Controlling accounts for small business is not an easy task. There are a lot of things to consider, from deadlines and fines to revenues and expenses. In addition, there is a multitude of data as well that has to be accounted when closing the month balance. In this blog, we shall discuss how to maintain accounts for small business in India.
Maintaining accounts is important for any business, be it a small business or a big business and be it in manufacturing products or providing services. Sometimes, lack of information and control over accounts can be harmful to the small business. This can result in disorganization, fall in profits, and difficulty in planning the future course of action for the business.
To maintain accounts for small business, it is important for the entrepreneur to have control over accounts payable and receivable. In addition, he must optimize his time and the employees working for the business. With the help of correct numbers, the small business owner can assess the financial situation of his business, identify the problems having a negative effect on the business, and find the best solutions for them.
How to keep Accounts for Small Business?
The correct structure of the finance is the first step to the smooth functioning and running of the business. But, how to control accounts for small business? How to put nothing at risk? How to see the dream of a successful business thrive?
Well, there is no magic formula for managing accounts for a small business. All you have to do is to manage some critical aspects of the business, such as market knowledge, planning, and professionalism. The other important aspect here to understand is the low level of business management on the part of the entrepreneur.
A number of reports show that many companies shut down early in their existence, majorly due to financial problems. Many companies suffer late payments from suppliers which indirectly shows their lack of control on the accounts and business management.
Maintaining Small Business Accounts
Adopting a few healthy practices can help you effectively manage the accounts for small business. To maintain accounts for small business, adopt the following practices:
Make a Plan
The first step to organizing accounts is to plan the finances in a way they effectively depict the current financial picture of your small picture. An effective financial plan is the one in which you have identified all your small business’s expenses and revenues. You can maintain an excel spreadsheet for this purpose.
In the accounts payable section, you must inform the details of each transaction, its periodicity, and due dates. This will help in analyzing the current situation of the business. And also to project financial commitments. And within a couple of months, you will be able to realize the average expenses of your business and identify the variable and fixed expenses.
Maintaining accounts for small business involves maintaining accounts payable. You can adopt the following practices for this:
Record all the expenses of the business including fixed, variable, and marginal.
Never mixing personal expenses with the business expenses is the best practice that you can adopt. Mixing both the expenses is the step from where all the problems start.
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Maintaining accounts receivable is as important as maintaining accounts payable. As the business owner, you must know from where all your money will come and their due dates. You can adopt the following practices:
Record all sales and receivable. This will help you know when and how much money you will receive. It further will help you take certain important steps, such as if there is any need to delay payment.
You can encourage your debtors to pay you on time. For this, you can offer attractive conditions like clients who pay on time will have certain discounts.
Also, it is important to have a good relationship with the clients to receive all the payments on time. A good and strong relationship guarantees growth and trust of partnership.
Make a point of all the accounts which will be received. This will help in avoiding any kind of disagreement that may harm the business.
Pay Bills on Time
Also Read: How to Refinance a Business Loan?
The other important point is to deduct all the cost in the correct timeframe. In simple words, it is important for you to pay all the bills on time and avoid delays. As said earlier, your suppliers may also be offering certain discounts on timely payment and you can take its advantage.
The above said steps are very useful to keep the small business surviving in this cut-throat competition.