The monthly financial close process is a daunting task for many small and medium businesses (SMBs), as it consumes many hours to double-check data and formulas, fix mistakes and consolidate multiple spreadsheets into a final set of financial reports. For many SMB’s, this process is all done manually which really extends the amount of time it takes. As a result, the chances of errors are relatively high which can result in severe consequences for an organization.
In this blog, we will highlight a few tips every SMB owner can follow to ensure an efficient and successful month-end close.
- 1. Bookkeeping
Timely & accurate bookkeeping is a must for every SMB to run successfully as it enables SMB owners to gain a better understanding of the progress the business has made, make decisions on the basis of data, procure additional funds needed for growth and prepare their annual income tax returns. Additionally, owners get an idea about which areas within the business are making profit and areas where they may need to consider reducing costs.
- 2. Accounts Receivable
SMB owners should be sending regular reminders to the customers who have not paid them on time. If there are any outstanding balances, owners should make the customers aware of the amount they still owe to the business and find out when they will be sending payment. This regular practice will help them to stay on top of their cash flow and save a lot of unneeded stress when cash becomes too strapped to pay their own bills.
- 3. Reconciliation of Bank Statements
Monthly reconciliation helps SMB owners to identify discrepancies, possible bank errors, or fraudulent activity that has happened in the account. It enables them to know what transactions they have authorized that have not yet cleared the account, such as uncashed checks. It is important to ensure that all the invoices and bills received reconcile with the transactions in the bank statement.
- 4. Financial Reporting
Every SMB must have accurate financial statements on a regular and consistent basis as it provides information about the financial health of the business and is critical to making good business decisions. If accurate statements are available to the owner at the end of each month, it is easy for him or her to make timely financial, growth-oriented decisions.
By following these four tips, it will become easier for SMB business owners to get timely and accurate financial information that will enable them to make better, proactive decisions for their business.
Whether an SMB owner faces an unmanageable financial reporting situation, needs guidance on tax planning, or is facing challenges in accounts receivable and accounts payable, Quatrro is committed to helping them those hurdles through with its cost-effective finance and accounting outsourcing solutions and wide range of other affordable business support services tailored specifically for SMBs.