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.
Table of Contents
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 tend to get out of hand, especially in the startup phase of a business. How will you know if you can afford to launch a new campaign without timely and useful information about revenue, expenses, and cash flow? 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 comes and goes 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: You probably have to cut costs elsewhere when money is tight. 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 significant 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 challenging 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, its benefits and perks include health, dental and vision insurance, flexible hours, vacation time, work-from-home options, student loans, 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 significantly impact 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 undoubtedly 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? Is tax preparation an afterthought? Have you passed up accounting software in favor of a paper ledger or spreadsheets? Customers notice those frantic collection calls and auditors questioning you about tax planning. They notice when their needs aren’t being met because your business is struggling due to not having accurate accounting services in your corner.
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 paint a positive picture for your staff, clients, and customers. Having a cash flow management system in place that allows you to handle income and expenses sensibly is a great tool.
Could accounting software like FreshBooks that builds out financial statements, helps with tax preparation and income taxes, as well as cash flow solutions like automated invoicing and payments is an easy place to start.
Pushing past accounting software, having a certified public accountant, or other bookkeeping and accounting services in your corner is an excellent way to ensure healthy financial statements.
9. Maintain Relationships
Relationships with vendors, customers, and employees play an enormous role in the success of any small business. When vendors question why a bill hasn’t been paid, clients ask why the service they ordered hasn’t been fulfilled, and employees wonder why you’re not paying them on time a solution like cloud accounting can help you quickly get information, answer questions, and preserve those relationships.
Many business owners think a lot about acquiring customers with things like a free initial consultation or a well-positioned loss leader, while maintaining an excellent client-retention rate falls by the wayside. Offering high-quality services is expected of most businesses, but what else are you doing to keep customers happy? Many things start with you well businesses are run, if there is a personal touch involved, how employees are treated, how often payroll is missed, and whether the IRS is knocking on the door to talk about taxes.
Accurate Accounting Services + Software
You started your business to serve your customers, build a happy team of employees, 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.