the customers’ legs? Will future purchases be cancelled or require a C.O.D. (cash on delivery) payment? You might not think of your accountant when it comes to writing these policies, but you should; we can help. A good accountant can help you craft these customer service policies so that your communications and expectations with customers are better than ever.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.
A quick glance is all you need to check your fuel gauge, speed limit, engine temperature, and RPM when you’re driving down the road. Your car’s dashboard is designed to focus you on what’s important and what you need to know to have a safe trip.
Your car’s dashboard items, if they applied to business, would be called key performance indicators or KPIs. Unlike a car, the KPIs of your business vary depending on your business goals and what’s important to you. Common ones might include your cash balance, how fast you get paid, how much revenue is coming in, and whether you're making a profit. There are literally hundreds of them to choose from, and many of them are not derivable from your financial statements, such as number of orders, client satisfaction levels, and employee turnover. Would it be useful to have a dashboard of KPIs for your business so you can know what’s working and get alerted to what needs focus? Here are the steps to creating a dashboard for your business:
There are many great KPIs available right in your accounting system, which might be plenty to get started with. And there are some real gems outside your accounting system that will take a bit of work to calculate. In any case, we can help you through this process. Feel free to reach out to us any time to discuss the possibilities of having a dashboard in your business.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.
2. Invoice faster or more frequently
The best way to smooth cash flow is to make sure outflows are in sync with inflows. If you make payroll weekly but only invoice monthly, your cash flow is likely to dip more often than it rises. When possible, invoice more frequently or stagger your invoice due dates to smooth your cash balances. Take a look at how long it takes you to invoice for your work after it’s been completed. If it’s longer than a few weeks, consider changing your invoicing process by shortening the time it takes to send out invoices. That way, you’ll get paid sooner. Talk to us about options for automating your invoicing. 3. Collect faster Got clients who drag their heels when it comes to paying you? Try to get a credit card on file or an ACH authorization so you’re in control of their payment. Put a process in place the day the invoice becomes late. Perhaps the client has a question or misplaced the bill. Be aggressive about following up when the bill is 45, 60, and 90 days past due. Turn it over to collections quickly; the older the bill is, the less likely it is to get paid. If you need assistance with automating follow-up, please reach out to us. 4. Pay off debt As your cash flow gets healthier, make a plan to pay off any business loans or credit cards that you have. The sooner you can do this, the less interest expense you’ll incur and the more profit you’ll have. Interest expense can really add up. If you have loans at higher interest rates, you might try to get them refinanced at a lower rate, so you won’t have to pay as much interest expense. 5. Reduce spending You don’t always have to give up things to reduce spending. Look at your expenses from last year and ask yourself:
Managing cash flow is always a challenge, and these tips will help give you a little cushion to make it easier. Please let us know if you would like options for implementing any of the above changes.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.
Class, tracking codes, and other custom data may need to be added as well. Rules can be set so that the accounting application can pre-code the transactions; in this case the accountant simply approves or corrects the entry.
Invoice Fetching It starts with a picture of a receipt. Invoice fetching applications can turn pixels into data using sophisticated OCR (optical character recognition). The data is then turned into a business transaction that can be imported into an accounting system. Auditing The books of many government agencies, nonprofits, and large businesses need to be audited on a regular basis. Auditing is an expensive process. Smart programs can review a company’s data and assess where the risks and anomalies are so that the audit program can be modified to focus on the more important parts. This reduces risk and cost for everyone involved. Accounts Payable Artificial intelligence can help to speed up the matching of purchase orders, packing slips, and invoices so that accounts payable tasks are streamlined. It can also automate approvals and look for duplicate invoices to avoid overpayments. Accounting Tasks That Are Clerical Robotic Process Automation (RPA) is a platform that allows users to create automation without involving the IT department. Think Excel macros or Zapier on steroids. Any workflow with a mind-numbing set of clerical steps is a candidate for RPA. AI allows accountants to spend less time on routine tasks and more time on higher-level analysis work. As AI becomes more affordable for small businesses, everyone will benefit from this long-term trend. For assistance with incorporating services that support efficient streamlining of accounting and payroll related services, please give us a call.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.
Why pay more for software and services than necessary? Check out our Resources page for information on discounts available to our clients.
Why pay more for software and services than necessary? Check out our Resources page for information on discounts available to our clients.
When you sell an inventory item, the asset is reduced and the Cost of Goods Sold account is increased, moving the item from an asset to an expense. It’s no longer an asset once it’s sold, and the cost of the item sold reduces your profit and is expensed into the Cost of Goods Sold account.
Some accountants will abbreviate the Cost of Goods Sold account to COGS, and you might hear them call it that. In the case of wholesale and retail businesses, the cost of goods sold is the amount that was paid for the inventory items to be sold.
Service businesses will typically not have a balance in the Cost of Goods Sold account. If they do have direct costs, the costs are often coded to a Supplies account under expenses. At any point in time, the cost of items you purchase are in two different accounts:
It’s important that the Cost of Goods Sold balance is accurate, because there are many good things you can learn from it when you compare it with inventory. You can learn how fast your inventory is selling, and you can determine your gross profit margin. If your inventory purchases have not been coded correctly, you can take inventory and arrive at the correct cost of unsold items. If your physical inventory does not match your books, your accountant can make a correcting entry between Cost of Goods Sold and the Inventory account so that both are accurate. If you have further questions about the Cost of Goods Sold account, feel free to reach out any time. And if you are still manually handling inventory tracking, please schedule an appointment to discuss options to more efficiently account for your inventory and COGS.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.
Why pay more for software and services than necessary? Check out our Resources page for information on discounts available to our clients.
The information presented is of a general nature and should not be acted upon without further details and/or professional guidance. For assistance in identifying and utilizing all the tax deductions to which you are entitled, please contact us, your CPA or tax preparer.
Why pay more for software and services than necessary? Check out our Resources page for information on discounts available to our clients.
Next, get your Income Statement for June 2019 Year-to-Date and check the revenue figure. Are you on track with your budget, or are you halfway there revenue-wise, accounting for seasonality? If so, pat yourself on the back! If not, what promotions will you put in place to boost your growth for the rest of 2019?
On Track for Profit Looking at the same Income Statement, check your net income figure. Are you on track with what you planned? If so, great! If not, the reason is simple: it will be either lower sales than expected or higher expenses than expected. If your expenses are too high, you’ll need to drill down into each of your expense accounts, including cost of goods sold, to see which ones are higher than expected. Were there some unanticipated costs? Does your pricing need adjusting? Do you need more volume to cover your costs? This is where we can help you with an analysis of where your opportunities are to increase profit. On Track for Cash One more place to look is your cash balance. It can be uncomfortable when you are running short of cash for your business. If your balance is lower than you’d like it to be, it could be because of some of the factors mentioned above. It could also be because you just purchased an asset like a truck. If you need help with improving your cash flow, that’s another thing we can help you with. Mid-Year Review This mid-year review can help you head off any small problems before they grow into big ones throughout the rest of the year. And it can keep you on track so you can meet your 2019 business goals.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.
Why pay more for software and services than necessary? Check out our Resources page for information on discounts available to our clients.
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