Business owners get used to doing things a certain way.
Best practices can become habits. Habits can become difficult to change, even when changes would be best for the business.
The financial and accounting worlds have gone through some significant changes over the past few years. They have modified or amended many of their accounting standards and practices. These changes are making their way through the rest of the business world.
The accounting systems that have served businesses well in the past may no longer be the best option.
Why are Updates to an Accounting System Important?
Every business needs an accounting system to track revenue and expenses, plan for taxes, and assess how the business is doing over time.
The accounting world is constantly innovating and adapting to changing conditions. New developments require new strategies and systems.
Changing Accounting Standards
Accountants have developed a set of rules that applies to a wide range of businesses throughout the country. Many businesses must use Generally Accepted Accounting Principles (GAAP) in order to stay in compliance with various laws and regulations.
Even small businesses without much regulatory oversight should apply at least some aspects of GAAP in their bookkeeping, accounting, and tax preparation.
GAAP is always changing and adapting. For example, one of the biggest accounting trade groups recently updated its auditing standards. With these changes, businesses may want to look into modifying their accounting practices.
Making regular adjustments to a company’s accounting system is simply a good business practice. It can have many benefits such as:
- Improved workflow
- Reduction in excess or unnecessary costs
- Planning and preparation for taxes
- Improved tracking of business performance
What Updates Should Businesses Consider in 2023?
The following accounting strategies could help your business improve efficiency and increase profits in 2023.
Ditch the Paper
Paper is an enormous expense for many businesses. Keeping records on paper requires more than just the cost of the paper itself. It also includes the cost of toner, printing equipment, maintenance, repairs, and storage space.
Businesses that have gone as paperless as possible have found it to be an effective way to save money, time, and space. A paperless accounting system eliminates a substantial part of the need to print, collate, and file documents.
It might not be possible for a business to go 100% paperless, but it is worth exploring where paper is not absolutely necessary.
Upgrade Your Accounting Software
Just like accounting standards, accounting software is constantly evolving. New products provide new functions and services. Updates to existing products can expand their capabilities. Your business might be missing out on exciting new possibilities.
To assess how well your current accounting software is serving you, compare the features that it offers to the types of accounting and reporting that you must do. Consider factors like remote work and the need to share information across multiple locations.
Reconcile Daily or Weekly, Not Monthly
Many business metrics operate on a monthly or quarterly basis. This is as much a result of long-term practice as business needs, if not more so. Banks send out statements on a monthly basis, so people tend to think of account reconciliation as a monthly task. It does not have to be.
Speeding up your reconciliation process can provide detailed, real-time data about business performance. It also relieves the pressure on your staff to meet end-of-month or end-of-quarter deadlines.
More and more technological solutions are available that allow businesses to automate various tasks. New automation technology is available, for example, to streamline the accounts payable process.
An employee scans invoices, which post to the automated system based on an invoice or purchase order number. Once an employee has matched the invoice to the company’s records, the system handles the rest of the process.
One way to reduce the burden on a company’s staff is to reduce the number of bills they have to pay in a given period. Corporate purchase cards (P-Cards) function like credit cards. Employees may use P-Cards for approved business purchases.
The company’s accounting department must keep track of all of the purchases, but the payables department is only responsible for one bill.
If you have any questions or would like additional information, please contact one of our accounting professionals.
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