Benefits of Good Accounting for your SME

Attention business owners…

Have you experienced any of the following problems in your business?

• Bank reconciliations not up to date and transactions not recorded at all
• GST applied incorrectly
• BAS Statements NOT lodged on time
• Too many voids and deletions in your accounting system
• Too many compensating entries for errors
• Debits and Credits jumbled up
• Trial Balance does not balance
• Fixed Asset Register & Depreciation Schedules non existent
• Prior period reports differ to published reports
• Your accountant is only interested in seeing you once a year at tax time

I hope you haven’t.

But unfortunately I come across these scenarios all too often.

Some business impacts on poor record keeping

• Your management reports do NOT reflect your actual trading activity
• The risk of fraud escalates dramatically because the likelihood of detection is low
• The warm and fuzzy feeling knowing your tax payments are accurate and lodged on time suffers
• Accurate forecasting and budgeting is more difficult
• The work arounds to obtain the necessary information to run your business becomes even more time consuming and possibly overwhelming
• You can potentially damage your relationship with your bank and therefore ruin future capital raising efforts

How do you combat and rectify

• Employ / hire the right people
• There are plenty of articles that cover what makes a good accountant. Hire a good accountant. Preferably a CPA. One that has commercial experience running businesses; has encountered such issues and put measures in place to fix them and avoid them in future.
• Perform a complete and thorough review of your systems, people and processes.
• Document your processes for your staff to follow.
• Create checklists and timetables so things don’t get missed.
• Pay your dues as and when they fall due. If you cannot do this there are other issues that need addressing. Address them. Ask your accountant to help you with this.

Benefits of good accounting for your SME

Good bookkeeping is just the beginning. With accurate records you create the foundations that make the following possible:

• Make informed decisions
• Manage your working capital
• Forecast accurately with built in seasonal fluctuations
• Create budgets that are not just a wish list
• Compare current results with prior periods
• Perform strategic analysis with complete data
• Identify capital requirements for expansion with bank support justification
• Vastly improve the selling price of your business

It all starts with basic good record keeping. The value created pays for the cost many times over.

This short article is an introduction to the world of business improvement strategies aimed at providing long term benefit to organisations. I hope you have found some benefit in reading this article. Should you wish to find out more, I invite you to get in touch with me.

Peter Katsos CPA

Based in Melbourne, Peter Katsos, founding Director of BIS Consulting can assist you with building shareholder value. With 20+ years commercial experience gained in MNC’s, local manufacturing & FMCG distribution SME’s, he has a wealth of financial experience aimed at transforming businesses into high cash generating sustainable profit making enterprises.

Visit us at www.bisconsulting.com.au.   Or better yet call Peter on 1300 577 309. We are here to help grow your business.