You know your company needs accurate accounting to make tax time more manageable, but did you know that it can also increase the value to your clients?
Just like a healthy diet can make a person look more attractive on the outside, healthy back office procedures can help your business look better to outsiders – including current and potential clients. So if you’ve been procrastinating on making a move to cloud accounting, here are 9 ways accurate accounting can help increase your business’ value.
1. Better Marketing
Accurate and up-to-date accounting helps you make better revenue forecasts for your company. Revenue forecasts aren’t just for budgeting and future planning. They can also be used to help understand whether your current marketing efforts are working, or whether they’re missing the mark.
Marketing expenses have a tendency to get out of hand, especially in the startup phase of a business. Without timely and useful information about revenues, expenses and cash flow, how will you know if you can afford to launch a new campaign? When is the right time to launch? Is your campaign driving the desired results? How do pricing and promotions affect sales? Without sound financial data, it’s difficult to answer these questions.
2. More Financial Stability
Accurate accounting helps your business create and control company budgets to know when and how money is coming and going from your business. It can also help you plan for enough cash reserves to see you through a cash crunch.
A company without a budget is like a ship drifting at sea without a captain – you never know when you might strike an iceberg or run aground. What does budgeting have to do with your clients?
Consider this: when money is tight, you probably have to cut costs elsewhere. Maybe you need to let go of employees that have built relationships with customers or shift work back to customers with increased self-service.
Sometimes it’s possible to cut costs while maintaining or improving quality, but other cost-cutting measures impact customer satisfaction and loyalty. They may even signal that your business is struggling to survive. Customers don’t want to board a sinking ship, so maintain accurate accounting information, control your budget, and keep the customer experience stable.
3. Investments in Quality and Efficiency
Accurate accounting also helps business owners consider the ramifications of making decisions about major investments.
Could new software or equipment have a significant impact on your processes? Could it help employees get their jobs done faster and with less stress? Could it delight clients by improving turnaround time or providing a higher-quality product or service?
Without up-to-date financial data, it’s difficult to know when is the right time to make such investments, whether you can afford to make them, and what their impact on cash flow will be. Timely accounting information means you’re better prepared to take advantage of such investments when an opportunity presents itself.
4. Hiring and Maintaining Happier Employees
Accurate accounting isn’t just about debits and credits. It’s also crucial for human resources. Timely financial data helps you know when to bring on additional staff (or when you need to do layoffs). It can mean the difference between having a profitable year and being in the red.
When you know exactly how much your business is spending on salaries and wages, payroll taxes, employee benefits, and other perks, you’re better able to make growth decisions for your business.
Once you’ve hired the right people, it’s time to keep them happy! Having happy clients starts with happy employees. So what makes employees happy?
According to the Harvard Business Review, for most employees, it’s benefits and perks including health, dental and vision insurance, flexible hours, vacation time, work-from-home options, student loan and tuition assistance and more.
Accurate accounting can help your organization plan for and calculate salaries, vacation policies, sick leave, paid time off, medical benefits and other aspects of employment.
5. Fraud Prevention
When you have a handle on your business accounting, you’re comparing transactions that hit your bank account to your company’s checkbook, comparing actual expenses to budget and otherwise taking a careful look at the money flowing in and out of your business. This oversight can help you quickly locate any discrepancies due to fraud, waste or carelessness.
Fraud can have a significant impact on your business, no matter how small it is. Imagine if the discovery of a corrupt employee in your company made the news. Customers may lose respect and trust. You may have to spend extra time and resources monitoring the fallout and reassuring clients that your company is still viable.
6. Controlling Costs
When we talk about controlling costs, most people think about improving the bottom line. While that’s certainly important, it’s also about becoming a more effective organization. Accounting is an essential back-office function of any company.
Every business has a finite amount of resources. Your company’s accounting records contain data that can help with decision making for everything from improving operations to responding to customer needs and measuring outcomes.
7. Better Security
Businesses that maintain all of their client and accounting records in spreadsheets on a desktop or laptop computer are at serious risk of losing their financial data. You are just one infected USB, email attachment or website click away from getting a deadly virus. A stolen or damaged computer can wipe out your business in minutes.
If your company’s data is stored in cloud-based software, what happens to your local system is just a blip on the radar. If your computer is stolen, infected by a virus or run over by a bus, you just use another computer to access the application. In other words, you’ll always be there when your clients need you.
8. Good Financial Management
Are you running your business in crisis mode? Customers notice those frantic collection calls. They notice when their needs aren’t being met because your business is struggling.
These are all signs of poor financial management, and they’re a turn off for clients. They may even influence your customers to take their business elsewhere. Financial stability helps is built with cash flow and a management system in place that helps you handle income and expenses sensibly.
9. Maintain Relationships
Relationships with vendors and customers play an enormous role in the success of any small business. When vendors question why a bill hasn’t been paid, or clients ask why the service they ordered hasn’t been fulfilled, a solution like cloud accounting can help you quickly search for information, answer questions and preserve the relationship.
You started your business to serve your customers and do what you love. That probably doesn’t include spending hours on accounting and bookkeeping.
Fortunately, accurate accounting doesn’t have to take hours out of every week. There’s an ever-growing suite of organizational tools and technologies that can reduce the headache of managing invoices, bills and receipts, giving you more time to work on your business instead of in your business.
about the author
Janet Berry-Johnson, CPA, is a freelance writer with over a decade of experience working on both the tax and audit sides of an accounting firm. She’s passionate about helping people make sense of complicated tax and accounting topics. Her work has appeared in Business Insider, Forbes, and The New York Times, and on LendingTree, Credit Karma, and Discover, among others. You can learn more about her work at jberryjohnson.com.