We realize there is a big temptation to do it all yourself to save money. But think about this...most successful businesspeople have learned that freeing up more time to spend running the business results in discovering many new ways to increase revenue.
Not all accounting firms offer the same services, and prices vary. Wouldn't you feel better knowing you are getting the best combination of price, service, and professional guidance?
Signs indicating that a business may benefit from outsourced accounting services include:
• Difficulty meeting investor obligations and lender reporting requirements.
• Difficulty in getting visas and maintaining a competent staff at a low cost.
• Administrative expenses as a percentage of revenues are too high and possibly rising.
• Inability to interest investors due a lack of credible financial information on the business.
• Large or uncontrollable outside write-up or audit fees from independent accountants.
• Significant audit recommendations.
This is a common question, along with the statement 'I've managed all these years, why do I need to change?' or 'How much will it save me?’ The answer to these is that, yes, you may have managed so far, but what might you have done if had been able to get more information quickly and accurately? The feature about computerised accounts is not that they save time (in certain circumstances though they may), but that they enabled you to get at your information better. For example, the time taken to enter information into a cash book is approximately the same as that to enter onto a system, however, once in the system there is no more adding up, cross casting, summarising etc., required. Consider the following situations: You want to know how much you have spent on vehicle x or machine y, or on postage in the year, or show on a graph expenditure on wages. Imagine the work involved on a manual cashbook system. With a computerised system it is all at the touch of a button. Sales are at a low this month, who do you target? Most people will know their top 5 maybe 10 customers, but what about number 15? Imagine the marketing possible you could have a list by turnover, with a telephone number and contact name? With a computerised system it is at the touch of a button. What if you could go to your suppliers knowing exactly what you bought from them and when? What a bargaining position to be in to negotiate terms and discounts. The above will hopefully give you an idea as the some of the benefits of changing to a computerised accounting system, but like any manual system, it is only as good as what is recorded in it. That is why training and close contact with your personnel is vital.
Imagine a pilot flying a plane without the help of an altitude meter, radar, or a fuel gauge! I am sure you wouldn ’t want to be flying on that plane!! Similarly companies and especially young companies need indicators to ensure they are going on the right track. MIS reporting fulfils this very requirement by providing critical financial (and non financial) information based on which a company can take important decisions ensuring that it is aligned to its strategic goals.
Just like good habits inculcated at an early age go a long way, standard procedures followed from the inception help discipline a company. Standard procedures help avoid the risk of fraud, errors and give a sense of direction to the employees thus helping them to optimise their output. Of course as the company grows, or changes its strategies, processes would have to be reviewed to establish their relevancy.
Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations. Companies with negative working capital may lack the funds necessary for growth. Many a young companies have failed before taking off because of improper handling of their working capital. A proper working capital management ensures that sufficient funding is available to meet the short-term operational requirements to run the business.