From giant corporations to solopreneurs, every enterprise uses accounting. It’s important for businesses to consider ways they can improve accounting practices, as this vital piece of business administration takes into account all of a company’s financial transactions. It measures and shares financial activity, tracks taxes, makes payments, and sends invoices.
Accounting is an essential aspect of running a company. It can be a deciding factor in the success of a business, too. In fact, the quality of a company’s financial transactions can be a key part of growing revenue over time. Timely invoices reflect well on a brand. On-time payments do, as well. A clean tax record is also a factor.
With that in mind, it’s important for businesses, great and small, to invest in maintaining high accounting standards, not just initially but over time. Here are a few suggestions for different ways every business leader, from CFOs to do-it-yourself freelancers, can improve their accounting practices in 2023.
Be Thoughtful With Outsourcing
A decade ago, outsourcing financial activity was an overwhelming proposition. Unless you were a massive company, it was safer, easier, and more affordable to keep your accounting in-house.
As technology has continued to improve, it has led to the rise of a growing number of third-party service providers. These specialize in offering certified, qualified, and ultra-secure financial services. Even better, the variety of outsourcing options makes this a viable way for any size company to improve its accounting practices in 2023.
For a freelancer, this might mean something as simple as hiring a local accountant to do their taxes. When a solopreneur is successful, one of their first priorities is to focus on eliminating the activities that are holding them back. Proper money management can suck up a lot of attention — especially during the tax season.
Even if you’re using a tool like TurboTax’s self-employed option, it can be very time-consuming to input all of the necessary information. And even then, it can leave a contractor nervous that they made a mistake. Hiring their taxes out to a good CPA can remove that stress and clean up their accounting at the same time.
For larger operations, thoughtful outsourcing could mean handing off entire portions of their accounting apparatus. When that happens, make sure to shop your options and find a third-party provider that specializes in working with businesses at your stage of development.
For instance, startups can use a plug-in finance department solution like Aquifer CFO. This can help them keep track of day-to-day financial activity, avoid overspending on hiring internal finance professionals, and maintain transparency (all of which are common concerns with startups) without breaking the bank on pricier or lower quality outsourcing solutions.
Leverage Accounting Automation
Financial transactions often vary from one moment to the next, even with simple things. For instance, you might spend $3,000 on a new computer one day. Then, a month later, you might order $100 of coffee pods for the office kitchen.
This inconsistency makes automation feel impossible. But the growing sophistication of modern technology is proving just the opposite. In fact, when you break it down, it’s possible to automate most steps in many accounting transactions.
The key is finding the tools to help you automate. Bill.com, for instance, has created an affordable and accessible platform that freelancers and smaller companies can use to send and receive invoices.
Part of the brand’s effort has been to make accounts payable as automated as possible. The company makes inputting invoices painless. Approval is simple, and you can put payments on auto-pilot. There are many other companies providing similarly automated services.
The key thing to remember with automation is not to look at an activity as the sum of its parts. Instead, consider each individual action that takes place and look for ways to automate those steps. This takes more up-front investment in time and resources. But once everything is set up, it can pay off in a big way over time.
Future Proof for Remote Work
The pandemic made remote work a permanent fixture in the modern workplace. This has many benefits, but for an accounting team, it can be challenging.
Layer in the complexities of a part-time, freelancing workforce, and something as simple as paying contractors can become a nightmare. Tools like Payoneer only work with an international workforce. PayPal takes an enormous cut out of any and every transaction. Wires are tricky and ineffective for smaller payments. And all of this doesn’t even start to cover things like payroll regulations and currency exchange if you’re paying an international worker half a world away.
There are ways around most remote work accounting concerns. However, it’s important to invest in setting up a solid accounting infrastructure now that can handle these new challenges before problems arise.
For individual freelancers (who are usually on the receiving end of accounting transactions), it’s important to stay up-to-date with the latest and most popular payment tools. Try to set up and maintain accounts with common payment platforms that clients may want to use. (For more tips on financial organization, see the next section.)
For larger companies, it can be helpful to look for a global payroll solution. Remote, for instance, offers a fully functioning payment platform that helps businesses seamlessly pay employees and contractors around the world.
Organize Your Tech Stack
Some accounting mantras never change. One aspect of healthy accounting activity is the need to stay organized. From invoices to payments, paychecks to taxes, there are a lot of things that go into a healthy, functioning financial sector of a business. And it’s the inability to tend to the details that can chip away at the overall quality of your accounting activity.
The need for organization is particularly poignant in the new outsourced and automated accounting world. The tips above and below are wonderful ways to reduce the workload and improve the precision of your financial activity. But the truth is, they can also lead to a scattered and decentralized accounting department, which is where organization becomes essential.
This starts with your tech stack. There is an endless stream of software that can help with accounting practices in any situation. For instance, Neat can help self-employed individuals stay on top of their finances. MarginEdge focuses on restaurant accounting.
While these are powerful technological tools, though, it’s all too easy to end up with a tech stack bloated with apps that you aren’t using. One quick and easy way to stay organized is to consider what tech tools you’re using and which ones you aren’t. From there, consider which tools are giving you a healthy ROI and which ones aren’t as effective.
Only then, when you’ve cleaned up your existing tools, is it time to consider what additional items you can add to the mix. An organized tech stack shows you what areas you already have covered and which areas are lacking. This makes it much easier to select an automation tool, outsourcing platform, or whatever else you need.
Keep Accounting in the Loop
It’s no secret that good communication is critical to every aspect of business. Every article, from marketing to tech, talks about the importance of communication. And yet, more often than not, accounting ends up left out of the conversation. It’s seen as an afterthought that comes in to mop up expenses and chase down revenue. That should never be the case.
There are many ways those engaged in accounting can benefit from being on the same page as their peers. If an accountant is fully in the loop on a growth initiative, they can plan on processing a larger number of expenses. If there’s going to be a seasonal promotion or a bigger push from a sales team, they can look for a larger number of sales receipts to come through.
These kinds of business activities also have an impact on long-term financial factors. Communicating them early and often help with things like maintaining accurate growth forecasts and preparing for taxes.
If you have a smaller business or you’re working on your own, communication shouldn’t be an issue. However, for mid-sized and larger firms, it’s worth investing in keeping your accountants in the loop. Set up communication protocols. Check in with your accounting teams regularly. Make sure everyone is on the same page this year.
Improving Accounting Practices in 2023
The business world is always evolving, and it’s important for accounting to keep up with everything else. From outsourcing to automation, remote work to communication, the tools are out there. However, improvements can only happen if leaders take the reigns and start to seek out accounting solutions.
As you look for ways to improve your accounting practices this year, remember to keep perspective in mind. Are you a small operation looking for little ways to improve daily activities? Are you a CFO considering outsourcing part of your accounting department to a plug-in solution?
Knowing your needs is the first step in finding your best options. From there, make an informed decision, plan out how to implement it, and then take action in the name of cleaner, more efficient, and ultimately more profitable accounting activity this year.
