Bookkeeping is one of the most important processes for your organization’s accounting and financial department. From large enterprises to startups and small businesses, every company needs access to complete, accurate, and up-to-date bookkeeping.
In the absence of experts or defined protocols, poor bookkeeping is inevitable. For most businesses, it is a non-core function and frequently taken for granted. Outsourcing your business’ bookkeeping tasks and opting for virtual controller services is one of the best ways to maintain accurate bookkeeping and prevent any kind of degradation of your books. In addition, this allows your business to reduce accounting and finance related costs while allowing you to focus on your core business.
The consequences of poor bookkeeping
Every organization needs efficient and accurate bookkeeping to ensure all the financial transactions including invoices, employee payments, and earnings are carefully recorded. Bookkeeping doesn’t just help understand the flow of money within and outside the organization, but accounts for every dollar received or spent. This information proves immensely valuable through comprehensive reports in making informed financial decisions that directly impact the future of the company.
For instance, if an organization receives a considerable influx of cash from a new project, it doesn’t necessarily mean that there is extra cash that can be invested in other places. There might be potential upcoming payments like taxes, payrolls, and lease renewals. Failing to consider all of these important details may lead to your organization’s bank account being overdrawn simply due to poor bookkeeping practices.
Late or missed debt payments can take a huge toll on the company’s credit score. Moreover, a string of late payments will eventually increase interest rates. Without proper bookkeeping, it becomes incredibly challenging to accurately track cash flow within the company. A clear understanding of the company’s current credit situation is necessary to make crucial business decisions.
Ignoring cash flow issues will make it challenging to seamlessly maintain business payments. While these issues may seem small, they can impact the organization in a big way in the long run. Putting all expenditures on the business credit card can lead to high interests and major payment issues in the future.
Improper bookkeeping can land the organization into legal problems which may, in turn, lead to heavy penalties. This may also end up delaying supplier payments apart from being unable to maintain regulatory compliance which can, in turn, affect the reputation and financial credibility of the organization.
Poor decision making
The bookkeeping data including cash flow statements, balance sheets, general ledgers, and budgets are of high value in helping your finance teams and CPAs make data-driven financial decisions. Improper bookkeeping can make it difficult to identify the opportunities, strengths, and weaknesses of the organization apart from making tax-season next to impossible. A skillful Controller ensures data behind these reports are accurate, information is relevant, and deliverables are available on time for management’s needs.
Lack of standardized processes
Inaccuracy or inefficiency in bookkeeping will directly affect the accounting processes within your company. Adding the wrong expenses or just mentioning the wrong date on the receipts can create discrepancies in annual account reviews. Without established protocols, it might be incredibly difficult for companies to recognize these errors.
While this may seem like a big step, it is necessary to design and document processes for each accounting task to streamline bookkeeping and prevent major problems. That is why it is more important than ever to have standardized processes in place for every accounting task. This will help improve data accuracy, spot any potential risks or errors, and create a safety net for balances and checks.
How can expert virtual controller services help?
Virtual controller services allow organizations to virtually manage the entire bookkeeping in a seamless and reliable manner. By accessing a secure system, you can check all the accounting records of your organization in real-time. CPA Innovations leverages the power of RPA (Robotic Process Automation) to automate repetitive accounting processes which improves the overall accuracy and increases the speed by over 10 times.
By working as an extension of your team, CPA Innovations can enhance the existing financial expertise of your company which might not be possible with your current department.
Our virtual controller services are specially designed for organizations that are interested in extracting useful financial oversight and structure but don’t have the time or the resources to hire an entire team of financial experts.
Reach out to us today for your free consultation to know how we can help streamline your bookkeeping processes.