The growth sustained during the first 5 years of operation for your small business can be an exciting time for business owners. Breaking down all of the financial data produced during the first five years of operation can be pivotal to your success in the next five.
Small business startups most commonly operate on a cash basis. Cash accounting can be a useful tool for analyzing what bills you can pay, if payroll checks will bounce, etc., but from an analysis standpoint, accrual basis is king. Accrual basis accounting can help analyze if you’re staying within your budget, whether you’re taking in more cash than you’re spending, and which expenses are eating your lunch. QuickBooks can switch your business from cash to accrual basis at the click of a button and this is one of many important tools that can help you better manage your business.
On the ground level QuickBooks can help assist in simple day to day bookkeeping such as bills paid and owed, checks written, and customer balances. Syncing these features with your financial institution through online banking can help you identify which checks have cleared and hit the bank on the fly. To help you better track your payables and receivables.
Streamlining all of your financial data with QuickBooks can save you both time and personnel costs. QuickBooks can automate many routine bookkeeping tasks, which means you don’t need to take time out of your busy schedule to run common reports, account aging, cash flows, etc. QuickBooks can also automate systems to send out payment reminders, notifications, and other customer service letters automatically. Reports are one of the most integral tools at a business owners’ fingertips and they can help produce a snapshot of the financial health of your business at any time. Not to mention QuickBooks’ ability to pull reports from prior periods to help calculate ratios and analyze the financial liquidity of your business.
Reports can also be helpful in budgeting and forecasting for your business’s future. The ability to calculate the cost of doing business can help you forecast your business’s cash position on a week by week basis and help you estimate your business account balances into the foreseeable future.
In the coming weeks I will help you better understand how to maximize many of these features within QuickBooks and in turn, better manage your business.