5 Tips for Avoiding Financial Inconsistencies within Your Business
The modern business is under more scrutiny than ever before.
At no point in history have companies been held to such high moral and legal standards. In many ways, it’s a sign of our changing priorities. Increasingly, people want guarantees from the brands they support. They want transparency, honesty, and accountability.
For your business, it means rigorousness must become a habit. Even when inconsistencies - particularly within accounts - are unintentional, they can still be extremely damaging. These days, it’s hard for companies to recover from a loss of trust. So, it’s important to be disciplined when it comes to bookkeeping and finances.
This article explores some methods you can use to make the bank reconciliation process simple and stress-free.
Keep Communicating
One common mistake is to treat accounting as an isolated department. You can’t just funnel numbers into the office and expect perfect bookkeeping. Finance teams need input from other departments to create viable budgets, report accurately on revenue and optimise cash flow.
Similarly, departments need information from bookkeepers to fully understand their fiscal capabilities. If you want to avoid errors and miscalculations, make sure each part of the business is connected. The accounting team should find it easy to liaise with other departments.
Always Enforce the Rules
When internal controls are discussed from a financial perspective, the focus is usually on protection and preservation. Often, it’s easier to identify risks coming from the inside than those resulting from poor performance. After all, businesses don’t like to admit they make mistakes.
Nevertheless, enforcing the rules in all cases is very important, because it’s the best way to prevent inconsistencies. Regardless of whether a mistake is intentional or not, proper oversight should in place to ensure it doesn’t happen again. Rigorousness is key to success.
Invest in Technology
With so much technology on the market, there’s no excuse for shoddy bookkeeping. Even if your team is exceptionally small, it’s easy to handle accounts with automated software solutions. These systems process, log and record every transaction that moves through the business.
They’re the perfect way to keep accounts clean because every detail is stored. Think about how easy bank reconciliation could be with the support of responsive software. There’s no more digging through paperwork. Discrepancies are identified and resolved ahead of time.
Use Your Auditor
Perhaps the biggest mistake made by modern businesses is the lack of interest in auditing. Yes, audits can be inconvenient and tedious. However, they’re not designed to catch you out. They’re just a snapshot of your finances at a particular time. So, don’t dread the tax man.
Auditors are independent, though many businesses seem determined to treat them as an enemy. This is a shortsighted view. Here is a financial expert whose job it is to define good bookkeeping. Take advantage of this knowledge. Ask for advice. Get tips on how to do things better.
Doing It All Alone
Proper handling of the books is essential, but it shouldn’t eat into time allocated for other projects. It is possible to spend too much time on accounts. You’ve got to remember they’re a necessary discipline, but they don’t drive growth or create opportunities.
If your business is very small, it’s worth investing in software, outsourced assistance, or both to avoid getting bogged down in receipts. Trying to handle it yourself, when you haven’t got the right skills, can end up being far more costly than hiring outside help.
The Importance of Impeccable Bookkeeping
Good bookkeeping is not a choice. It’s a legal requirement. However, it’s so much more than a set of rules to abide by. When your accounting team is in top form, so is the rest of the business.
Everybody knows what they’re spending, how much money they’re generating, and whether short and long-term plans are sustainable.
