Growth is obviously great for small businesses. When you’re finally able to expand your team, move office or simply service more customers due to increased demand for your product, it can be an amazing feeling when you start seeing real change take place around you.
However, one of the least enjoyable aspects of scaling is handling the technical accounting responsibilities that come with growth. This can mean handling payroll for more employees, sending out more invoices, or handling more complicated billing requirements.
At this stage, it’s imperative that you have a good accounting system in place to support your transitional phase and make sure that nothing stops you from driving further improvements for your business. And one of the best ways to do this is outsourcing more of your financial-related tasks to an accounting agency that can take the pressure off your internal team.
In this blog, we’ll explore a few things scaling businesses should keep in mind when it comes to keeping their books in order!
Understand the Dangers of Poor Accounting
Poor accounting can seriously damage your business in more ways than one. And the dangers are even greater when you’re scaling up for the first time. For instance, if you fail to stay on top of receivables, neglect to record cash expenses, leave off expense reports, don’t pay your employees on time, or commit any number of other errors that affect your clients or customers, you can seriously undermine your integrity as a competent business.
No matter how big you grow, good accounting should promote transparency and create positive visibility for your company whether that’s internally or externally. Inaccurate or slow accounting can impede growth and create serious problems for you later on, whether that’s because of unhappy suppliers or a damaged reputation amongst customers.
Understanding the vital significance of solid accounting is the first thing you can do to support the growth of your startup when it comes to the financial side of your organisation. And when you combine good bookkeeping with actually accounting strategy, you can even find new ways to grow your business and streamline your processes.
Get on Top of Things Before they’re Too Complicated
Setting up an efficient system before you get too big can seriously save you time and money. You only need to set up the right processes once, whether that's hiring an in-house bookkeeper and getting them to establish a logical workflow, or working with a professional accounting agency to outsource your employees’ payroll.
If you let things get out of hand, or overwhelm your bookkeeper with too much while you’re growing, you risk making mistakes and slowing down your whole business. One aspect of this is always keeping on top of your financial records by tracking your expenses effectively. It’s a crucial step that allows you to monitor the growth of your business, build financial statements, keep track of deductible expenses, and prepare tax returns.
Many startups make the mistake of neglecting to record all their expenses from the beginning. This is common when owners become too focused on moving ahead with the business and growing their sales.
While bookkeeping or arranging for an accountancy firm to manage your financial processes might seem like the last thing you want to do when growing your business, setting aside some time to review your accounting approach and overall strategy can give you critical insight into the financial health of your business.
Think about the Bigger Picture
By reviewing a basic snapshot of your revenues, expenses and cash flow, this can provide you with some necessary data to inform your key business decisions. Whether it’s looking for ways to cut down costs, or finding areas that could benefit from further investment, having a better grasp of your finances will let you see exactly how different parts of your enterprise are performing.
Automate when Possible
Certain functions must be handled manually in order to ensure accuracy and consistency, of course, but certain processes should certainly be automated. This is one of the best ways to reduce time wastage and enhance efficiency.
Hire an Expert
If you want to learn more about how you can outsource your employees payroll and keep on top of your business finances when scaling, get in touch with us at Paycheck.