Ever wonder what you should be doing to reach your business goals?
It sounds simple, but the first step is creating a year-round accounting system.
This is the best way to leverage your numbers to produce results and grow your business.
Let’s take a look at how you can reach your goals through a year-round accounting system.
What Does a Year-Round Accounting System Look Like?
Understanding what a year-round accounting system looks like is essential to realize how it can help you reach your business goals.
It Starts With Organization
Getting yourself organized is key to creating a year-round accounting system. This is the part of the process where you nail down your third-party apps and create a schedule for spending time with your finances.
One of the easiest ways to get organized is by building a tech stack. A tech stack is a combination of tools used to automate your accounting system. You can automate nearly every area of your accounting system, including:
- Inventory management
- Managing accounts receivable
- and more
- Gets rid of manual work
- Eliminates the need for paper
- Gives you timely numbers
- Gives you accurate numbers
Automation also handles repetitive tasks, which gives you more time to focus on running your business.
Another way to stay organized is to carve out time to spend on your finances. You can do this by scheduling specific times to work through your weekly/monthly/quarterly financial checklists. This way you are keeping tabs on your finances and ensuring you complete the tasks automation can’t handle.
Understand Your Numbers
Your numbers are essential for growing your business. They all intertwine and work together to tell you the story of your business.
When you have a solid understanding of your numbers and what factors produce those results you can use the information to grow your business.
For example, your efficiency in acquiring customers (tracked using the customer acquisition cost metric) directly relates to your total expenses. Lowering your CAC will also lower your expenses.
When you understand how your numbers connect to each other you can make better business decisions.
Build and Stick to a Budget
Your budget is the backbone of your business. It’s what you use to guide your spending and make business decisions throughout the year.
Without a solid budget, you’ll likely run into cash flow problems, which is the reason behind 82% of business failures.
To ensure you’re sticking to your budget year-round, include a budget to actual analysis in your monthly financial checklist. If you’re falling off track, this gives you the opportunity to course-correct before it’s too late.
Realize Accounting is More Than Compliance
Yes, keeping good records is a requirement for meeting government regulations but your accounting is more than that. It tells you where your business stands financially.
You won’t see success if you don’t rely on certain aspects of your accounting to tell you what’s working and what’s not.
For example, your statement of cash flows tells you more than how much money you have available to spend. If your cash flow is low, it can indicate accounts receivable problems, overspending, or the need to reevaluate your prices.
With this mindset, you can leverage your accounting to lead to success, rather than just meeting compliance guidelines.
How Can an Accounting System Help You Reach Your Goals?
Once you’ve established an accounting system you can rely on year-round, you’ll be in a better position to reach your goals. You’ll have a clear picture of what’s going on in your business at all times and will be able to quickly make decisions that drive your business forward.
Most businesses have similar goals:
- Generate revenue
- Reduce spending
While these are general, overarching goals, each of them relies on a year-round accounting system.
Take reducing spending as an example. You’ll need to create a strong budget with the goal of reducing spending in mind. From there, you’ll need to follow it closely and consistently measure your progress throughout the year.
Additionally, a year-round accounting system is essential for growing your business. As previously mentioned, you need to be able to leverage your numbers to make the right business decisions. An organized system allows you to access these numbers quickly, with confidence in their accuracy.
Need Help Building a Year-Round Accounting System?
Through organization, an understanding of your numbers, a strong budget, and the mindset that your accounting is more than just compliance, you can build an accounting system that helps you reach your business goals.
However, getting to a place where you are confident in your accounting system can be difficult. You’ll need to build the right tech stack, study your numbers, frequently check in on your budget, and spend time focusing on the big picture, all things you, as a business owner, likely don’t have time for.
This is where Shetland Financial can be of benefit to you. We’ll help you build a financial system that accomplishes all of these things and more.
Contact us today to learn more about our services and how we can help you grow your business.