Regardless of the business size and complexity, keeping track of your company’s finances is essential in a competitive market. In the beginning, small business owners try to manage their books independently rather than an in-house accountant or bookkeeper. However, managing taxation, accounts payable and bookkeeping without proper knowledge of accounting might lead to financial errors.
According to the US Bureau of Labor Statistics, jobs for accountants & bookkeepers are projected to grow by 4% between 2019 and 2029. You see, the demand for accountants and bookkeepers is increasing but reasonable accounting services are hard to find these days. Remote accounting services can help businesses – regardless of their size and complexity – to think beyond and plan their finances strategically. Your remote accounting team can even help you rethink revenue models and unlock new horizons for purposeful, growth-oriented financial decisions.
In the previous blog, we discussed the benefits of outsourced accounting for strategic business management. This month, Technomine will be discussing some common accounting mistakes business owners make, and — more importantly — how to avoid them. So, let us dive right in!
Delays and data entry errors
Accounting is all about details, and if someone drops the ball, you are in for some significant errors in your paperwork. In 2017, someone at Uber applied an incorrect accounting formula, resulting in the loss of approximately $45 and $50 million – a simple arithmetic error. If Uber struggles with number-crunching, how can a regular business owner ensure that their accounts are in order?
Sure, you can think of hiring an experienced accounting professional to help with data entry – but accounting staff is expensive to hire. Read on to see how you can minimize such errors.
Minimizing data errors
The leading cause of errors in accounting is because of unorganized activities & lack of financial protocol within the business. One month of data cannot be compiled altogether in a single day – which is what most small businesses tend to do. The key to reducing accounting errors is to delegate about 15 to 30 minutes every day before logging off to register the transactions that occurred during the day. Remote accounting staff working for your organization can keep your record books updated on a daily basis – at a very reasonable cost!
Failing to prioritize items for budgeting
Budget is a complex beast, even for the most seasoned business owner. Prioritizing line items for budgeting helps you anticipate expenses – and avoid bookkeeping errors that may cost you more down the line. When every priority item is reflected in your budget & books, there are smaller chances of making common bookkeeping mistakes. Whether you have an in-house accountant or you outsource the accounting, prioritizing big-ticket items can facilitate smooth financial planning.
Prioritizing budget items
Thinking from a macro perspective, taking down notes and recording every transaction is not the job of the business owner. Someone has to take care of the nitty-gritty to avoid accounting errors and delegating to an outsourced accountant can be a great way to get quality services without paying a ton of money.
Even profitable businesses can struggle with delayed payments and poor cash flow. These risks can be mitigated with remote accounting functions. With the Technomine remote accounting team, you can ask someone to complete all your pending payments even after your employees have logged off for the day.
Inadequate checks and balances
Inadequate checks and balances are also a common type of accounting error. When two or more than two people are assigned the same responsibility, it is obvious that there will be a chance of discrepancy – leading to inadequate checks and balances. To prevent this accounting error, having a single entity responsible for managing transactions can be a great way to ensure accuracy as well as accountability. Assigning specific responsibility to your offshore accounting team can minimize confusion and prevent inadequate checks and balances.
Dealing with discrepancies
Accounting discrepancies are usually unintentional. However, they do need to be minimized. Your offshore accounting team can help ensure that your accounting books are thoroughly checked and even ensure that you are reconciling canceled checks every month.
As a business owner, getting into this nitty-gritty takes a lot of valuable time that can be used to think strategically about business growth and development. What if you could access comprehensive accounting services and bookkeeping management without sacrificing your quality while reducing your workload?
Technomine has a team of trained accounting professionals to deliver quality accounting services like bookkeeping, payment processing, T&E management, sales audit and reconciliation, accounts receivable collection and analysis. The team will act as an extension of your own company to take responsibility for accounts payable function from the root level and make even the most cumbersome bookkeeping process pain-free. Agents are also trained to escalate urgent matters for prompt action and even reply to common supplier queries. To learn more about our accounting services, you can visit www.technomine.biz or email us at email@example.com.
Pending accounts reconciliation
Once your monthly accounting work is completed, tally all your statements and make sure that your records reflect the same numbers in your bank accounts. Companies that do not perform regular bank reconciliations on time might face fraudulent activity, unauthorized withdrawals and bank errors. If left unchecked, these issues can lead to cash flow leaks that can hamper business operations and growth – and even lead to legal issues.
While there is no need for fear-mongering, proper and regular accounts reconciliation will prevent things from rippling into more significant issues.
Time management & reconciliation
Reconciling the bank statements helps in reflecting your internal financial records against the bank records. This process is time-bound – and important for your accounting staff to identify any unusual transactions caused by fraud or accounting errors. The same process also helps you stay on top of your taxation and documentation.
Timely accounting will help you catch erroneous entries and inaccurate records faster, but it will also prevent fraudulent employee activity from going undetected. Most importantly, taxation will be a breeze, so you don’t miss any important deadlines!
Is offshore accounting safe?
In terms of safety, we have a 24*7 CCTV surveillance system for every employee working on your accounts. Our accounting team cannot use personal emails and mobile phones during their respective working hours.
In fact, every employee working at Technomine is given accessible, trackable and secured emails for accessing all the information to ensure that your information is handled with the utmost confidentiality. Additionally, staff internet access is controlled and monitored regularly – with spot checks to ensure accountability.
How do you avoid mistakes in accounting?
It does not matter whether your accounting mistake is as simple as a minor discrepancy or as big as wiping out your hard drive. Every small error can put your business at risk. A professional offshore accounting team can help you manage your accounting books – and even keep an eye on every incoming and outgoing transaction into the business.
At Technomine, you get a professional team working round-the-clock to improve your cash flow efficiencies. The remote accounting staff working on your behalf ensures timely submissions, documentation accuracy, and strategic insights to increase profit margins.
Make some time to review your business bank accounts against your records regularly. This will help you catch erroneous entries and inaccurate records faster, but it will also prevent fraudulent activity from going undetected.
Take notes of the transactions made and money received into the business account. As a business owner, you can inform the delegates about the transactions before the review to better prepare the budget and prepare more insights for the business. The key to reducing accounting errors is to delegate about fifteen minutes every day before logging off to register the transaction activities that occurred during the day. This way, your accounting staff will not have to spend hours or days later.
Some of the common mistakes in accounting are:-
‣ Data entry errors
‣ Transposing numbers
‣ Failing to prioritize items for budgeting
‣ Inadequate checks and balances
‣ Failing to reconcile accounts on time
Accounting accuracy can be maintained by:-
‣ Identifying revenue streams
‣ Keeping track of invoices and receipts
‣ Preparing financial statements
‣ Tracking deductible expenses
‣ Preparing tax returns
Use these five tips to identify accounting errors in your books:-
‣ Keep an audit trail
‣ Double-check your work
‣ Have a consistent process
‣ Have someone else to review your work
There are five types of errors in accounting:-
‣ Clerical Errors
‣ Error of Omission
‣ Error of Commission
‣ Compensating Errors
‣ Error of Principle