Benefits of Accounts Payable Automation

Accounts payable can feel like an endless series of energy-draining tasks for businesses. But it doesn’t have to be that way. The benefits of accounts payable automation far outweigh the time spent to set up your systems.

You might be surprised at the many ways automating accounts payable automation can save time, money, and provide even more benefits for your business. Let’s explore the many benefits of accounts payable automation. 

Saving Time

One of the most important benefits of accounts payable automation is saving your valuable time. You’ll save time through: 

• Automated Data Entry: Say goodbye to painstakingly typing invoice details into spreadsheets. Incoming invoices can be scanned and automatically entered into the system, saving hours of manual data entry.

• Faster Approvals: In traditional accounts payable workflows, invoices often languish in bloated email inboxes, awaiting approval. Automation streamlines this process by routing invoices to the appropriate approvers automatically, reducing bottlenecks.

• Instant Access to Information: With automation, teams no longer need to sift through piles of paperwork or spreadsheets to find crucial financial information. Everything from invoice status to payment history is available at your fingertips, empowering you to make informed decisions quickly.

• Reduced Follow-Up Time: Automation sends reminders and notifications for overdue invoices, minimizing the need for manual follow-up and ensuring timely payments.

• Efficient Exception Handling: Occasionally, invoices may require additional scrutiny if there are discrepancies or errors. Automation can identify these exceptions and route them to the appropriate personnel for resolution, streamlining the process and reducing manual intervention.

Saving Money

We all want to save money in our business, and that is one of the core benefits of accounts payable automation. Here's how automation translates into cost savings for businesses:

• Reduction in Manual Errors: Mistakes happen. Human error is inevitable in manual accounts payable processes, leading to costly mistakes such as duplicate payments and incorrect data entry. Automation reduces the risk of errors by automating repetitive tasks and applying validation rules, saving businesses from the financial fallout of avoidable mistakes.

• Avoidance of Late Payment Penalties: Late payments can result in penalties and fees. Accounts payable automation ensures timely payments by automating payment scheduling and sending reminders for upcoming due dates, reducing the likelihood of late payments and associated costs.

• Optimization of Cash Flow: By streamlining the accounts payable process, automation enables businesses to better manage their cash flow and working capital. With better visibility into payment obligations, organizations can make more strategic decisions.

• Increased Efficiency in Invoice Processing: Manual invoice processing is notoriously slow and labor-intensive, requiring significant time and resources to complete. Automation accelerates invoice processing by digitizing and standardizing workflows, reducing the time and effort required to process each invoice and lowering the cost per transaction.

Other Benefits of Accounts Payable Automation

Improved Vendor Relationships

Building strong relationships with vendors is important for any business, and using automation in accounts payable can help. 

With automation, payments get processed faster, which means vendors get paid on time more often. You can often take advantage of discounts for paying early, which helps your cash flow and keeps your vendors happy. 

If any issues come up, automation makes it easier to keep track of payments and quickly figure out what happened, minimizing disputes. 

Streamlined Approvals

Approving invoices can be a hassle, but automation makes it easier because:

• Invoices are automatically sent to the right people for approval, cutting out the need for manual sorting and speeding up the process.

• Managers can approve invoices on-the-go using their cell phones, so there's no waiting around for signatures.

• If an invoice sits too long without approval, automation escalates it to higher-ups, keeping things moving smoothly

• Digital signatures mean no more printing, signing, and scanning documents, saving time and hassle.

Enhanced Visibility and Control

With automation, you can track invoices and payments in real time through dashboards and reports, allowing for proactive management of cash flow and working capital. 

Detailed audit trails document every step of the accounts payable process, supporting compliance with regulations and internal controls. Centralized document management further streamlines operations by digitizing and organizing invoice documents, reducing the risk of document loss or misplacement. This makes audits, inquiries, and tax season a much more pleasant experience.

Finally, role-based access control ensures that sensitive financial information remains secure, mitigating the risk of unauthorized access or fraud. 

Increased Accuracy

Automated validation and matching ensure that invoices are checked against predefined rules, like purchase orders, reducing the risk of errors. If any discrepancies are found, automation flags them for review, helping finance teams catch and fix mistakes before they cause problems.

Embrace the Benefits of Accounts Payable Automation

Accounts payable automation can be made easy with the right support. Finding the right bookkeeping and accounting service can help you improve processes and reach your goals.

At Accounting Made Accessible, our team is equipped to help you automate your accounts payable and take full advantage of its many benefits. 

We offer free strategy calls to help you get a sense of how we can support your business. We look forward to hearing from you!

How to Leverage Financial Forecasting and Decision-Making for Your Business

Financial forecasting and decision-making can unlock your most exciting goals. But it’s easy to feel overwhelmed with the countless opportunities and approaches available. 

Don’t let financial forecasting and decision-making give you more stress - they are tools to make your life easier. Let’s explore some insights to make the process more accessible. 

The Problem With Financial Forecasting and Decision-Making Using Traditional Tax & Accounting Firms

Traditional accounting firms often focus solely on past financial data, neglecting the potential for future opportunities. This “historic” work is important, but shouldn’t come at the cost of improving your tax & financial picture for the future. Approaches that only focus on backward-looking financials leave businesses ill-prepared for upcoming challenges and opportunities.

Example: Imagine a small company that relies on a traditional accounting firm. Despite steady revenue growth, the company fails to use forecasting to anticipate upcoming tax changes that significantly impact the company's profitability. Market trends on the horizon also weren’t considered during the accounting process, and opportunities for growth and expansion were completely missed. 

The Solution: Start With Goals 

Working with vague ideas of what you want to achieve won’t help you take full advantage of financial forecasting and decision-making. It’s important to clarify your goals. Ask yourself questions such as:

• What do I want to achieve in my life and business in the next year, five years, and beyond? 

• What would my definition of success look like for my business, both financially and operationally?

• What resources, whether financial, human, or technological, do I need to achieve my goals?

• Have I tried setting business goals in the past? What worked, what didn’t work, and why? 

Decide on Your Indicators

Once your goals are set, identify the key indicators that will measure your progress. 

Your indicators are not set in stone!

Regularly revisiting and deciding which indicators are the most relevant to your goals is strongly encouraged. Make adjustments along the way as you track your performance. 

KPIs for Financial Forecasting and Decision-Making

Your Key Performance Indicators (KPIs) which help gauge success towards your goals could include: 

• Cash flow: Is there enough money coming in to cover expenses and maintain operations?

• Profit margins: Are we making enough profit on our products or services to sustain and grow the business?

• Customer satisfaction: Are our customers happy with the products or services we provide?

• Sales growth: Are we seeing an increase in sales over time?

• Inventory turnover: Are we managing our inventory efficiently and avoiding excess or shortages?

• Debt-to-income ratio: Are we managing our debt responsibly in relation to our income?

• Business expansion: Are we growing our business into new markets or segments?

• Accounts receivable: Are we effectively managing the money owed to us by customers?

Threats in Financial Forecasting and Decision-Making

While it may seem intimidating to consider what can go wrong in your business, it’s an important step that will help you rest easier at night. If you haven’t considered the most likely and impactful scenarios, you won’t be able to prepare. 

Uncover Threats

You’ll be able to uncover many potential threats in your financial forecasting and decision-making if you carry out the following: 

• Conduct regular market research to stay informed about industry trends and competitor activities.

• Analyze customer feedback and complaints to identify potential areas of improvement.

• Monitor regulatory changes and compliance requirements relevant to your business.

• Assess potential risks related to cybersecurity, data breaches, or information security.

• Evaluate economic factors such as inflation, interest rates, and currency fluctuations that may impact your business.

• Review your supply chain for vulnerabilities and diversify suppliers where possible.

• Stay updated on emerging technologies and innovations that could disrupt your industry.

• Conduct risk assessments to identify internal weaknesses or operational vulnerabilities.

Neutralize Threats

Now comes the part that sets you apart from many other small business owners - putting plans in place to neutralize the greatest and/or most likely threats. 

• Invest in insurance coverage to mitigate financial losses from unexpected events.

• Diversify revenue streams to reduce dependence on a single product or market.

• Train employees on security best practices and create awareness around potential threats.

• Implement robust cybersecurity measures, such as firewalls, encryption, backups, and intrusion detection systems. 

• Build strong relationships with suppliers and partners to ensure continuity in the supply chain.

• Engage legal counsel to navigate regulatory compliance requirements and mitigate legal risks.

• Continuously monitor and reassess threats to adapt strategies and stay ahead of potential risks.

Create an Action Plan 

With your goals defined and threats identified, it's time to create an actionable plan to turn your vision into reality. Work with your team or financial advisors to develop a roadmap with clear priorities and timelines.

Example: Imagine a freelance graphic designer looking to transition into full-time entrepreneurship. Their action plan might include steps such as building a diverse client portfolio, setting up a streamlined invoicing system, and investing in marketing efforts to attract new clients.

Work with Experts in Financial Forecasting and Decision-Making 

You don't have to navigate the world of financial forecasting and decision-making alone. Working with experts who have systems in place to support you saves time and money. 

Accounting Made Accessible can make your process a breeze. We’ll work with you to clarify your goals, decide on indicators, discover and neutralize threats, and implement an action plan. We won’t just stick around for tax time, we’re your reliable supporters year-round. 

Book a free call with us and see how we can help make your goals come true. 

Are You Tracking These Accounting KPIs?

Once you’ve set up monthly financial reports, your work isn’t quite done. In order to get the most out of your bookkeeping and reporting, accounting KPIs are going to be an important ally for your business. 

What are Accounting KPIs? 

Accounting Key Performance Indicators (KPIs) are metrics that provide insights into the financial health, performance, and efficiency of a business. 

KPIs serve as measurable values that gauge various aspects of a company's financial activities, allowing stakeholders to:

• Assess progress toward strategic objectives

• Identify areas for improvement

• Make informed decisions

Businesses can have non-financial KPIs as well, tracking customer satisfaction, employee engagement, lead conversion rates, and social impact metrics. 

Why are Accounting KPIs Important? 

Accounting KPIs are valuable to business owners in many ways, going beyond providing an overall view of a company’s financial health and performance. Businesses can use accounting KPIs to support in a number of ways, including:

• Strategic Planning and Decision-Making: Accounting KPIs provide valuable insights into the effectiveness of business strategies, resource allocation, performance against goals, and investment decisions, enabling you to make informed choices that drive success.

• Investor and Stakeholder Confidence: Whether you’re applying for a loan or looking for investors, meaningful accounting KPIs enhance confidence in your company.

• Risk Management: Accounting KPIs help to identify and mitigate financial risks by highlighting areas of potential concern, such as liquidity issues, excessive debt levels, or declining profitability. By proactively monitoring these indicators, businesses can implement risk mitigation strategies and safeguard against unforeseen challenges or economic downturns.

• Benchmarking Against Industry Standards: Accounting KPIs enable businesses to benchmark their performance against industry standards and competitors. By comparing KPIs to industry benchmarks, companies can identify areas where they excel or lag behind their peers. This comparative analysis provides valuable insights for setting realistic goals, identifying opportunities for improvement, and staying competitive in the marketplace.

Not All Accounting KPIs Are Equal

Not all KPIs will be relevant for your business. KPIs should support and inform your larger strategic direction. It’s important to consider factors including your company’s industry, size, mission, goals, and values. 

For example, a retail business might track the Average Transaction Value (the amount spent by each customer per transaction) to understand purchasing patterns and maximize revenue.

A service provider, on the other hand, might focus on tracking Average Revenue Per Client, assessing the profitability of their pricing and customer retention strategies.

How to Select Relevant Accounting KPIs for Your Business 

Businesses can begin with a thorough analysis of their operations, goals, and industry benchmarks. This involves identifying key drivers of financial performance, such as revenue streams, cash flow, and cost structures.

Once these factors are identified, businesses can then prioritize and select the accounting KPIs that are most relevant and actionable for their unique circumstances. This may involve:

• Consulting with industry experts

• Benchmarking against peers

• Leveraging data analytics tools to identify correlations and trends

Baseline Accounting KPIs

While every business is different, below are some accounting KPIs most small businesses will want to track.

Revenue Growth Rate

This KPI measures the percentage increase or decrease in revenue over a specific period, indicating the business's ability to generate more sales and expand its customer base.

Gross Profit Margin 

The gross profit margin calculates the percentage of revenue retained after deducting the cost of goods sold, providing insights into the efficiency of production or service delivery and overall profitability. It summarizes how efficiently you're converting sales into profit.

Net Profit Margin

This key metric shows the percentage of revenue remaining after accounting for all business expenses. It's the ultimate indicator of your business's profitability.

Accounts Receivable Turnover

This metric evaluates how efficiently a business collects payments from customers by measuring the number of times accounts receivable is converted into cash within a given period.  A lower number suggests faster collection and better cash flow management.

Debt-to-Equity Ratio 

The debt-to-equity ratio assesses the proportion of debt financing relative to equity financing, indicating the level of financial leverage and risk exposure for the business.

Operating Cash Flow Ratio 

This ratio compares operating cash flow to current liabilities, representing the business's ability to generate sufficient cash to cover short-term obligations and sustain daily operations.

Accounting KPIs Made Easy

Choosing and monitoring accounting KPIs is important for businesses navigating the complexities of financial management. 

By aligning KPIs with organizational goals, benchmarking against industry standards, and regularly tracking performance, businesses can:

• Gain valuable insights into their financial health

• Identify areas for improvement

• Make informed decisions to drive growth and profitability 

It's important to remember that KPIs are not static but evolve with your business, requiring regular updates and refinement to remain relevant and effective.

If figuring out the accounting KPIs for your business isn’t something you feel excited about, our team at Accounting Made Accessible can help! 

You can expect to better leverage your KPIs, identify and minimize threats, and improve your financial performance when working with our team. 

Book your free strategy call today! 

Do You Have a Reliable Accounts Receivable Process in Place?

If someone were to ask you, could you confidently tell them that you have a reliable accounts receivable process? 

If the answer is no, it may be important to review what you have in place and see if everything is on track with best practices that can set your business up for greater success. 

Accounts receivable refers to the amounts owed to a business by its customers or clients for goods or services provided on credit. It can include unpaid invoices from sales, outstanding balances, and installment payments. 

Why You Need An Accounts Receivable Process

Without a strong accounts receivable process, small businesses can experience major challenges and missed opportunities.

Cash flow is crucial for businesses to meet their own financial obligations, yet accounts receivable can impact cash flow through: 

• Delayed Payments: Customers or clients may delay payments, impacting your business's cash flow and financial planning.

• Bad Debts: Unpaid invoices may have to be written off as bad debts

• Payment Disputes: Resolving payment disputes without a solid accounts receivable process can be time-consuming and resource-intensive.

• Lack of Follow-Up: Inconsistent or ineffective follow-up on overdue accounts can result in prolonged outstanding balances.

• Inefficient Invoicing: Inaccurate or delayed invoicing processes can lead to delays in receiving payments.

Opportunities From a Reliable Accounts Receivable Process 

Better cash flow and a strong accounts receivable process presents many opportunities including improved: 

• Information for decision-making based on more accurate financials.

• Opportunities for growth such as investing in more service offerings, advertising, or staff.

• Customer satisfaction built from having a clear process. 

• Peace of mind knowing that there is an organized accounts receivable system in place. 

Strategies for a Better Accounts Receivable Process 

Now let’s dive into how you can improve your accounts receivable process. 

First, choose a software that meets your business needs. The right software can assist with nearly every step of your accounts receivable strategy, including automating tasks, measuring KPIs, and providing training resources for employees. 

Set and Measure Goals 

Investing in a better accounts receivable process should be done with your business’s goals in mind. Think about what is driving your business, and how accounts receivable ties into larger goals.

For example, if your goal is to hire new staff in the next year, improving your accounts receivable process may tie into this by improving cash flow.

Next, determine key performance indicators (KPIs) that you’ll use to measure the success of your program, which could include: 

• Days Sales Outstanding (DSO): Measures the average number of days it takes to collect payment from customers after a sale is made.

• Aging of Accounts Receivable: Analyzes the distribution of outstanding receivables by the length of time they have been outstanding. It helps identify overdue accounts and prioritize collections efforts.

• Bad Debt Ratio: The percentage of total sales that cannot be collected due to customers' inability or unwillingness to pay.

• Percentage of Overdue Receivables: The percentage of accounts receivable that are past due compared to the total outstanding receivables. 

• Average Collection Period: The average number of days it takes to collect payment from customers. 

• Accounts Receivable Turnover Ratio: Calculates how many times during a specific period (usually a year) accounts receivable are converted to cash. 

• Collection Effectiveness Index (CEI): Measures the effectiveness of collections efforts by comparing the amount of cash collected during a period to the total outstanding accounts receivable. 

Improve Customer Payment Experiences

Ensuring customers have a positive experience is important to businesses, and improving accounts receivable systems is one way to create a smoother customer experience. Some best practices supporting your customer's payments include: 

• Ensure you have a clear policy outlining payment terms to minimize misunderstandings.

• Offer incentives such as discounts or rewards for early payment.

• Offer payment plans to meet a variety of needs. 

• Charge reasonable late fees for delayed payments.

• Provide a variety of payment options such as credit card, bank transfer, and cash. 

• Use your software to its full advantage, including automating invoicing, payment reminders, and collections. 

Staff Training and Team Support

Ensure that staff members are trained on best practices for accounts receivable management and customer communication. This includes training on your software and its latest features, and revisiting regularly so your staff have the tools available to implement your processes.

If you find it’s too much for your team, consider hiring a specialist firm that can support you in creating a better process. Consider factors such as their qualifications, services offered, software support provided, and pricing structure. Learn what to expect if you’re not used to outsourcing tasks. 

Better Accounts Receivable Could Be Nearer Than You Think

If you’re ready to improve your accounts receivable process, but don’t want to spend too much time worrying about the details, our team is available to discuss your needs.

Accounting Made Accessible is here to help you every step of the way. 

Book your free strategy call today, and let us do the accounting while you focus on your favorite parts of running a business. 

How to Track and Reach Your Revenue Projections

Setting and reaching revenue projections is an essential aspect of any business. Creating accurate revenue projections–and achieving those projections–helps with budgeting, decision-making, and tracking the growth of your business.

Building a revenue tracking system helps you compare your projections versus your actual revenue. You can use this information to help formulate reports and create insights that set you up for long-term success and growth.

In this article, we’ll look at how to accurately estimate revenue and track your revenue against your projections.

Importance of Accurate Revenue Projections

Accurate revenue projections are essential to the long-term success of a business. A business that doesn’t have an accurate estimate of its revenue can’t accurately plan its budget. An accurate revenue projection, on the other hand, works as a roadmap for business planning. 

Your projections can help guide you in:

• Resource allocation and management

• Budgeting and cash flow forecasting

• Risk management

• Performance evaluation of sales, marketing, and customer service efforts

• Strategic decision-making based on current market trends

Additionally, accurate revenue projections can be a key element in securing financing and gaining investor confidence. Say there are two companies seeking investors. Company A regularly provides accurate revenue projections that align with its sales goals and are based on historical revenue numbers. Company B often over-inflated its revenue projections and consistently falls behind in actual revenue. Investors are more likely to provide funding for Company A than Company B.

Setting Realistic Revenue Projections

You know you need accurate projections, but you might be wondering how to actually set realistic projections for your business.

Your first step should be to look at your historical sales and revenue data. Your past revenue is often one of the best indicators of future revenue. You can start your projections by reviewing the previous years’ revenue statistics to gain an estimate of potential revenue for your current forecast.

In addition to past revenue data, there are two main aspects to creating realistic financial projections:

• Understanding Your Market

Analyzing market trends and current customer behavior can give you a leg up when creating revenue projections. As you analyze trends, you can build insights into what your customers currently want–and are willing to spend on your products. Plan to incorporate your market insights into your revenue projection models.

• Considering External Factors

Customer trends aren’t the only factors that will affect your revenue. External factors, such as economic conditions and greater industry trends can influence your revenue as well. You can account for these external factors by building flexibility into your projections to accommodate unexpected changes out of your control.

Choosing the Right Revenue Projection Model

There are many revenue projection models you can use to estimate your company’s revenue. Not all models will work with every business. In fact, most business owners find a certain type of projection model works best for their type of business, while other models give less accurate projections.

When selecting a projection model, consider your business dynamics and goals. For example, a larger business with numerous sales departments and regions may want to use a bottom-up forecasting model. This system compiles sales and revenue forecasts from each department to create a revenue projection for the company as a whole.

Continuous Monitoring and Adjustments

As with most financial projections, forecasts, and budgets, your revenue projections shouldn’t be set in stone. Instead, you should plan to regularly review actual versus projected revenue figures. Regular reviews of your projections can help you stay on track to meet revenue goals by adjusting to ongoing market trends or external factors.

To get the most out of your financial projections, get into a routine of reviewing financial performance against your projections. This allows you to identify early signs of potential deviations from your estimated revenue. In turn, you can use these insights to create strategies that help you adjust your goals and stay on track to meet projections.

Key Performance Indicators (KPIs) for Tracking Revenue

Key performance indicators, or KPIs, are perhaps the most essential factor in accurately tracking and projecting revenue. Tracking the right KPIs makes creating future revenue forecasts easier while also giving you the information you need to make data-driven revenue decisions.

Like forecasting models, different businesses may find different revenue and sales KPIs to be more beneficial for projecting and tracking revenue. However, most businesses will benefit from tracking:

• Sales metrics

• Expense management metrics

Sales Metrics

Sales data KPIs generally monitor the sales performance of a company. This might include total sales by dollar amount, sales by department or sales team member, or the number of products sold in a timeframe. Whatever sales data you use, comparing sales to revenue projections is an easy way to track the success–and limitations–of your revenue projections.

Expense Management KPIs

Sales data gives you insights into pure revenue from products, services, and other income. However, sales KPIs can limit insights when compared to revenue projections by only showing one side of the story.

Adding expense management KPIs into your revenue projection tracking can help give you a more complete picture of your projections compared to actual revenue numbers. This ensures a balanced approach between revenue growth and cost controls to maintain or expand that growth. Expense KPIs help you analyze expenses and the cost-effectiveness of producing and selling your products. 

Focus on Continuous Improvement to Reach Your Revenue Projections

An effective revenue projection management system offers businesses many long-term benefits, including:

• Improved financial stability

• Enhanced decision-making capabilities

• More efficient resource allocation

• Increased competitiveness and growth

• Flexibility to adapt to market changes

Not sure where to start when creating revenue projections? Accounting Made Accessible is here to help. We help business owners and leaders like you accurately and efficiently manage their revenue and other business financials. Our team has the experience you need to build an accurate revenue projection–and achieve it.

Reach out to us today to get started.

What to Look for in Monthly Financial Reports

If you’re like many business owners, you know that monthly financial reports are an important part of keeping your business in check. Whether it’s monitoring cash flow or tracking expenses, these reports help with strategic decision-making and sound financial management. 

But entrepreneurs find themselves just “going through the motions” and aren’t crystal clear on what to look for when reviewing their monthly financial reports. In this article, we’ll review the basics of financial reports to make sure you’re using them to your advantage. 

Accurate and Timely Monthly Financial Reports 

In the hustle and bustle of running a business, it’s tempting to view monthly financial reports as a chore to rush through or simply put off altogether. 

Don’t give in to the temptation! 

Accurate and timely monthly financial reports can serve as the bedrock for informed strategic decision-making. They offer incomparable insight into a company's financial standing and can uncover trends, identify areas for improvement, and give you confidence in your finances.

Neglecting monthly financial reports can result in: 

• Financial Risk: Inaccurate or delayed financial reporting can hide emerging financial risks, such as cash flow shortages or unsustainable debt levels, leaving businesses vulnerable to unforeseen crises or regulatory penalties.

• Poor Decision-Making: You may lack the necessary insights to make informed strategic choices, resulting in reactive rather than proactive responses to financial challenges or market trends. 

• Misallocated Resources: Without up-to-date financial data, businesses may misallocate resources, leading to inefficiencies and missed opportunities for growth.

Key Components of Monthly Financial Reports

Monthly financial reports typically consist of several key documents which together provide a more holistic view of the company's financial situation. Below is a summary of some of the more common reports that businesses produce and review regularly. 

Income Statement

The income statement offers insight into a company's financial performance over a specific time period. An income statement will provide you with insight into:

• Revenue: The total income generated from your sales and/or services during the period.

• Expenses: Costs incurred, including operating expenses, depreciation, and taxes.

• Profitability: Your net income or loss, highlighting the company's overall financial health.

By analyzing revenues and expenses, you can assess the effectiveness of sales strategies, identify areas of cost inefficiency, evaluate the financial viability of specific products or services, and set realistic targets.

Balance Sheet

The balance sheet provides a comprehensive overview of a company's financial position at a given point in time, detailing:

• Assets: Resources owned by the company, such as cash, inventory, property, and equipment.

• Liabilities: Obligations including debts, accounts payable, and accrued expenses.

• Equity: The company's net worth, calculated as assets minus liabilities.

By looking at the balance sheet, you can go beyond seeing if there’s enough income to pay the bills and make decisions about potential investments and other growth areas.

Cash Flow Statement

The cash flow statement tracks the inflow and outflow of cash during a specified period, offering insights into a company's liquidity and ability to meet its financial obligations. You can expect to see the following on your cash flow statement: 

• Operating Activities: Cash generated or used in the day-to-day operations of the business, such as sales revenue and operating expenses.

• Investing Activities: Cash flows related to investments in assets, such as property, equipment, or securities.

• Financing Activities: Cash flows from activities such as borrowing or repaying debt.

By looking at your cash flow, you’ll be able to see if you have enough cash available to meet all of your financial obligations and take advantage of new opportunities. It can also help you determine if you’re spending too much cash on certain activities, such as buying new equipment or paying off loans. 

Tracking Budget to Actual Analysis on Monthly Financial Reports 

Budgets are rarely 100% accurate, because it can be difficult to fully predict income and expenses. However, by comparing your planned budget with actual expenditures and revenues, you can identify major discrepancies from your financial targets. 

But tracking budget to actuals doesn’t only help detect potential overspending or underspending areas. This process can be a regular opportunity to proactively adjust where you’re putting your company’s resources. 

Lastly, as time goes on, you’ll improve your ability to budget and forecast, allowing you to further refine future budgetary decisions, improve overall financial management practices, and make strong financial decisions. 

Tracking KPIs on Monthly Financial Reports

Key Performance Indicators (KPIs) are a concise way to make sense of the detailed financial information available. Tracking KPIs is a bit like checking your company’s scoreboard to see how you’re performing. Examples of KPIs include: 

• Revenue Growth Rate: The percentage increase in revenue over a specific period, indicating the company's ability to generate more income over time.

• Profit Margin: The percentage of revenue that translates into profit after deducting expenses.

• Return on Investment (ROI): the profitability of an investment relative to its cost. 

However, KPIs don’t need to be purely financial. You can develop KPIs based on your business goals and values, such as customer satisfaction, operational efficiency, employee turnover, and environmental sustainability. 

Using Monthly Financial Reports for Decision-Making 

Monthly financial reports are important for informed decision-making in business, but you don’t have to develop them on your own. At Accounting Made Accessible, our team can help define your business goals, make sense of the numbers and how to reach your goals faster, neutralize potential roadblocks, and create an action plan.

Contact us today to learn how we can assist with your monthly financial reporting and beyond!

Make Your Business Tax Strategy a Year-Round Process

Do you find yourself in a rush to collect documents and make payments when tax time rolls around? Focusing too much on year-end tax planning for tax season could be hurting the efficiency of your business–and the effectiveness of your tax strategy.

The most effective tax strategies require a year-round, proactive approach. This means factoring tax planning into each part of your business bookkeeping.

Year-round tax planning doesn’t have to be another burden for you as a business owner. You can make the process simple by incorporating regular tax strategy maintenance into your everyday business operations. Keep reading to learn how.

Start By Creating a Tax Strategy Calendar

You’ve likely used year-end tax planning strategies in your business. You can increase the benefits of those strategies by incorporating other tax strategies throughout the year. The easiest way to do this is by creating a tax strategy calendar.

A tax strategy or tax planning calendar can help you stay organized and accountable throughout the year. Your calendar can be as simple as notes on a physical wall calendar or as expansive as a detailed digital calendar that you can access on the go. Whatever you choose, the main benefit of your calendar is to remind you of important tax planning and deadline dates, including:

• Quarterly estimated tax payment deadlines

• Tax filing deadlines

• W-2 or 1099 filing due dates

Your tax strategy calendar should also include dates that will help you stay on track throughout the year. For example, you might receive a recurring invoice payment at the beginning of each month. Adding a note in your calendar can help you set aside a portion of that invoice for tax purposes.

Align Your Business Plan with Tax Strategy

Your year-round tax strategy should take into account any major business decisions you’re facing, such as:

• Investments

• Expansions

• Acquisitions or mergers

These irregular changes to your business could have major tax implications. Additionally, accounting for these changes to your business could help you reduce your tax liability.

Businesses buying new equipment, for example, might want to use the Section 179 deduction to depreciate the new property. This deduction allows you to deduct the depreciation of business equipment immediately rather than deduct smaller increments each year.

Keep a Close Eye on Your Financials

Day-to-day cash flow management is a standard part of your work as a business owner. However, have you considered how that ongoing management could be used to improve your tax position?

Keeping a close eye on your business financials will help you identify trends and assess your tax liability. In turn, you’ll be able to make strategic tax decisions based on your current financial situation.

For example, you might notice an influx in revenue for the year, which likely means a larger tax liability. By keeping an eye on your finances, you can move up the purchase of a major business expense to offset the increase in revenue, effectively reducing your tax liability.

Stay Up-to-Date on Changes in Tax Laws and Available Credits and Deductions

Tax law changes. A lot. It’s important as a business owner to stay on top of changes that could affect your business. Bookmarking the IRS business tax newsfeed could be a good way to stay on top of federal changes.

However, you might not have time to keep up with all the tax changes or might be unsure which changes affect you. This makes having a trusted accountant essential to your business. Your tax advisor will stay on top of tax law and regulations changes for you, so you can focus on running your business.

You should also take time to review your potential tax credits or deductions. A knowledgeable tax advisor can help you stay up-to-date on changes to deductions or tax credits for which your business might qualify.

Keep Your Books Clean

The key to an effective accounting plan and tax strategy is accurate bookkeeping. Without accurate, clean records, all of your tax strategies could be ineffective.

Additionally, clean books make it easier for you and your accountant to identify potential new strategies.

Take the time to review and audit your books throughout the year. A regular monthly check-in is generally advised to help catch potential errors.

Meet With Your Tax Advisor Regularly

An effective year-round tax strategy means you work with your tax and financial advisors. Your tax planning calendar should include regular meetings with your accounting service, tax planner, or financial advisor so everyone is on the same page.

These meetings help set aside dedicated time to discuss your financial goals and the current status of your business. Regular meetings with tax advisors also give you a chance to review your tax strategy and make any adjustments as needed.

Still looking for the right accounting advisor for your business? Accounting Made Accessible provides expert tax and financial advice for businesses of all sizes. We’re experts at creating a tax planning strategy your business can use year-round to help alleviate tax burdens and financial stress. Book a call to learn how we can help your business today.

What to Expect If You’re Outsourcing Accounting Services

For businesses that are used to doing it all themselves, making the leap to outsourcing something as critical as accounting can be a big step. 

To be sure, it can have many major benefits for the company and its leaders, but it also requires placing your trust in outside experts. That's why we're breaking down exactly what you should expect when outsourcing your accounting services for the first time.

3 Benefits of Outsourcing Accounting Services

Outsourcing accounting services is one of the best decisions most companies can make, as it frees up your time, energy, and attention to focus on the things that matter.

Outsourcing Accounting Services Saves Money

Hiring a qualified financial professional can be expensive. These are skilled, in-demand workers that can take a big chunk out of your company's bottom line. And it's not just salaries - it's also benefits and other associated compensation that full-time employees require, not to mention office space and other administrative and HR costs. 

But by outsourcing your accounting services, you can dramatically cut these expenses. Not only will you avoid the associated costs of hiring an employee directly, but you can pay for a smaller portion of the outsourced accountant's time, while a full-time employee may not have enough work to keep them busy, resulting in wasted money.

You Get Access to Expertise By Outsourcing Accounting Services

Some business leaders may try to do their own accounting or give the task to an employee who also handles other issues. This can be a serious mistake, leading to missed opportunities or even potential tax or legal trouble if money isn't adequately accounted for. 

However, outsourced accountants are experts in their field, dedicating all of their time, energy, and attention to ensuring your finances are handled correctly. They can:

• Provide valuable insights

• Help spot small problems before they become big ones

• Give you the confidence to know you're making the most of your accounting

Outsourcing Accounting Services Frees Up Your Time

There's no way to avoid the time it takes to properly do a business's accounting - that is, unless you put the work on someone else's plate! 

By outsourcing accounting, you free up time for yourself and other leaders, allowing you to focus more on your core business and the things that inspired you to start a company to begin with. This can be a vital step to growing from a small organization to a larger one or reclaiming some of your time to improve your work-life balance.

The Accounting Made Accessible Difference

At Accounting Made Accessible, our team focuses on four key areas that impact your financial situation most. It's this core of valuable outsourced services that sets us apart from other accounting partners.

Goal-Focused

It's easy to feel stuck when you don't have clear financial goals. Accounting Made Accessible will help you develop clear, achievable goals that are uniquely tailored to your business and how it:

• Makes

• Spends

• Invests money

We'll not only help you set these goals but also monitor them over time to ensure you're staying on track to where you'd like to be.

Leveraging Key Success Indicators

For many companies, a few critical numbers can explain a great deal about how things are operating. These are known as key success indicators (or key performance indicators), as they're the pieces of data most closely linked to reaching the goals you've set for yourself. 

Accounting Made Accessible assists you in identifying these signals and making targeted adjustments that have the most impact with the least work.

Identifying and Addressing Threats

As diverse as businesses can be, most face the same risks to their success. Accounting Made Accessible has identified nine major threat categories that frequently cause the most significant problems for owners and leaders. 

Our team will help you examine the biggest potential hazards and create contingency plans to address them. Plus, simply being aware and proactive about these issues can go a long way toward avoiding them, to begin with, an added bonus of working with us.

Implementing the Action Plan

Once we've developed a plan for your business, Accounting Made Accessible crafts an easy-to-follow, step-by-step process to make it all come together. We'll set priorities, timelines, and action items that will ensure you see tangible results in no time. 

Meanwhile, your advisor will continually refine and update your plan as they get to know you and your business and see the improvements manifest.

Ready to Begin Outsourcing Accounting Services?

If you're tired of wrestling with your books and spending so much time on finances instead of your actual business, it's time to outsource your accounting services. And there's no better choice than Accounting Made Accessible, which truly lives up to its name in making the most important parts of accounting easy to understand and leverage for your company. 

Book a free strategy call with us and see how outsourcing can transform your business today.

How to Use a Cash Flow Forecast Template

Understanding and forecasting the cash flow of your business is essential to staying on top of your day-to-day funds. A cash flow forecast template is a valuable tool you can use to manage and project the cash flow of your business.

In this guide, we’ll provide a step-by-step process for effectively creating and using a cash flow forecast template.

Download or Create a Cash Flow Forecast Template

The biggest benefit of modern technology is access to almost anything you need for your business. Finding a cash flow forecast template is no exception.

Most accounting software tools have pre-built forecasting templates you can download. If using a premade template, try to find one that fits the needs of your business. For example, if your business doesn’t have a lot of investing activities, a template built for investment-heavy businesses might not be the best option.

Additionally, you can use spreadsheet software—like Microsoft Excel or Google Sheets—to create a forecast template from scratch.

Download my FREE Cash Flow Forecast Tool HERE!

Identify Cash Flow Categories

Part of setting up your cash flow template is identifying cash flow categories. There are three main areas of cash flow:

• Operating Activities

• Investing Activities

• Financing Activities

In addition to the main categories, you should further break up the categories into specific line items, including:

• Sales

• Expenses

• Loan Repayments

• Investments

Add any line item categories that relate to your regular business activities. Remember, cash flow forecast templates should be customized to fit your unique business needs.

Input Opening Balances

The final step in setting up the template is adding your opening cash balance at the beginning of the forecast window.

You can use the opening balance that makes the most sense for your business and the upcoming projection period. For example, many businesses use either the closing balance from the previous period or the current cash position of the company.

Project Sales and Revenue

Accurately predicting your future sales and revenue is one of the most important parts of a successful cash flow forecast. To get a realistic estimate of your sales and revenue data for each period, use:

• Historical Data

• Market Trends

• Sales Projections

Let’s say you run a retail business that regularly sees increased sales during the final quarter of the year. In the past three years, your business made approximately $100,000 in revenue during quarter four. You can probably assume you’ll make around that amount again this year if most other factors remain the same.

On the other hand, if you’ve seen a lack of sales all year due to the economic constraints of consumers, you may want to lower your projection.

Estimate Operating Expenses

In addition to projecting revenue, you’ll need to estimate your operating expenses for the forecast period. Your operating expenses should include the day-to-day costs it takes to run your business.

Be sure to consider both fixed and variable expenses. Fixed expenses, like rent or employee salaries, don’t change month-over-month, making it easy to accurately record them.

Variable expenses, like utilities or credit card processing fees, require some extra work to project accurately. One way to project variable expenses is to look at past expense data. You can take an average of the past variable monthly expenses over the last year, for example, to get a more accurate estimate.

Include Non-Operating Cash Flows

Most businesses bring in revenue from operating activities like selling products or performing services. However, you might find your business makes money from other sources as well, called non-operating cash flows. Non-operating cash flows could include interest income, dividends, and taxes.

Not all businesses may have significant non-operating cash flows. Consider your business activities when creating your cash flow forecast. Do you regularly see non-operating revenue?

If yes, you should add non-operating cash flow into your forecast. If not, it may not make sense to add it to your forecast, as these additional categories could clutter your template.

Factor in Investing and Financing Activities

Businesses that hold investments in securities or assets should add investing activities to their forecast template. Cash flow from investing activities could include purchasing or selling equipment, property, or investments like securities.

Additionally, your business may need to include cash flow from financing activities. Like cash flow from investing activities, this type of cash flow relates to cash movement from financing like loans. Cash flow from financing activities might involve loans, repayments, or equity transactions.

Adding cash flow from financing activities to your forecast template is crucial for understanding how external financing impacts your cash flow management.

Account for Changes in Working Capital

Be sure to adjust and account for changes to your working capital when making your forecast. Any changes to these activities will directly affect your cash flow.

Working capital could fluctuate due to changes in:

• Accounts Receivable

• Accounts Payable

• Inventory

For example, you plan to add a new product to your offerings during the forecast period. You’ll want to account for increased inventory costs on your forecast template to accurately predict cash flow.

Input Assumptions and Scenarios

Add any assumptions you’ve made in your forecast. Common cash flow assumptions include payment terms, sales growth rates, and interest rates.

You should also plan out a few realistic scenarios for the forecast period. You can create a list of potential scenarios to help analyze the potential impacts of varying business conditions. Consider using a best-case, worst-case, and likely-case scenario model to help you more accurately plan for the forecast period.

Regularly Update the Forecast

Your cash flow forecast shouldn’t be static.

You can—and should—regularly revisit and update your forecast. Add actual data as it becomes available to keep your forecast as accurate as possible. This also helps your forecast more accurately reflect the financial reality of your business.

Analyze and Adjust

As you add new data to your forecast, you need to analyze any changes to your potential cash flow. Analyzing new data helps you see potential challenges or trends in the coming months, such as market trends that could lead to new opportunities.

You should also adjust your forecast based on your analysis to account for potential issues or opportunities. Adjusting your cash flow forecast gives you a better chance to address market changes, business strategy updates, or economic conditions head on.

Use Software Tools for Automation

Software tools are one of the easiest ways to accurately and efficiently create cash flow forecasts. Many accounting software programs have built-in cash flow forecasting tools to automate your cash flow analysis based on historical data and current cash flow trends.

Seek Professional Advice When Using a Cash Flow Template

Are you feeling overwhelmed or uncertain about certain aspects of your cash flow forecast?

You’re not alone. Many business owners don’t feel confident in setting up a cash flow forecast template, making it difficult for them to trust their projections. Working with a trusted financial professional, such as Accounting Made Accessible, can help alleviate your fears and create an accurate forecast.
Contact us today to learn more about our accounting services, including cash flow forecasting.

Year-End Tax Planning Strategies

Business owners know the anxiety that can come from a large tax bill at tax time. The good news? You can use year-end tax planning strategies to help lower your tax burden.

Tax planning at year-end sets your business up for success during tax season.

In this post, we’ll explore how you can prepare your business for next tax season by taking advantage of tax planning strategies, including deductions, credits, and the merits of good record-keeping.

Review Your Current Financial Position

The first step in any tax strategy is reviewing your current financial situation. Going over your business finances gives you insights that are vital to an effective tax plan. Without this step, you could wind up using tax strategies that don’t make the most sense for your business—thus leaving tax savings on the counter.

To get a better idea of the financial health of your business, take a close look at the company’s:

• Profit and Loss (P&L) statement

• Current cash flow

The P&L statement will help you see the financial health of your business in regard to sales, revenues, and profits. Your cash flow then gives you further insights into the financial well-being of the business.

Tax Planning Strategies to Consider

Maximizing Deductions

Many common business expenses qualify for deductions, including:

• Office supplies purchases

• Advertising and promotions expenses

• Employee salaries and benefits

• Certain business travel expenses

• Business Insurance

A key year-end tax planning strategy for almost any business is double-checking your expenses to maximize deductions. While this should include looking over your already-incurred expenses, part of this strategy involves making year-end purchases to reduce tax liability.

Let’s say your business had a great year and profits are way up. The downside is your tax liability is also likely to increase. You planned to purchase new office furniture in the new year.

However, you decide to purchase it before year-end so you can deduct the expense and lower your tax liability for this year.

In addition to deductions, you should consider tax credits and other incentives to help reduce your tax burden, such as:

• Pass-Through Entity Tax Credits: The pass-through entity tax (PTE) allows partnerships, S Corporations and LLCs to elect to be taxed at the entity level for state income tax purposes.

• R&D Credits: The IRS offers a research and development (R&D) tax credit for costs related to research, development, and improvement of products, processes, software, and more.

• Energy-Related Credits: There are a number of energy-related credits and incentives available for businesses that make energy-conscious decisions. For example, a deduction for energy-efficient commercial buildings.

Asset Depreciation

Major business assets, such as company vehicles or heavy equipment, depreciate over time. Traditionally, business owners deduct the cost of the asset throughout the useful life of the asset.

However, this isn’t the only way to deduct equipment purchases. In many cases, it makes more sense for businesses with qualifying equipment purchases to use the Section 179 deduction or bonus depreciation.

Both of these methods let you deduct the cost of certain business equipment right away rather than spreading out the deduction over several years.

The main difference between a Section 179 deduction versus bonus depreciation is how the deduction is calculated. Section 179 deductions use a dollar amount based on the purchase price of the equipment.

Bonus depreciation, on the other hand, lets the business deduct a percentage of the asset’s depreciation instead of a specific dollar amount. However, the maximum percentage amount for bonus depreciation is scheduled to phase out by 2027.

Managing Capital Gains and Losses

One of the most underrated tax planning strategies is tax-loss harvesting. This strategy uses capital losses to offset gains.

Tax-loss harvesting works by selling an investment at a loss and claiming the capital loss. This loss then offsets capital gains on investments that are making money. Capital losses can also potentially be used to deduct taxable income.

Another strategy for maximizing tax savings on investments is simply timing the sale of your investments correctly. For example, after purchasing securities, you may be able to save significant money in taxes just by holding the security for a year. After a year, investment gains switch from short-term to long-term, which generally have lower taxes.

Retirement Contributions

Most workers know the value of maximizing retirement contributions for tax savings. Many employees use a 401(k) plan to lower their taxable income and reduce taxes.

Like employees, the businesses that offer these retirement plans can use contributions to maximize tax savings. Employer contributions to qualified retirement plans are generally tax deductible.

However, business owners need to understand the restrictions to retirement contribution deductions, including deduction limits. Be sure to check with your trusted tax accountant to calculate how much you can deduct.

Keep Good Records

Accurate record-keeping is essential to tax planning strategies. While good record-keeping processes won’t directly lower your tax liability, they can help keep you organized and on top of deductions, credits, and incentives.

Luckily, modern tax and accounting software and technologies make it easier than ever to maintain accurate bookkeeping records for your business.

For example, you can use business accounting software to track expenses and cash flow. At the end of the year, your software produces a report detailing all of your business expenses and potential tax deductions. This ultimately saves you time rather than manually scouring your records for potential tax savings.

State and Local Guidelines

While many business owners focus on their federal tax liabilities, it’s also important to remember state and local liabilities. This includes staying up-to-date on changes to state and local tax laws.

Depending on your state, you may face more or less of a tax burden based on state laws.

State income tax, for example, can swing widely between states. Additionally, if you do business in multiple states, you’ll need to consider the tax implications of your business classification and differing state laws.

Consult with a Tax Professional

The final—and most important—of our tax planning strategies is to work with a knowledgeable tax professional.

As a business owner, you likely already wear many hats. Adding an accountant to your responsibilities will only increase your stress. In addition, you may not have access to or knowledge of the latest tax rulings or strategies, which could lead to a higher tax liability.

Accounting Made Accessible is your trusted resource for year-end tax planning. We work with business owners to develop a customized tax strategy that maximizes your tax savings.

Learn how you can save on taxes by booking a free strategy call today!

Should You Outsource Payroll in Your Business?

Managing payroll can be one of the most time-consuming tasks of running a business. The stress of paying employees and maintaining records might have you looking for a better way. If so, you might wonder if you should outsource payroll.

Outsourcing payroll can be an efficient and affordable way to manage your employment costs.

Learn the benefits of outsourcing payroll for your business and the best way to do it below.

What Does it Mean to Outsource Payroll in Your Business?

Outsourcing payroll is the process of hiring a third party to manage your payroll functions from simple to complex. You’ll then take a hands-off approach to the day-to-day management of payroll.

Common duties of a payroll service include:

• Paying employees

• Setting up payroll software and employee accounts

• Tracking time and calculating wages

• Monitoring payroll compliance

• Withholding taxes and garnishments

• Remitting taxes to the IRS

• Deducting employee retirement contributions and insurance premiums

• Compiling payroll documents for end-of-year tax planning

The best way to outsource payroll is by using one of many payroll software platforms. Payroll software or software as a service (SaaS) makes outsourcing easy and efficient through automation.

5 Benefits of Outsourcing Payroll in Your Business

1. You’ll Save Time When You Outsource Payroll

The biggest benefit to outsourcing your payroll is time savings. Payroll tasks are often time-consuming and tedious, and when you do them yourself, you end up spending more time on administrative payroll duties than you do actually running your business.

Outsourcing payroll lets you automate the complicated process of distributing pay, calculating wages, and filing tax reports.

By outsourcing, you free up valuable time you can use for strategic business planning or performing core functions. Using a payroll service or software lets you get back to what you do best – running your business.

2. Payroll Accuracy and Compliance

Payroll law is long, confusing, and different in each state. On top of state laws, federal labor and payroll tax regulations have their own set of requirements. Trying to be a payroll law and tax expert while running your business could lead to mistakes. Even an unintentional mistake could mean expensive penalties for your business.

Payroll service providers specialize in payroll taxes and labor laws meaning your payroll will always be accurate and compliant. They’ll know when employment tax reporting is due or how a new state law might affect your employees. 

Ultimately, you’ll lower your risk of errors and the penalties that come with them when you work with an outsourced payroll service.

3. Outsourcing Payroll is Cost-Efficient

Doesn’t outsourcing payroll cost money?

Yes, but a payroll service is an investment in your business. Outsourcing your payroll generally costs less in the long run than hiring an in-house payroll team or doing payroll yourself.

Hiring a new employee or human resources team can drain your monthly cash flow. In addition to ongoing employee pay and benefits, there’s an initial cost to hire and train payroll employees.

Trying to manage payroll by yourself, however, could lead to costly mistakes and fines.

A payroll service takes care of both of these problems by doing the following:

1. Payroll service providers need very little onboarding to get your payroll system up and running. This means you won’t have to spend months training an employee to do the work.

2. A payroll company focuses only on payroll, so you can be sure your data is accurate and in compliance with regulations.

4. Outsourcing Payroll Adds a Layer of Security and Data Protection

According to data from IBM, the average cost of a data breach is nearly $4.5 million. As a business owner cybersecurity is one of your top concerns.

However, managing payroll on your own could open your business up to cyber-attacks. You may not have the necessary security measures to stop and data breach before hackers get access to your employee and payroll data.

A payroll service can help alleviate your cybersecurity fears. As companies that deal with sensitive data every day, payroll services invest in the tools and resources needed to stop cyber-attacks. With the latest in cybersecurity tools, your payroll service provider helps reduce the risk of you or an employee experiencing identity theft.

5. Streamlined Reporting Comes with Outsourced Payroll

Many business owners are surprised to learn that outsourcing payroll could help them save money.

An unexpected benefit of payroll services is enhanced reporting tools. Most payroll services give you access to analytics on your payroll data, including:

• Labor costs

• Employee performance

• Potential discrimination in pay or benefits

• Employee retention

• Training and onboarding costs

You can use this data to form insights into your labor performance and costs. 

For example, you find that the average employee training takes two days. You streamline training so all employees are trained in a day, saving you money on training time.

Still Unsure if You Should Outsource Payroll in Your Business?

Outsourcing payroll can help you save time and money by automating payroll tasks. In addition, a payroll service reduces your risk of noncompliance with labor laws and employment taxes.

Accounting Made Accessible is here to help you find the perfect payroll software solution. Our knowledgeable team can answer your payroll outsourcing questions and address your concerns.

Ready to learn more about outsourcing payroll? Book a free strategy call with us today.

How to Find the Right Bookkeeping and Tax Service

When starting and growing your business, delegating tasks can be a challenge. How much can you feasibly do by yourself, and where should you hire help? 

Since most people don't come from an accounting background, hiring a bookkeeping and tax service is virtually always the first responsibility that gets outsourced. Accountants are often chosen for expert guidance and getting to know your business, in addition to simply performing required services like tax preparation.

According to CPA Practice Advisor, a majority of business owners (86%) feel that their accountant is a trusted advisor. It jumps up to 88% when the accountant offers the ideal level of service. However, not all business owners receive the appropriate level of service or know how to communicate their needs in this area.
It's important to choose a bookkeeping and tax service that specifically aligns with your business needs. Here are the factors that you need to consider when selecting the right accountant.

Start By Assessing Your Business's Needs

If you're in the restaurant business, knowing what goes into a delicious dish and enchanting atmosphere is only part of the challenge. 

For example, a technology business can ace product development and rapid prototypes, but it's also integral to understand the back end of the business. 

No matter what field your business is in, you need to become familiar with its tax and accounting obligations on the surface level.

Retail businesses often struggle with information systems for inventory. Software's common pain points are figuring out cost recovery and which expenses qualify for complicated tax credits. 

Assess where your industry as a whole tends to run into problems and areas where your business specifically needs professional assistance.

Define Your Service Expectations

Once you've identified the pain points for your business, it’s time to think about what you really need from a bookkeeping and tax service. In order to ensure that you get the appropriate level of service, it's best to clearly and definitively outline the services that you need.

This can include:

• Tax preparation services

• Bookkeeping

• Financial analysis

• Assistance with loan and grant applications

• And more. 

Conversely, if you don't need a comprehensive suite of services because they don't fit your industry or company size, you shouldn’t pay for what you don't need.

Is the accountant going to be fairly hands-off, just someone you'd like to contact for year-end tax planning and other annual check-ins? Or do you want more frequent reports and involvement if you expect transaction volume to significantly rise? Specifying these needs upfront respects both your time and the accountant's time.

Search for These Qualities in an Outsourced Bookkeeping and Tax Service

Qualifications and Expertise

While some accountants are generalists who work with a variety of clients, many have an industrial specialty or two after getting established. It's absolutely preferable to hire a bookkeeping and tax service that demonstrates knowledge and experience in your industry or field. They're more familiar with common pain points for your field, along with tax benefits and technical solutions that can make your business more efficient.

Services Offered

Hand in hand with industrial specialties, the services should align with what your business needs on an ongoing basis. If there are additional services you don't need, see if you can cut your agreement down to just the ones you want. Ask if they have additional or customized services that might not be advertised.

Software and Technology Compatibility

Bookkeeping and tax services may already work with the tools that you have, or integrate new solutions into your existing information systems. Ask questions and read client testimonials to get a feel for how smooth the transition will be on the technology side.

If your business is very new, and you have not yet set up these systems, ask how much onboarding and ongoing support they can provide. Whether your business is new or established, services that use cloud-based tech are the best option. They provide the most flexibility, scalability, and real-time features.

Cost and Pricing Structure

Bookkeeping and tax services utilize a variety of pricing models. They include hourly fees, project/flat rates, retainers, subscriptions, or a hybrid model depending on the services you need.

It's crucial to discuss pricing upfront so that there aren't any disputes over fees. Project-based pricing is often the best option for business owners so that it ensures you only pay for the services you absolutely need.

Communication and Reporting

Make sure that you discuss how often you want to receive reports, the level of detail expected, and how you will communicate. Regular and clear communication is direly important, and you need a provider that simplifies communication in a way that works for you.

Searching for a Bookkeeping and Tax Service?

The right bookkeeping and tax service will serve as a strong partnership invested in seeing your business succeed. They will help you achieve your financial goals and stability while also being on the same page in terms of services provided, communication styles, and knowledge in your field.

Accounting Made Accessible can provide the ideal accounting solutions for your business. Contact us today to speak to one of our friendly and professional accountants.

How to Simplify Year-End Tax Planning

Managing tax obligations can be a challenge for business owners, but proper tax planning can make it far less overwhelming.

Tax laws constantly change and filing requirements can vary depending on where you live and operate. Of the nearly 263 million tax forms the IRS processes every year, you have no way of knowing which ones didn't take advantage of tax benefits the filers were simply unaware of. 

Year-end tax planning will provide you with a road map that makes next year's taxes easier to navigate so it takes up less headspace during busy times. 

Here's how to simplify the year-end tax planning process.

First, Review Your Current Financial Position

Start with the data that you know: how your business is currently doing.

If your business is new, stable, growing, or going through changes, it will greatly affect the tax planning process. A financially healthy business also has different considerations compared to a business going through a rough patch.

Looking at the current year's financial data also gives you an idea of the tax benefits you may be eligible for in the coming tax year.

Take the Time to Set Clear Tax Goals and Objectives

Your industry, headcount, and other aspects of your business will shape your year-end tax planning goals. Every business owner has a unique financial situation, so the objectives you create might differ from your peers.

For instance, if your business sells handmade goods, you may prioritize finding an inventory management solution that makes tax filing easier. A software company could prioritize projects that qualify for R&D tax incentives. 

Life and business will happen, but if you anticipate a major change or unusual transaction, this is the time to plan for potential tax consequences.

Organize and Update Financial Records

Good recordkeeping is a solid foundation for simplified tax filing and tax planning. Make sure that your financial records are accurate and up-to-date. If your records are messy and have large gaps, it makes every other aspect of managing your financial and tax obligations far more difficult. For deductions that require more recordkeeping than dollar amounts alone, you need to be able to find:

• Invoices

• Expenses

• Receipts

• Logs

This is the time to find a financial recordkeeping solution that best fits your business needs and personal preferences. Reach out to an experienced accountant for help building a system that makes sense for your business as it grows.

Review Potential Deductions and Credits

Credits and deductions are available at both the personal and business levels and tax laws change every year based on Congressional actions and the outcomes of Tax Court cases. 

There are so many deductible items and other tax benefits that you may be unaware of: did you know that cat food may be deductible if you have pest control issues? Crazy, we know, but see Seawright v. Commissioner and how they made it happen.

Your deductions and credits might not be as outlandish, but year-end tax planning is the time to take a closer look at the tax benefits most commonly used in your industry. The law may have changed, such as the sunset of various CARES Act provisions or the benefit amounts indexed for inflation. 

This gives you time to determine how much of your activity in the past year qualifies for this benefit or what you should plan for in the coming year.

Manage Your Expenses and Make Year-End Purchases

Business expenses are often at the heart of tax planning engagements. They help you identify areas where you can do some cost reduction, like cutting off software and other subscriptions you're barely using. Your deductible operating expenses and overall burn rate need to be examined relative to your business and tax savings goals.

An accountant can help you with timing certain planned expenses to get the most benefits. Certain complex deductions, like depreciation of big-ticket purchases such as vehicles and equipment, have more delicate time constraints than a simple purchase like ordering office supplies. Bonus depreciation and electing for Section 179, where you expense the item, also majorly affect tax planning and the current year's taxes.

However, simple transactions also add up. If you anticipate that next year's profits will be higher than the current year, you may want to put off ordering those supplies if it can wait. If you think next year's profit won't be as high due to project expenditures or a planned closure, making purchases before December 31st would be more beneficial for the current year's tax bill.

Reach Out to Accounting Made Accessible for Help with Year-End Tax Planning

Every business owner has different priorities when it comes to tax savings and cutting down on administrative burdens. An experienced accountant knows exactly where to look for those checkboxes you might miss. They can also provide you with actionable tips you can implement throughout the ensuing tax year to reduce headaches and increase savings during tax season.

Accounting Made Accessible can assist with your year-end tax planning. Book a call with us today to speak to one of our friendly and professional accountants.

7 Tips for Business Cash Flow Management

Business owners face many challenges, and one that frequently gets overlooked is cash flow management. Your top priorities may be honing your product or finding more customers because you know money needs to come in. But what about how much you're spending? How long does it take to get paid after you send invoices?

When you hear frightening statements such as the age-old claim that the Small Business Administration says more than half of businesses fail, there's often little context to it. But the truth is that 82% of those failures are attributed to poor cash flow management.

If you don't want your business to become part of this statistic, it's critical to understand how cash flows work and what makes them different from other accounting concepts.

Understanding the Difference Between Cash Flow and Profit

Profit results when subtracting your expenses from your revenues. If you made $200,000 in sales and spent $50,000 on supplies, research, and rent, your profit is $150,000. But you likely don't have $150,000 in cash on hand at year-end.

Cash flows are calculated similarly to profit, but they're your cash receipts (cash inflows) minus cash expenses (cash outflows). Revenue can be high, but excessive non-payment and late payment means negative cash flow.

Some businesses have fairly even cash flows, like medical practices. Software and real estate have lopsided cash flows with years of cash outflows but no inflows until a project is complete. Protracted negative cash flow causes business failure, which is why monitoring your net cash flow is so crucial.

Business Cash Flow Management Tips

1. Create a Cash Flow Forecast

Cash flow forecasts help you determine how much cash you should strive to have on hand for expenses in the near future. Forecasting utilizes both your historical data and what you can reasonably expect for your business cycle, such as holiday shopping in e-commerce.

While it's impossible to predict every positive and negative event that will affect cash flows, your cash flow forecast still provides a framework tailored to your business. Your historical data helps you determine when you tend to collect cash quickly and what times of year you're apt to run into a cash shortage.

2. Have a Contingency Fund in Place

Contingency funds provide you with peace of mind and cold, hard cash to get you through times when you have few cash inflows but are bleeding cash outflows.

An accountant that you trust can help you determine how much you should have set aside in your contingency fund. It works a little differently than your personal savings, as you need to account for predictable cash outflows like rent and payroll plus unpleasant surprises like repairs.

3. Monitor and Manage Account Receivables

Your receivables are key to shortening your cash conversion cycles. If you don't receive payment upfront from customers, look at how quickly you bill them.

The payment terms on your invoices should be clear. You will also need an invoicing solution that lets you track and follow up on late payments and gives you clear data on how long it takes you to collect payment.

4. Focus on Expense Management

Expenses also affect your net cash flow, and you tend to have more control over many expenses compared to how quickly you get paid. Look for areas where you can cut costs without compromising quality and safety, such as:

• Opting for virtual conferences instead of events requiring long-distance travel

• Getting rid of subscriptions you barely use

• Monitoring expenses that look unusually high or that could be pruned easily

5. Focus on Inventory Management

Inventory can have an adversarial connection to positive cash flow. Inventory-dependent businesses need it on hand, but items that don't sell constrict cash flows. Examine your inventory turnover time:

• Which items sell out in hours or sit in the warehouse for months? 

• What's your average inventory turnover?

New businesses and expanding companies are particularly prone to cash flow problems because inventory levels sharply increase.

6. Negotiate Vendor Terms

See if you can negotiate with your vendors to ease potential cash flow issues. Building more personal relationships with your vendors will get you better prices or longer payment terms that can get you out of a bind.

7. Explore Financing Options with the Help of an Accountant

Financing can be a major boon or a disaster for your business depending on the type, amount, and purpose of the loan. There are situations where financing can significantly free up cash flows. 

A skilled accountant can help you navigate your financing options and understand the right time and purpose for external financing.

Searching for a Trusted Accountant to Help with Your Business Cash Flow Management?

No matter the business, negative cash flows will lead to failure. An operation that looks successful by profit may not be collecting cash quickly and efficiently enough to pay its expenses. Don’t let it be yours.

Book a call with Accounting Made Accessible to learn how we can help you avoid cash flow problems and build a successful business.