6. Back Up Your Electronic Data

A good rule of thumb regarding electronic data is that if it has only been saved in one place, then it does not really exist. Computers can get viruses, crash, or fry in a power surge, effectively destroying a company’s financial records. Many accounting software companies offer clients the option of utilizing storage space in the cloud. For company’s without the option of saving to the cloud, files can also be backed up on thumb drives, external hard drives, or burned onto disks.

7. Manage Accounts Receivables and Payables

Accounts receivable represent a large portion of company assets, which have yet to be received. Timely and accurate invoicing are imperative to collecting payment. Accounts payable, the bills which a company still needs to pay, should also be carefully managed to avoid incurring late fees or remitting double payments.

8. Track Cash Flow

Businesses using a cash based accounting method will already have a clear picture of cash on hand, but those operating on an accrual accounting system will need to track cash flow. Cash flow represents the amount of liquid cash available to a business at a particular time, making it clear whether the company will have enough cash available to cover operation costs and loan payments.

9. Create Financial Reports

Accounting software will help with creating monthly or quarterly financial reports like balance sheets and income statements in addition to cash flow statements. Learning how to read and analyze these statements together will enable you to assess and improve your company’s performance.

10. Know Your Limitations

Recognizing your own bookkeeping strengths, acknowledging weaknesses, and obtaining assistance are the most important steps you can take. Several bookkeeping and accounting outsourcing options are available to businesses which cannot afford to hire a full time accountant. By outsourcing the bookkeeping and accounting processes which you are uncomfortable handling, you can ensure the accuracy and compliance of your company’s accounts while becoming familiar with an established process.

Hassan Sultan is a CPA and a Partner at Reckenen with previous experience at Big Four accounting firms. Reckenen provides delightful accounting to entrepreneurs and small business superstars.