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Why should you invest in proper accounting systems?

If the #1 weakness of growth firms is marketing, the #2 problem is accounting. Accounting is often underappreciated and if not done correctly can lead to poor decision-making.

Why should you invest in proper accounting systems?

Clear the distortions

As businesses get bigger, so do the nature of the day-to-day and week-to-week transactions. For a small business, basic bookkeeping, which essentially involves an analysis of day-to-day transactions flowing through the bank account, is sufficient.

But as your business gets bigger so the nature and volume of transactions become more complex. It is at this point that you should consider employing an accountant to assist in managing some of this complexity. This assistance can often come in the form of:

1. Proper accrual accounting which often involves recording and managing creditors and stock;
2. Doing some form of financial target setting;
3. Doing some form of cash flow forecasting to give you peace of mind that you will make payroll!

The goal of accrual accounting (as opposed to bookkeeping) is to match revenue vs costs, to ensure that you are making a profit. So, if you have reached a point where the movements in your daily and weekly bank account, no longer make sense, you have reached a point where you need either a part-time or full-time accountant.

In a nutshell then, employ an accountant to:

1. Assist in providing better quality data to make sense of your numbers;
2. Provide trend analysis to assist in your decision-making; and
3. To assist with better cash flow management;

If you would like to talk to us to understand how we can help you make sense of your numbers, then contact us at hello@118accounting.co.za to find out more.