Business owners don’t really think about accounting processes. So long as the cash is flowing, they think everything must be OK. Unfortunately, they often don’t recognizing the signs that accounting is not running well at all.
Here are a few key indicators that should raise red flags for a business owner:
- Inflated External Accounting Bills
Your external accountant should not have to redo your books or be asking for a lot of invoices and receipts at tax time or year end. If you find your external CPA firm or accountant is suddenly charging higher rates you need to take a closer look at billing details.
If you find work that should have been done in advance by your bookkeeper then it is a sure sign your bookkeeper is not completing the work assigned before submitting it to the CPA. The rule of thumb is that firms requiring external reporting should pay no more than $1,000 per million dollars in revenue. More than that and it’s an indication something is wrong in accounting.
- You are getting No or Poor variance analysis and discussion on the financial results of your business by the 5th day of the month
Every month, you should have a complete package providing you with a comprehensive set of financial reports plus key performance indicators and a list of expenses or revenue numbers that are outside of expectations. If you don’t receive this information by work day 4 at the latest, you can bet that there is a lot of room for improvement here.
- You see unallocated or miscellaneous transactions lined up in your record deposit window
Software like QuickBooks provides a feature for undeposited funds. You should have zero transactions. If there is even one transaction listed, then it points to poorly-managed invoices and payments. You need to look at your accounting processes immediately, to protect your cash
- Your balance sheet is not accurate and updated on demand
As a business owner, you come across opportunities every day. One day, you may get a very interesting investment proposal and want to ensure you have the cash and financial health to take advantage of the opportunity.
Your bookkeeper should be able to provide you with an immediately ‘snapshot’ of your balance sheet.
- Your bookkeeper doesn’t understand the type of business accounting you follow: What kind of accounting DO you follow?
A good bookkeeper must know the different kinds of accounting and also understand the one being followed by your company and your industry.
Without this knowledge, you may be getting wrong entries and wrong reports.
These are just a few symptoms that can indicate a larger problem with your accounting.
Logicon Solutions offers a complimentary analysis of your Accounting and Bookkeeping procedures to ensure you have accounting peace of mind and will have no problems with your business.
Schedule a free Strategy Session with Gerry Anderson, President of Logicon Solutions to review the
options available to improve your accounting processes and Increase your Profitability!
You provide a quick review of your challenges and we provide you with information on how you can overcome these challenges based on proven systems that work. We will look at how you can implement the fixes and your next steps to immediately improve your cash flow and reduce your accounting costs.
Gerry Anderson, M.Sc., CPA, CMA
Toronto, Ontario: 647-933-0955 ext 301