Last updated on November 18th, 2023 by RGB Web Tech
Accounting is the only way for small business owners to know if their business is doing well and the only thing keeping them out of prison. This is why it needs to be accurate and resilient. No matter what happens, you need to know that the numbers in the books correspond to the real numbers with a 1:1 ratio. Still, how do you achieve this reliability? Here are our top seven suggestions for the ideas you should implement to reap more accounting benefits.
1. Segregation of duties
To commit fraud, one person must have control over multiple accounting processes. It’s like having more than one checkpoint that you have to pass. It’s not about distrusting people in your accounting. It’s just acknowledging that people will be tempted if you make it too easy to alter data and manipulate financial records for personal gain.
By segregating duties, you make this a distant possibility, dissuading many potential troublemakers. Also, by making a whole system more robust, you’ll make it resilient even in the face of staffing changes.
This means that the level of quality remains continuously high and you don’t have to worry about the future, as much.
2. Pick the right platform
Another thing you need to do is choose the right accounting software. The right platform can drastically reduce the likelihood of human error. With the help of an invoice processing API armed with OCR technology, invoices can be scanned. Since there’s no manual entry, the likelihood of human error is drastically reduced.
This also saves labor and allows a single accountant or bookkeeper to do the work of many. You can have a functional accounting department with a good platform, one accountant, and a bookkeeper (or a virtual assistant).
The benefit of this is that you get the functionality of a department even with a skeleton crew. So, your payroll remains low and your accounting improves.
3. Internal control
You need to control your accounting as thoroughly as you can. Just think about it – it’s not just maliciousness you seek. It’s incompetence or errors due to a lack of attention. Do you think that an explanation that you’re not fraudulent, it’s just your accountant who is incompetent, that will stick in court?
You must also stay compliant with regulations and laws, maintain high operational efficiency, and ensure that your financial statements have high integrity. Sometimes, investors or stakeholders will insist that you control your accounting more closely, and you must oblige.
This gives you mechanisms to rapidly discover anything suspicious going on in your accounting, which benefits you from both financial and legal standpoints.
4. External audits and reviews
You can never be too careful. Therefore, on top of the internal control that we’ve already discussed, you also need some independent external verification. The key thing to bear in mind is the fact that these controls are more credible. Internal control can be biased. For this reason, an external audit may even be a regulatory requirement.
Even more importantly, this way, you can control your internal controllers. If the results are not the same, there’s something amiss. This is important since your internal control will conduct a more frequent overview.
5. Careful selection when hiring/outsourcing
When hiring help, you need to be extra careful. Whom are you hiring, and can you trust them? These two questions are pivotal for your selection process, especially when it involves tasks like legal document comparison. First of all, make sure to ask around. Look at their previous employment and their stay in each firm.
There’s so much you can do to research the reputation of the person or agency you decide to work with. The key lies in carefully selecting who you’re working with. There are reviews online, and you can even ask for contacts with old clients.
This keeps track of your own team and helps you make a better staffing selection in the future.
6. Continuous training
We live in a dynamic world. The truth is that regulations change more frequently than they did half a century ago. New tools and accounting practices are also hitting the market every day. Continuous education and training is the only way to keep up with this. These are just not things you can know intuitively.
Also, continuous education will ensure that your problem-solving abilities remain sharp. Your skills deteriorate when not used, and even in accounting, not all skills are present in day-to-day tasks. This way, you’ll just be ready for everything.
Once again, in order to benefit from a system in the long run, you need to make all your accounting methods systemic.
7. Emphasis on data security and privacy
Accounting is always full of sensitive information. This is why you need to ensure that all the data is protected. First of all, your systems need to be sturdy. If your accountants work from their private devices (which is not advised), you must have a firm BYOD policy.
Also, ensure they have strong passwords and never open anything via an unsecured network. This is especially important when it comes to online payment processing. Most importantly, think twice about who you’re hiring. It’s not just their honesty that’s dangerous, but also their recklessness that may put you at risk. Wrap up
In the end, there’s not one of these tips that you can afford to skip and stay safe in the process. You need to ensure that your accounting remains reliable no matter what changes in the legislative or technical accounting field. Also, you want to make this systemic so that nothing significantly changes, even when you hire a new accountant. This way, you’ll get to enjoy these accounting benefits in the long run, not just benefit from them temporarily.