Bookkeeping Tips for a Smooth Year End

Year end is often the most stressful time of year for small business owners. Despite the best of intentions, many bookkeeping tasks often get shifted to the back burner so you can focus on other aspects of running a business.

This transforms what would otherwise be incremental and manageable tasks into a large, time-consuming ordeal. The pressure is on because, now more than ever, your numbers have to be accurate, particularly with the planned $80B investment in beefing up the IRS. Experts anticipate that small businesses--especially those that generate significant revenues in cash--may face additional scrutiny in the coming years.

We can't undo the past, so no point in dwelling there. We can, however, stay forward-thinking and look at the actionable steps needed to make year-end as smooth as possible.

Create a Checklist

Write down everything you need to do to close out your books and schedule time to do it. It never pays to wait until the last minute.

Getting this out on paper or screen can be very empowering and motivating, as you can see what you need to accomplish and that it's probably not as large a project as it might seem. 

Include any deadlines or due dates so you don't get caught off-guard or unintentionally push off an important task.

Automation will help with this process. The more automated your accounting system, the easier, less time-consuming, and less stress-inducing all of this will be.

Get Caught Up

Keeping your books up-to-date, regardless of what's going on in your business, isn't easy. However, it is easy to fall further and further behind on bookkeeping, but now is the time to get caught up.

You need everything to be accounted for before you close out the books. Figuring out what you are missing now and making the adjustments will make closing for the year a much easier process.

Here are some items you may need to catch up on:

Update Expense Records

Don't forget about things you get billed for after the fact, like utilities, Net 30/60/90 terms, and insurance. To reconcile your books, you'll need to include these. Forgetting them can throw the numbers off and waste your time.

People also tend to forget business expenses they paid using a personal account. This isn't advisable, but it happens. If you need to pay yourself back or include that expense on your Schedule-C, make sure you have the paper trail to prove it.

Update Income

Review services you've rendered but haven’t invoiced and ensure all completed payments are updated in your bookkeeping system.

Settle Up with Employees

Give your employees a deadline to submit for reimbursements. This will help you avoid discovering expenses at the last minute or, worse, next year. 

Remember, if you want an employee paycheck for 2021 work to go toward 2021, you must date it in 2021.

Reconcile Your Accounts

For lack of better words - make sure everything makes sense. If you're using double-entry accounting, you may notice the sides don't reconcile. That's obvious.

But also look through the numbers for outliers suggesting there may have been a key error. For example, if your water bill normally runs $200-300 and you have a month where it's 5X that, you have an outlier requiring a closer look. If it continues to stay high after a certain date, there’s probably another issue, like a leak.

This practical example can happen in any area of your business, from marketing to payroll. The faster you identify anomalies, the quicker you can address the cause, whether it's:

• An unplanned but explainable budget variance

• A typo

• An untrustworthy employee

It can be frustrating and time-consuming to get the numbers right, but it’s necessary. This will ensure accuracy when you go to close the books.

So don't fall for the temptation of "this is good enough." If proper bookkeeping is taking place, then those numbers are reconcilable.

Just start early, take some deep, relaxing breaths and stick to it until it's right.

Review and Plan Ahead

Now is the perfect time to look back at the year to see what went right and what didn’t. Are poor record-keeping, inability to keep up with bookkeeping, or outdated software and systems holding you back in both finances and your business as a whole?

Once you’ve determined your mistakes, you can create a plan for correcting them in the year ahead. Now is also the time to start working on:

• Budgets

• Forecasts

• Other tools your business needs to keep your finances on track

In other words, the year's end shouldn't be a time to regret your bookkeeping wasn't up to par. It should be a time to constructively look at what you can do better in the year ahead.

Review your whole financial system and consider the ROI of outsourcing accounting next year, it may be your best option.

Turn to a Trusted Accounting Partner

This can be an overwhelming time of the year. Working with a trusted accounting partner will take the stress of end-of-the-year bookkeeping off your plate.

They’ll make sure you aren’t missing any deadlines, everything is up-to-date, your accounts are reconciled, and you’re ready for the year ahead.

Learn more about the benefits of outsourcing your accounting to a trusted partner by contacting SIMPLY Financials PLUS today.

How Efficiency in Data Leads to Better Decision-Making

You’ve probably heard that using data to make decisions leads to a successful business. But the truth is it's not the data. Data is everywhere and it’s abundant.

You don't just need more data.

Instead, it’s efficient data that really drives you to make the best decisions for your business. Data is efficient when collected correctly, consistently, and comes to you in a form you can use.

Yet a Harvard Business Review study found that while 62% of businesses now invest heavily in data collection, only 38% have a sufficient strategy to use that data. 

Furthermore, a 2021 CIO study found an astounding 94% of businesses say they're still in the planning stages of using data, despite the fact they've been investing in and collecting significant data for years now. This demonstrates a disconnect between data collection (which isn't cheap) and putting that data to use to make better decisions, drive revenues, cut costs, improve cash flow, and grow the company.

Many businesses lack the correct financial mindset to achieve these goals, but efficient data can change all that.

Decisions Are Based on Accurate, Up-To-Date Data

First of all, you need to make sure you're collecting the right data. You identify which data you need to collect based on your goals.

Efficient data helps you achieve them. But you should also work backward from the goal. Through this process, you'll identify what data you need to collect to understand how you're performing related to that goal and what's happening along the way.

Track progress toward a goal through metrics. Metrics are measurable indicators showing if you're on the right track.

With efficient data, your decisions can be centered around reaching your goals and making choices that improve your business. No more following gut feelings that keep you up at night wondering if the move you made was sound. With efficient data, you know it is.

It's in the numbers.

Secondly, you won’t have to worry about sifting through out-of-date or useless data to make the right decisions. Because you have a consistent, automated system to collect and present data, you know it's always up-to-date.

Because we don't have to tell you, it's always better to pivot in business as obstacles arise rather than spending most of your time reacting to events that have already happened. Many small businesses are stuck in this loop of putting out fires, so they lack the resources to become forward-thinking. Efficient data changes all that.

It's critical that companies define how they use data and put a process in place to improve decision-making through it. You need a system to detect patterns, learn from them, and steer the company in the right direction.

Efficient Data Helps You Create Stronger Goals

As mentioned, the data you collect should be centered around reaching your goals, so the more efficient data you collect and use within a strategic data plan, the better you understand what's working and what isn’t to get you closer to where you want to be.

When you set out to make new goals, you’ll be able to rely on your efficient data to guide your goal-making process. Once you’ve reviewed your data, you can look for areas you’d like to improve.

Let's look at how this works in a real-world application. Based upon industry benchmarks, you determine you're spending a lot more on customer acquisition than similar businesses. So you seek to determine why. You use efficient data to understand customer lifetime value (CLV), so you know:

• If those higher customer acquisition costs are justified

• How you can lower them without sacrificing CLV

• Who your highest value customers are, so you can dedicate more resources toward attracting and nurturing that target audience

• Where to spend to attract, convert, and increase CLV among this audience

• How much money should you spend to get the right ROI

What should your customer acquisition cost goal actually look like? You started out with an industry benchmark that told you that you were overspending. But by using your own first-party efficient data, you recognize why your spending is higher and how to use that greater spending in the most effective way to deliver a higher ROI.

Through efficient data, you can set SMART goals because the data reveals what realistic goals look like for you, not someone else.

Efficient Data Leads To Efficient Processes

When your data is providing you with essential information, you can rework your processes to improve other areas of your business.

You’ll be able to see efficiency leaks and correct them.

For example, when reviewing data, you notice one of your team members is spending a lot of time figuring out payroll. This may push you to use an automated payroll service so that employees can spend more time working on more important work.

Small businesses can also use efficient data to learn how their customers interact with their brands online to deliver a more cohesive experience that generates the same kinds of loyalty and greater profits.

Efficient Data Leads to a More Engaged Team

When your decisions are based on data, it’s easier for your team to see what you are doing and how it fits into the bigger picture. They get objective feedback more frequently and in some cases may even be able to access it themselves to confirm they're on track.

This maximizes personal responsibility and ensures employees that management is using objective measures to evaluate their performance. Because they can see that performance in-between performance reviews, employees can correct course and take charge of their careers.

In the current worker shortage that many companies face, this kind of data transparency gives employees a sense of empowerment that they're looking for in the modern employer. Efficient data shows employees they're partners in your success rather than a means to an end. That distinction makes a difference in both recruitment and retention.

With more use of data, your team is motivated to continuously improve their numbers, knowing they play a role in the success of the business.

Working with an Accounting Partner Leads to Efficient Data

It's clear. You don't just need more data. You need efficient data.

To make sure you don’t miss the mark with getting efficient data, turn to a trusted accounting partner. SIMPLY Financials PLUS will work with you to create a data strategy that focuses on your goals and tees you up for making decisions that drive your business. Contact us today to learn more about the importance of efficiency in your data.

Year-end Is Approaching, Will Your Business Be Ready?

It’s never too soon to start thinking about your end-of-the-year financial tasks. In fact, it is advisable to set aside some time each month, and quarterly, to evaluate your financial strengths and weaknesses. This way, when the end of the year rolls around, you already have a good grasp of the way your finances have been working for your business. 

However, when the time does come, do you know what you need to do to be successful?

Run and Review Key Reports

Here's the truth: you’ve been collecting useful data about your company all year, and now is the most opportune time to use it. Hopefully, you have been periodically checking in on your data to do some analysis and see where your company falls in line with your beginning-of-the-year expectations. 

However, now is the time to really analyze this data for clarity and purpose. What you do with your data at this point in the year can have a massive impact on your success in the year ahead.

Here are some reports you need to run at the end of the year to get a good understanding of your finances:

• Profit & Loss Statement

• Annual balance sheet

• Yearly income statement

• Cash flow statement for the previous four quarters

Once you have successfully run each report, perform a comparative analysis of each of them to last year’s data. This will show you what your business did well and where you can improve in the year ahead. From there you can start making big financial decisions with confidence because you’ll have data as your support. 

Reconcile Your Accounts Receivable

If possible, avoid leaving any accounts open at the end of the year. This means you have to do your best to collect all of the payments owed to you before closing the books. It is not an easy feat, but if you have outstanding receivables, know you are not alone.

There was more than $78,000 in the average outstanding receivables for small businesses in the US in 2019. That’s quite a lot of money to be left in the lurch between one year and the next. But it happens across every industry and is not the end of the world.

The best way to lower the time between sending an invoice and receiving your payment is to use the accounts receivable turnover ratio. It will give you the average number of days it takes to receive payment. Your goal is to lower this ratio in the year ahead, so take your average from the current year and implement ways to get a lower average by the end of next year. 

When you lower your accounts receivable turnover rate, you reduce your risk and stand to gain more financially.

You’ll also receive a better score for risk reduction when it comes to your overall financial statement.

Why is this important? A lower risk score means you stand a better chance of getting lower interest rates on loans and more capital when borrowing money from lenders. Since your business runs less of a financial risk compared to other ventures in your industry and community, you get out ahead, putting your business in forward motion with growth for the coming year.

Get a Jump Start on Your Taxes

Now it’s time to switch gears and focus on your finances for tax preparation. 

First, identify all of the important documents and necessary paperwork you will need for your tax preparation. 

Next, you have to see if your business qualifies for any deductions. This might include deductions on office equipment, employee travel expenses, or green construction initiatives. You should check to see if your business qualifies for deductions specific to the industry or location where you operate. This added step could save you a lot of money in the long run.

Finally, as part of your tax preparation, prepare to analyze your tax strategy from the current year. How did that tax strategy pan out? Make the needed adjustments now and so you’re ready for next year’s tax season well in advance.

Prep for the Year Ahead

Now that you have a good grasp on your year, it’s time to start looking towards the future. Here are some of the areas you can build on now to set you up for great financial gains:

• Start making goals for the year ahead

• Begin creating budgets and forecasts

• Determine what systems worked (and which didn’t) and make adjustments where needed

Another tip is to avoid waiting until the very end of the year to map out your business plan and financial strategy for the year ahead. Let your plan gradually come together throughout the last few months, that way your focus can be on execution rather than building and refining your strategies. This allows you to make better projections about where your business could go if you follow your plans closely. 

Turn to an Experienced Accounting Partner

The end-of-the-year checklist keeps getting longer. Even the smallest slip-up can negatively affect the start of the year ahead.

To put your business in a position to grow, work with an experienced accounting partner, like SIMPLY Financials PLUS. We will help get your business ready for the end of the year and prepare you to take on the year ahead. 

To learn more about how we can help, visit https://www.simplyfinancialsplus.com/.

The ROI of Outsourcing Your Accounting

You probably understand what it means to outsource your accounting and have a good idea of the services you’ll receive when you hand your accounting over to an expert. However, you might be wondering if it’s really worth it. 

As someone who is always looking to optimize their money, you’re likely asking yourself, “what is the ROI of outsourcing my accounting?” 

The truth is, it comes with plenty of beneficial returns and you can get a lot more out of it than just improved finances.

Frees up Time and Saves Money

You already know that outsourcing accounting can free up time. But did you know it can also save you money? Here's how.

When you hand your accounting over to an expert, you no longer have to deal with the nitty-gritty of accounting or using your brainpower to manage your finances, something that may be outside of your area of expertise. But at the same time, you will still get the many benefits of having your balance sheet and other financial records always up-to-date. You can make more on-the-spot data-driven budgeting decisions, which leads to less budget waste and greater financial efficiency. You’ll be getting more out of every dollar.

Should you make the decision to outsource your accounting, you don’t have to go to the extreme of hiring a full-time in-house accountant when it’s likely the need for that isn’t there. Even though the hourly rates for outsourced services seem higher, the cost of service is often cheaper than hiring. With service or value-based pricing, you only pay for what you need. 

A Deloitte study confirmed that 70% of businesses that outsource accounting saved money. While that's not 100%, and there are certainly businesses that benefit from a full-time in-house accountant, the majority of businesses benefit from outsourced accounting.

QuickBooks Management

QuickBooks is very helpful when used correctly but can be difficult to understand. It takes time not only to learn it but to become quick and competent with it, so you can get as much out of it as possible. 

When you outsource your accounting, you won’t have to worry about learning how to use QuickBooks. You’ll have a trusted partner managing and keeping it up-to-date so that it meets your business’s unique needs. 

This removes your role from the process and ensures that when you need to view your financial insights, they are maximized and designed to boost productivity by:

• Providing you with real-time financials

• Producing meaningful reports

• Maintaining accuracy

• Becoming financially savvy without wasting time

Improved Systems and Processes

Outsourcing your accounting means handing your accounting over to an expert who understands how to make your money work harder for you.

This expert will then aid in creating systems and processes that work for your business, so you'll have financial clarity around KPIs, cash flow, budgets, forecasts, and more.

All of it will be less complicated and easier to understand.

This eliminates a major challenge many businesses face. Those trying to manage their own accounting often collect financial data, and a lot of it, but don't know how to organize it into a usable and quickly accessible form. It’s important to recognize that you don't just need more financial data, you need business intelligence to help you make confident decisions. With the help of an outsourced accountant, you can put processes into place to help you achieve this.

Outsourced accounting services set your company up for success with strong financial systems and best practices that simplify finance like:

• Tracking and improving cash flow

• Embracing digital finance

• Getting to know your accounting tools

• Customizing accounting to match unique business needs

And here's the bonus: an accounting service helps you develop a forward-looking financial system. With a forward-looking financial system, you're poised to meet your business goals and grow your company. As a result, there may be a time when your business no longer needs to outsource accounting. You'll grow to a point where supporting a full-time accounting professional is more of an option.

When that day comes, you'll already have strong systems and processes in place you can use without missing a beat during the transition.

Constant Communication

Accounting is an ongoing process. Even when you outsource your accounting, you’re still responsible for certain tasks because it's critical that you stay involved in the process and understand your company's numbers to get the most out of outsourcing. 

When you have questions you’ll have someone to turn to, an expert who doesn't just know accounting, but also has in-depth knowledge about your business from working with your company. This will also improve your systems and processes because you’ll constantly be working together to determine the best course of action for your business.

Work with SIMPLY Financials PLUS

Are you ready to start generating ROI simply from outsourcing your accounting? 

When you trust SIMPLY Financials PLUS, you’ll begin receiving the ROIs above. We'll make sure your bookkeeping is kept up-to-date with accurate records and tracking of transactions.

We will help your business go from where it is now to where you want it to be, and we will do it by providing customized accounting and bookkeeping services for your business. 

Visit our website to learn more about how SIMPLY Financials PLUS can help you.

Guide: The SFP Approach to Business Financial Clarity

To have a successful business, you need strong financials. However, getting to that point requires a financial system and processes custom-made for your business. Because your business is unique, your approach to your finances isn’t necessarily a carbon copy of your competitors. This means you’ll likely have to create and implement systems and processes that are meant to propel your business, and only your business, forward.  

You’ll need a deep understanding of what makes each aspect of your finances tick, and on top of that, you’ll want to be able to recognize when something is off so that you can make the needed adjustments. Properly managing your business’ financials can be a huge undertaking, especially if it’s not something you are familiar with.

One of the most beneficial things you can do for your business is to work with an experienced accounting partner. They will walk with you to ensure your finances are solid, top to bottom, and you are reaching your financial goals. 

At SIMPLY Financials PLUS we are all about getting your business from where it is now to where you would like to be. We understand the role every aspect of your finances plays in the success of your business and we want to work with you to bring clarity to your accounting system. 

Our approach is simple. We will start by clarifying and refining your current finances. This will include a detailed look at:

• Your KPIs 

• Your reporting

• Your processes

• Your accountant reconciliation

• Your cash flow

• Etc. 

Once those have been reviewed and reworked, we will set our sights on the future by bringing clarity to:

• Your forecasts

• Your budgets 

• Your planning

• Your financial strategies

• Etc. 

To take it one step further, we will even provide you with sound financial advice to help you make informed decisions for your business. 

The remainder of this guide will walk you through exactly how SIMPLY Financials PLUS will approach bringing clarity to your business financials. 

Clarity for your Current Financials

It’s no secret managing your finances is time-consuming and is often complicated. It’s tedious work and small mistakes can lead to much bigger problems within your business. Not to mention many business owners, like you, are not always well-versed in financial topics. You may understand the basics, but beyond that, there’s a good chance you aren’t overly confident in your financials.

Get your Books on Track

The first step in clarifying and gaining confidence in your financials is to ensure your books are on track. When you work with SIMPLY Financials PLUS, we will run through your current books and:

• Access your problems

• Break down all expenses

• Create a budget

• Reconcile your transactions or accounts receivable 

This covers all of the major bases and will help to fix any glaring issues. It’s incredibly important that your books stay up to date and are accurate before diving into creating new systems and processes for your bookkeeping. 

Improve your Bookkeeping

Some of the ways SIMPLY Financials PLUS can help improve your bookkeeping is with: 

• Properly categorized, coded, and reconciled transactions

• Invoicing, A/R aging reports, and collections management 

• Payroll setup and processing

• Account reconciliations

• Monthly and quarterly financial statements

Each of these improvements, with the help of third-party apps, where appropriate, will make your workflow more efficient and reduce the time it takes you to do your bookkeeping. 

Collect the Right Data

Once your books are in order and the new systems and processes are put into place, the next item on the agenda is to start preparing for where your business is heading, and it starts with your data. 

Your data is the key to creating meaningful reports (like cash flow) that will be useful for making informed financial decisions to drive your business forward.

Clarity for Where you are Going

After you’ve found clarity in your current financials, you’ll want to shift your focus towards where you are headed. Getting to where you want to be involves just as much planning and strategizing as finding clarity in your current financials. However, now you will be using previous reports to help you set goals and make projections for a stronger business. You’ll be thanking yourself later for implementing forward-looking financial practices. 

SIMPLY Financials PLUS focuses on getting you where you want to be by building forward-looking financial systems through our controllership services. 

Our controllership services can help your business with:

Understanding and interpreting financial reports and KPIs

As previously mentioned, collecting the right data is key for creating growth- and future-focused reporting. At SIMPLY Financials PLUS, we believe it’s important for you to have, at least, a basic understanding of your KPIs and reports. We’ll walk you through everything to ensure you have a better idea of what’s going on in your finances.

Budgeting 

Budgets quite literally plan for the future. You create budgets by sifting through your previous expenses and recording each of the expenses you know will be repeated in the future. You then combine that with any expenses you may have left out or know will be coming. Your budgets will serve as a guide for spending throughout the month/quarter/year. You can think of it as a spending goal and will be able to refer back to it often to make sure you are on track. 

Forecasting (including cash flow forecasts)

Forecasting is another great way to look towards the future. SIMPLY Financials PLUS will help you create multiple forecasts for a variety of situations that predict the financial state of your business. They are based on previous numbers and, like a budget, can be used as a comparison each month/quarter/year to make sure you are on track.

Cash flow is one of the more important aspects of your financials and working with SIMPLY Financials PLUS will ensure you have an accurate cash flow forecast to use as a point of reference throughout the year.

Short- and long-term financial strategies

While looking ahead can mean a year, three years, or even five years, it also can mean next month or next quarter. Whichever you’re planning for, it’s important you have informed decisions driving your financial strategies. SIMPLY Financials PLUS will help you strategize for the future (and near future) to create a plan for reaching your business goals. 

...and more

SIMPLY Financials PLUS will also supervise and train your bookkeeping staff, set up internal controls to reduce the risk of fraud, and liaison with your bank, venture capital financiers, and your tax preparer.

Once you’ve set goals, strategized, planned, and begun taking action on your forward-looking financial system you start to notice a new level of success within your business. 

How to Get Started with SIMPLY Financials PLUS

SIMPLY Financials PLUS will play a key role in getting your business from where it is now to where you want to be. All you have to do is take the next steps for getting connected and you’ll soon be reaping the rewards that come with working with SIMPLY Financials PLUS. 

Here’s what you can do to get started:

1. Let’s start with a phone call.

   • We’d love to get to know you and your business better. In this initial call, we will discuss your current accounting practices, get an understanding of the issues you are facing, and take a look at your existing QuickBooks file so we can run an assessment of the shape of your file. 

2. Together, we’ll strategize and make a plan.

   • We will work with you to make a plan that is unique to your business needs.

3. We’ll accomplish your goals so that you can do what you do best: run your business!

   • We will help you and your team formulate the best accounting practices and ways to maintain your QuickBooks file. And if you need backend support while you run your business, we will help you with that too. 

Work with SIMPLY Financials PLUS

At SIMPLY Financials PLUS, we know how complicated it can be to manage your finances. On top of everything else demanded of you as a business owner, managing your finances often becomes a bothersome task. However, we are here to help. 

First, we will start by bringing clarity to your current financials. We will straighten out your books, improve your bookkeeping processes with the help of third-party apps, and help you collect data that will be used to create meaningful reports and sound financial decisions. 

Then we will work with you to bring clarity to where your business is heading. We will help you understand and interpret financial reports and KPIs, formulate budgets with your needs in mind, create forecasts that give you a point of reference for reaching your goals, and suggest short- and long-term financial strategies to drive your business forward.

If you are interested in getting your finances from where you are now to where you want to be, consider working with SIMPLY Financials PLUS. We want to make sure you have all of the correct, and unique, systems and processes in place to drive your business forward.

How Your Accounting System Works as a Team Accountability Tool

When you hear “accounting system” your mind probably drifts to things like budgets, forecasts, and meeting your sales goals. Understandably so, considering they are some of the core pieces of running your business and when they are successful they lead to strong financial results. 

But did you know your accounting system can stand as a point of reference for improving team accountability too? 

Because each aspect of your system shows what areas of your business are doing well and what areas need work, they can all be related back to team performance and used to hold them accountable. 

Aspects of Your Accounting System that Lead to Team Accountability

To keep it simple, we'll specifically focus on three aspects of your accounting system that can be used to promote team accountability.

• Budget

• Forecasts

• Sales Numbers and Goals

Your Budget

When you and your team create budgets, you are relying on previously collected data to create a spending plan for the year ahead. The budget will guide you through spending, effectively pushing you closer to your goals. 

However, a budget can’t succeed unless the whole team is on the same page. A well-functioning team has a strong ability to adhere to a budget, which keeps them accountable by ensuring there is no spending outside of what was planned. 

But for your budget to be a strong accountability tool, you must:

• Clearly define the team's desired outcome and how you measure their success. Document it.

• Make sure you understand the skills, time, and resources needed to achieve that success. 

  • A budget built on data analysis pulled from previous years' accounting combined with a forward thinking financial system makes this happen.

• Have a system in place to measure performance incrementally. 

  • This allows for recalibration if things get off track. Financial tools like QuickBooks help small businesses track revenues, expenses, and cash flow as you go and provide information in easy-to-understand reports, so you don't have to wait for end-of-the-quarter or year surprises to identify discrepancies and re-align with your goals.

• Provide regular feedback based on the accounting. Make accounting your priority. 

  • This is the only way you can provide feedback timely enough for teams to do something to get back on track.

• Don't let teams slide by. 

  • People push boundaries if you don't clearly define them. Make sure there are consequences of going over budget. At the same time, make sure you reward teams that achieve team goals while coming in under budget. Too often, the opposite happens. Cutting a team's budget the year after they come in under budget is punishment for performing well. It encourages overspending the following year.

Your Forecasts

A forecast is essentially an expectation for the year ahead. Your team should strive to meet expectations. 

Periodically check in on your forecasts and compare them to your actuals, they should closely match. If they don’t, it will clearly show you where you are struggling. When you’ve pinpointed your areas of underperformance (or in some cases overperformance) and you and your team can make the needed adjustments. This ensures everyone is staying on track.

Further align your forecast to your actuals to nurture accountable behavior by:

• Making people individually responsible. 

  • It's easy to shirk responsibility when people are collectively accountable. By making individuals responsible, you are holding each person accountable, not just the entire team. 

• Adopting an "embrace your mistakes" mentality. 

  • Nurture a growth mentality where people feel comfortable admitting their mistakes and learning from them. If something doesn't get done or done correctly, it’s important you have a team environment where a person stands up and says, "that was my responsibility, here's what happened, and here's what I'm doing differently to make sure it's done right going forward." That's accountability!

• Leading by example. 

  • To create this kind of ownership of mistakes, teams must see leadership owning theirs and using what they’ve learned to improve team function.

Your Sales Numbers and Goals

You’ve likely created sales goals for your business based on data. If you aren’t reaching these goals, there are obviously areas where you could improve. 

If this is the case, turn to your actuals. The comparison can be used to hold your team accountable. It will give you clear direction for taking action in struggling areas. 

When you use your sales numbers and goals to hold your team accountable, it helps you identify and make the most of:

• Which sales behaviors produce the desired results.

• How to best segment audiences to nurture leads and close new accounts.

• Where you can streamline operations to eliminate barriers to results.

• What tools your sales team needs to close deals. 

  • For example, investing in sales automation may help salespeople more consistently meet individual sales goals.

• How marketing can better align with sales and offer sales-enablement resources.

• Repeatable systems that work.

• Coachable moments.

Your Accounting Partner 

To achieve a high level of team accountability through your accounting systems, you need established processes centered around supporting your team. 

An experienced accounting partner will help you develop and manage these systems and processes, as well as keep you and your team focused on your goals through accountability. 

Looking for a trusted financial partner? Contact SIMPLY Financials PLUS.

How Entrepreneurs Can Change Their Financial Mindset and Improve Their Business

You’ve heard it before, and in many ways you can attest to it: “it’s all about mindset.” But did you know you can apply that way of thinking to handling your businesses finances as well?

We get it. As a small business owner, you’re overwhelmed by the many responsibilities being added to your plate each day, and spending time reviewing your finances just isn’t a top priority. You want to grow, but as far as your finances go, getting to a place of continual growth seems far from reach. 

However, with a simple shift in frame of mind, you can take your business from where it is now, to where you want to be. All you have to do is get into the right financial mindset.

With the right mindset, you’ll notice managing your finances can be simple, straightforward, and practical. By following a few simple steps, you’ll be basking in the peace of mind that comes with a solid growth-focused financial mindset. 

Master Your Cash Flow

Your cash flow drives your business, so getting it moving in the right direction will improve other areas of your business. When you know your cash flow is doing well, you can be confident other business areas are experiencing success. 

The entrepreneur mindset involves recognizing that building a company isn't just a job. This is your opportunity to build significant wealth for you and those you care about. You need a long-term strategy, and that starts with how you'll grow the amount of money you have to work with without turning to loans or precarious shuffling of the books to feel like you're making more than you are.

There are five forces of cash flow anyone with an entrepreneur mindset needs to know. These directly impact cash flow growth when you manage them properly.

1. Tracking and Accountability: Track everything (we will explain this later on in more detail) and ensure it's organized in a useful way. This allows you to see performance in real-time when you're most able to adapt to the impact on those metrics and improve cash flow.

2. Accounts Receivable: A high amount in accounts receivable is inversely proportional to good cash flow. It can make it appear you have more money than you do. Your new financial mindset includes an efficient system to collect what you're owed, track the amounts, and know what's past due.

3. Budget Variance: An overoptimistic projected budget often includes numerous underestimations of expenses. At the same time, you may be spending more than you planned or need to in certain areas. When you understand where your budget and spending do not align through budget variance, you can more easily see these mistakes and correct them to increase cash flow.

4. Vendor and Partner Terms: Your vendor partners have contracted service level agreements (SLA). They provide this service, and you pay them on time. Failing to understand either side of the contract can lead to a reduction in cash flow. If they're not meeting their SLA, you have to spend more to pick up the slack. If you're not meeting your side of the contract, you may be paying more than you have to for raw materials, cost of goods sold, and services.

5. Product/Service Pricing: You need a pricing scheme that works for your business, and there's no one right answer here. Your pricing may be product-based, cost-based, value-based, or competition-based. Ensuring you're pricing correctly will increase the revenues you have coming in to improve cash flow.

Track Everything

Tracking the right metrics is beneficial for nearly every aspect of your business. It gives you a snapshot of the big picture, which in turn, allows you to see where you are experiencing success or what areas are in need of an adjustment. 

Once you’ve begun tracking essential metrics, you’ll be able to create more accurate reports for a detailed look into your finances. Your reports will then turn into important information for making the right financial decisions moving forward.

Tracking everything sounds like a daunting task, especially if you are accustomed to doing it manually.  Manual tracking is not easy and requires a lot of your valuable time. It can also lead to error and doesn’t give you the option of real-time numbers.

Instead, try turning to tools and systems that track everything and present information in an already usable form. This way you are getting reliable, accurate data in the form of reports that are meant to drive your business. By establishing a system like this, you’ll be embracing a key aspect to a growth-focused financial mindset.

Make Your Financials a Top Priority

While the goal is to develop peace of mind about your financials, you must never lose sight of those financials and how financial performance aligns with business success. Focusing on your financials throughout the year keeps you in the right financial mindset. Your decisions will always be focused on improving them, and because you're not looking at them in hindsight, you have the ultimate power to do just that.

Prioritizing your financials helps you avoid common problems that can discourage you or pull you further away from your goals:

• Security issues, which could even include fraud from within your organization

• Reconciliation

• Thinking you're making more than you are because of good cash flow

• Failing to separate contractors from payroll or understand the different costs associated with each type of classification

• Not understanding when you're on an over-budget trajectory

• Not using a Profit Loss Statement (P&L) so you know throughout the year where you stand, not just at tax time

Look Forward, Not Backward

While the past serves as an excellent point of reference, you should have your mind set towards the future. If you want growth, focus on growing. Create budgets and forecasts for the upcoming year that will help you reach your goals. This will lay out a groundwork for you to follow, so when you feel yourself slipping off track, you’ll have something to turn to.

But know that you do have to look back to some extent to look forward. You need to know how much you've made, spent, and retained. The problem is that many who think they have an entrepreneur mindset stop there, looking back--either with frustration or a pat on the back. 

To turn your financial mindset into a forward-thinking one, dig into those past financials to:

• Create a more detailed budget: Each year, your budget should get better and more accurately reflect what you spend and how you spend. Now, you actually know what you're working with and can put that money toward business growth.

• Break down sales goals: Based on past performance, you should have an idea of acquisition costs and their relation to revenues. 

Ask yourself questions to help you generate your projected revenue:

• How many leads do you need to get? 

• How many new customers do you need?

• How much money do they need to spend?

• Forecast cash flow: You can better anticipate cash flow and leverage it to grow your business. 

Work With a Trusted Accounting Partner

Getting into the right financial mindset can be tricky. Working with a trusted accounting partner will help you stay focused on growing your business and reaching your goals. They’ll help you track the right metrics, master your cash flow, make your financials a top priority, and look forward, not backward. 

If you're struggling to change your financial mindset, turn to SIMPLY Financials PLUS. We bring simplicity, clarity, and confidence to your finances, so you can stay forward-thinking and grow your business.

Does Your Financial System Look Forward or Backward?

For most people, checking your business’s finances means looking at the current numbers and determining whether or not you think you are on the right track to reach your goals. While your current finances are helpful, they won’t be much help in determining your future. 

Instead, you should look back at how you performed over the past month/quarter/year/etc. This information will serve as a point of reference for creating:

• A detailed budget

• A breakdown of sales goals

• A cash flow forecast

Once these are created, you can start focusing on a more forward-thinking financial system that keeps your business goals on the top of your priority list. 

Most of Us Stop at Looking Back

Dwelling on the past is ill-advised in many situations, but when it comes to your finances, the past can provide valuable insight into your future. Your past records will show things like:

• How much you’ve made

• How much you’ve spent

• How much cash you have in the bank

It’s common for a small business owner to turn away from this information thinking it can’t help them prepare for the future, however, that is a big mistake. With all of this information, you can create a comparison to your current finances and use them as a baseline for where you hope your finances will go. 

Creating a financial system that leans on this information will help you set forward-looking business standards for the next 1, 2, 5 years. 

3 Ways to Build a Forward-Looking Financial System

1. Create a Detailed Budget

A budget is the foundation of a forward-looking financial system. It sets the tone for what you expect to be spending for the year ahead. To create a good budget, you’ll need to turn to your past financials (especially previous income and expenses) as a point of reference. From there you can make the needed adjustments and factor in the big purchases you are expecting. The more details you include in your budget the more helpful and accurate it will be. 

It will also be beneficial to create multiple budget scenarios to prepare yourself in case of a change in the market. You should have budgets prepared for a good, bad, and neutral economy. That way if something happens, you’ll have a plan to adjust accordingly and still reach your goals. 

1. Break Down Sales Goals

Start by creating an overarching sales goal. This goal should cover the entire year ahead. 

As an example, let’s say you’d like to grow by 20% within the next year. Once you’ve set that goal, the next step is to break down your sales goal so you can achieve it by completing more reasonable and achievable tasks. 

To determine these mini-goals, ask yourself questions like: 

• How many more leads do I need to reach my goal?

• Do I need to hire additional staff to get me to where I need to be?

• How many sales do I need to make each month to be on track for the rest of the year?

Once you’ve set these mini-goals, you can break them down even further to create a month-to-month sales plan. Focus on some key performance indicators, like conversion rate and return on ad spend, to keep you in the loop with the data behind your attempt at your goals. With the help of your KPIs, you’ll stay on track with your month-to-month goals and won’t be scrambling at year’s end to reach your goals.  

1. Create a Cash Flow Forecast

Once you’ve created a budget based on your past financials and future expenses and broken down sales goals to smaller, more manageable monthly goals, your next task is to create a cash flow forecast. This is the definition of forward-thinking as it gives a detailed snapshot of the future. 

Your cash flow forecast includes all of the money coming into your business and all of the money going out. A healthy cash flow is the goal, so forecasting a good cash flow is an essential aspect of creating a forward-looking financial system. While there is a chance your forecast may not go exactly as planned, by combining your budget and sales projections you will have a pretty good idea of what to expect in the future. 

Speed Up the Future with an Accounting Partner

While looking back on your past financials may not be your favorite activity, it is necessary to create the tools you need to drive your business forward. Tools like a detailed budget, broken down sales goals, and a cash flow forecast will set you up for future success.

If you don’t have the time to relive the past and plan for the future, turn to SIMPLY Financials PLUS. We will track your current financials and help build a forward-looking financial system to get your business where you want to be.

What to Expect From an Outsourced Controller

Having a controller is fairly standard for major corporations and large enterprises. But at small and medium-sized businesses? Not so much. 

Understandably, it’s rather uncommon for smaller enterprises to use an outsourced controller, and even more rare to employ an in-house controller. There’s often neither enough work nor sufficient available resources to hire a qualified, full-time expert. 

Since it’s rare for small and medium-sized enterprises to have a controller, you might be wondering how using an outsourced controller can help you, and what you should expect from an outsourced controller?

But first, let’s take a look at what a controller is and what they do. 

What Is a Controller?

Controllers are versatile and often fill a variety of roles within the finance organization. 

Typically, the individual is responsible for all accounting-related activities, including:

• Planning, budgeting, and forecasting

• Accounting systems and internal workflow process design

• Interpretation of financial reports and KPIs

• Reducing fraud through internal controls

• Liaising with bookkeepers, tax preparers, banks, or venture capital financiers

• They might also be involved in payroll and cash planning systems

In addition to reporting to the CFO and overseeing the company’s financial health, the controller might also be responsible for staffing and training other finance department staff. 

Essentially, controllers help keep the finance side of the business running smoothly by ensuring robust systems and supporting the management team to make data-driven decisions. 

Why Should You Hire a Controller?

Modern businesses generate large amounts of data and information. But without someone to analyze that data and distill the key concepts, helpful information goes unnoticed and underutilized. 

Good controllers tend to be experts at sifting through data and can aid a company in implementing robust processes to ensure consistent and accurate reporting. 

Often, controllers are initially brought on board during a crisis or to solve specific problems in the organization. It could be that the company has inadequate financial processes or poor financial record-keeping that needs to be addressed. 

Maybe the issues are more operational in nature and the company is facing insufficient cash flow and needs to figure out where to plug the leaks. 

Issues like these are especially common after companies have gone through rapid growth phases or acquisitions. 

You should expect a controller to help you sort those issues out.

However, while controllers are often brought on to solve problems, they can also be beneficial in less critical situations. If company leadership is considering major structural changes to the business, a controller can help ensure they make the best decision for the business. 

Situations like:

• Taking on investors

• Getting a loan 

• Investing in assets or acquiring other companies

• Or, defining an exit strategy to sell or go public

can also benefit greatly from input from an outsourced (or in-house) controller. Even without the intent to make major structural changes, a controller can help you keep your finances in order year-round.

Should You Outsource, or Hire in-House?

There are a host of good reasons both for and against hiring an outsourced controller. Many companies, especially smaller organizations, tend to prefer an outsourced controller at the outset for a variety of reasons. 

Outsourcing can be beneficial when:

• Attempting to solve a temporary problem. Preparing to raise capital or going through an acquisition are temporary issues best solved by hiring an outsourced controller. 

• Not enough work for one person. Typically, insourcing requires hiring a full-time employee. A smaller business may not have enough work to keep one person busy full time. This wouldn’t be fair to the person or the business to pay full time and only need a fraction of the person’s time and effort. 

• Shorter hiring process and ramp-up phase. Because you’re engaging a service, there’s no need to wait until a controller you would be hiring leaves his or her current job. 

• Can be less expensive. When outsourcing, you’re only paying for the work that’s done. You’re not directly on the hook for the controller’s full-time salary, benefits, and bonuses.

But outsourcing isn’t without drawbacks:

• You may unintentionally hire an inexperienced partner. When engaging an outsourced controller, you place a fair amount of trust that he or she knows what they’re doing. If not, it could lead to negative impacts on your business. You need someone who understands what they’re doing and can provide you with high-quality, timely results. 

• An outsourced controller may be hard to find. Although outsourced and fractional CFOs and controllers are becoming more mainstream, they’re not everywhere yet. Many accounting firms still only offer bookkeeping with a limited amount of advisory services. 

• It’s not a hands-off solution. A good outsourced controller can absolutely provide valuable advice. But you will need to do some of the work. Learn how to use the reports and insights provided by the controller, otherwise, you’re wasting your time and resources.

Partner with SIMPLY Financials PLUS

The point is, good controllers are versatile and can fill a variety of financial roles in your business. 

Hiring a controller doesn’t have to be a major headache. Consider partnering with SIMPLY Financials PLUS and using our Outsourced Controllership-level and CFO-level services to fill any gaps you have in your financial team and gain financial peace of mind.

Why Your Accounting Needs to Be a Priority All Year (not just tax time!)

As a small business owner, you have a lot on your plate so accounting might be something you’d rather deal with when you have to, not throughout the year. 

If this is your approach, tax time is probably very stressful for you. You spend your days sifting through the numbers and questioning why it has to be so difficult, all while wishing you were spending more time checking other things off your to-do list. 

While it doesn’t sound like something you have time for, you can avoid all of this by transitioning to monthly, or even quarterly, accounting. The switch sounds daunting, but in the long run, it will give you peace of mind, help you avoid common problems, improve your business’s performance, and make everything easier when tax time rolls around. 

Peace of Mind

If you are waiting for tax time to focus on your taxes you probably find yourself worrying about getting everything done in a timely manner. It can be overwhelming to gather everything you need and provide accurate numbers. 

Your concern likely leads to much bigger questions like “Am I paying too little in business taxes?”, “Will I have a big tax obligation this year?”, “Is my business financially healthy?” These questions are enough to add additional stress to an already busy tax season. 

However, it’s totally avoidable. There are just a few simple steps you can take to ease your worries about tax time: 

• Get in the right mindset: Your financials are not something to avoid until tax time. Regular maintenance eliminates the worry and puts you in a position to reach your business goals more easily.

• Lay a strong foundation: With the help of technology, you can automate many accounting processes. Aside from regularly inputting the information, you won’t have a whole lot of back-end work because your apps will be doing it for you. 

• Regular financial reporting: With the help of your accounting software, you will be in a position to regularly pull financial reports. Through regular reporting, you can make real-time adjustments while constantly understanding your finances, so there aren’t any surprises during tax time.

• Work with a financial partner: A financial partner helps with each of the aforementioned steps. Working with them will ensure you are not avoiding things until tax time, using the right tools to help you reach your goals, and reporting regularly to keep your finances on track. 

Working with your finances regularly will practically eliminate the troubling tax time questions and give you financial peace of mind.

Avoid Common Problems

There are plenty of issues that may arise within your financials. Once these start to pop up, they can have a significant impact on your business. Here are a few hidden pitfalls that can ruin your accounting: 

• Security issues

• Reconciliation

• Equating cash flow with profit

• Not separating payroll employees and contractors

• Not keeping up with your budget

• Not using a P&L

Each of these causes its own problems within your accounting and if you are only checking them during tax time, the problems only get bigger. 

While these common problems aren’t always entirely avoidable, through regular accounting you can catch them more quickly. It will take a problem that’s been growing for a year and turn it into a problem that’s only been growing for a month. 

Improved Performance

Through regular tracking, you can improve the performance of nearly every area of your accounting. Here are a few examples of the benefits of regular tracking: 

• Keep a tighter budget: By tracking your budget regularly, you can see where you are overspending and make the needed adjustments. This will also help you to see where you may have extra funds and allow you to allocate those towards areas that spark more growth. 

• Stronger cash flow: Keeping an eye on cash flow shows you when there are late invoices in your accounts receivable. These late payments can negatively affect your business, so a regular check will help keep the money flowing in the right direction.

• Accurate forecasting: Your financials are used to create forecasts so the most up-to-date reports will improve their accuracy. These can show opportunities for increased revenue and point out potential problems that may arise. 

Your key reports like budgets, cash flow, and forecasts are improved and become more helpful when you are regularly populating them with accurate information. 

Make it Easier

In addition to peace of mind, fewer problems, and improved performance, prioritizing your accounting all year round makes everything easier. You will get into a habit of continually tracking and improving reports, embracing your technology and accounting tools, and working with a partner (hopefully) to help you stay focused and on track throughout the year, not just during tax time.

If you are in the market for an accounting partner to help you ease your mind and stay on top of your finances, turn to SIMPLY Financials PLUS. We provide simplicity, clarity, and handle the financials, providing you peace of mind and a big picture view of where your business is going.

Clean Up Your Business Accounting: What to Do If The Books are Off Track

As a small business owner, you are most likely handling your books on your own. You also probably know they are not as accurate as they could be. Unfortunately, those books left unattended often lead to larger issues for your business.

Here are some of the signs you need a financial clean up: 

• General ledger errors

• Customer and vendor invoice inconsistencies

• Negative cash or credit balances

• Unauthorized withdrawals

• Missing retained earnings

All of these common mistakes are indicators your business is taking steps in the wrong direction and that it is time to clean up your books. 

In addition to having a smoothly run business, keeping clean books helps you make better decisions, look more desirable to potential investors or partners, and is necessary should your business be audited. 

If you are like many other business owners who know they need some assistance with their books, but don’t know where to start, here are a few tips to get you on the path towards cleaner books. 

Use an Accounting Software, Like QuickBooks

Using accounting software is one of the easiest ways to get your books in order. Software, like QuickBooks, allows you to link accounts together, track expenses, and even send invoices all while keeping your financial data organized and in one place. 

However, using accounting software is just the first step; you also need to be able to understand it. SIMPLY Financials PLUS provides customized accounting and bookkeeping solutions and specializes in helping businesses that use QuickBooks. To help you better understand your software, we also provide QuickBooks training based on your business’s unique needs. 

The training will help you:

• See real-time financials

• Produce meaningful reports

• Maintain accuracy

• Become financially savvy without wasting time

With proper training and a good understanding of how it works, accounting software, like QuickBooks, is incredibly helpful in getting and keeping your books in order. 

Assess Your Problems

One of the most important things you can do to clean up your books is to figure out where the errors are. 

In addition to the aforementioned signs that you might need some accounting assistance, you should also look for things like…

• Late fees

• Unexplained expenses

• Overdue accounts receivables 

...as indicators of a larger problem. 

When you know where your issues lie, you can make timely adjustments to get them right. 

Break Down All Expenses

One of the largest areas to maintain within your books are business expenses. Because there are so many, and purchases are often made by multiple people, there is plenty of room for error. If this is an area of your books needing work, try listing all the items out and figure out why you (or someone else) made the purchase. Then create a list of recurring expenses. This will show you where you are spending money properly, and where you are not.

If a recurring expense is no longer needed, get rid of it. If you are making unnecessary purchases, stop. If there are people spending more than they should, limit access to the accounts. Your breakdown of expenses will show you how to focus your spending. 

Create a Budget

Once you’ve broken down your expenses, you should be able to see where you overspent and what areas may need to be adjusted. If you don’t already have a budget, now is the time to make one. 

A budget is essential in keeping your books in order. It will help you focus your spending, making it more consistent while providing an overview of where you can expect to be spending money during the month/quarter/year.

Reconcile Your Transactions or Accounts Receivable

Accounts receivables can easily be forgotten about if they aren’t paid on time and can cause massive implications to your financials. Things like overdue payments, if not logged properly, will make it look like you have more money than you do. 

Making sure every transaction and invoice is up-to-date will help your books stay in order. If you notice this is an issue, follow up on unpaid invoices and ensure returns are handled correctly (if you are a commerce business). This will give you the bigger picture of how much money you are planning to flow into your business. 

Get Help Cleaning and Maintaining Your Accounting

Clean books help you keep everything in order and allow you to have a better understanding of where your business is heading. However, to fix or avoid issues in your books, you have to be proactive by using accounting software, assessing your problems, breaking down expenses, creating a budget, and reconciling your transactions or accounts receivable. 

All of this comes easier when you work with a trusted accounting and bookkeeping service like SIMPLY Financials PLUS. We will help you learn to use tools like QuickBooks, point out areas you could be improving, and work with you to create a budget that makes sense for your business. 

Contact SIMPLY Financials PLUS to learn more about the services we offer and how we can help you clean up your business’s accounting.

Why Should You Consider Outsourced Accounting?

In the search for cost-savings and efficiency, businesses have begun to look at whether they need to retain their in-house accounting staff. What they’ve found is that there are some significant benefits to working with an experienced financial team--and that choosing to outsource their accounting services could be an important step in the growth of the business.

Outsourced accounting means having the numbers you need to run your business, without having to crunch them yourself. While there is an ease and many pros to working with this type of service, there are a few cons that may make the experience less appealing. 

What is Outsourced Accounting?

Outsourced accounting partners provide financial services and can be thought of as an extension of your team. They help you manage your books and work closely with you to ensure you are making the right financial decisions to propel your business forward.

Partnering with an accounting solution is a proactive approach. Instead of “catching up” on the financial matters, you’re actively keeping things up-to-date. 

Pros and Benefits of Outsourced Accounting

1. More Cost-Effective

A study by Deloitte found that 70% of businesses turned to outsourced accounting as a way to reduce cost. Because hiring an outsourced accountant eliminates the need for an in-house accountant, the cost for the service is often cheaper. You will receive equal benefits of a finance-focused employee without having to pay overhead costs like paid time off, medical benefits, and retirement funds. 

2. A Proactive Approach

Outsourcing your accounting will put you ahead of the game. It alleviates the need to worry about how, when, and who is going to oversee your books. Additionally, they will be able to spot any areas in your cash flow that need adjustments. This allows you to make changes before it’s too late, keeping your business on track. 

3. Improved Accuracy

Hiring an outsourced accounting service typically means hiring a team. Instead of just having one in-house set of eyes reviewing the work, you can be confident your numbers are accurate because a team will be reviewing and looking them over. This keeps you involved in the process and reduces the amount of time spent on accounting—all while improving confidence in your finances.

4. Better for Growth and Positive Change

Oftentimes, in-house accountants focus on the current numbers. While this is necessary, it leads to placing the future of the business’s financials on the back-burner. With outsourced accounting, the team providing you services will place focus on all areas of the business, including laying the groundwork for a strong future. 

Potential Cons of Outsourced Accounting

While the benefits of an outsourced accounting partner are compelling, it is important to realize you may run into a few cons. There is a chance you could work with an inexperienced partner, which could lead to hiccups and other problems, not to mention failing to fully utilize the service. 

1. Working with an Inexperienced Partner

When choosing an outsourcing accounting partner, it is important to find the right fit. Unfortunately, you may run into an inexperienced partner, which could have an impact on your business. You should aim to find a partner who understands the services you need and can provide you with timely and quality work. 

2. A Solution that Only Offers Bookkeeping

Oftentimes outsourced accounting firms will provide limited services. Bookkeeping is universal (for the most part) but financial planning and explaining/mining value from your reports are services that are often not provided. However, they are essential for growth. Without these services, there will come a time when your business is no longer benefiting from just the bookkeeping service. 

3. Not Working with your Accounting Partner 

A proper accounting partner will be able to provide you with all of the information you need to ensure your business is successful. However, if you are not utilizing the information they provide and reaping the benefits of their services, you will be missing out. Providing them with the information they request and leaving them to do the rest will only get you so far. It is important to use the reports they create, learn from them, and consequently grow your business. 

Partner with SIMPLY Financials PLUS

Working with an outsourced accounting partner isn’t always easy. However, when you properly work with an experienced accounting partner you will find that it is more cost-effective, improves the accuracy of your books, and promotes positive growth and change. 

If you are looking to reap the benefits of an outsourced accountant, consider working with SIMPLY Financials PLUS. We focus on getting you from where you are now to where you want to be by providing services like accounting systems and internal workflow process design, planning and budgeting, cash flow needs and forecasting, short-and long-term financial strategies, and more. 

Visit https://www.simplyfinancialsplus.com/controllership-services for more information!

The Business Owner's Complete Guide to Financial Peace of Mind

Simple is a word not often associated with business financials. Instead, accounting typically brings to mind frustration, confusion, and worry about potential tax problems.

At SIMPLY Financials PLUS, Simply is right there in our name and our purpose is simple: To change the accounting experience for our entrepreneurial clients.

We want to provide you with the peace of mind that comes from a combination of three things: 

1. Having complete confidence in your compliance, and meeting tax obligations

2. Having a high-level view of your business and profitability

3. Having better control of the time and effort you put into your business finances

Does this seem impossible? That’s because too often we are intimidated by accounting and by putting it off we are fighting an uphill battle.

In this guide, our goal is to lay out what a simplified financial system looks like. With this guide, you’ll have the fundamentals in place to have confidence in your numbers - which will translate into confidence in your business.

Let’s get started.

The ROI of Financial Peace of Mind

As a business owner, you most likely have an endless to-do list. You need to make sure the day-to-day operations are working as they should be, you need to look after your team, and you need to make sure you make the right decisions so your business keeps on moving in the right direction. It's a lot of work. 

The last thing you need is to spend your precious mental bandwidth worrying about your business's finances. This guide will help you make sure that you have all the systems in place. Financial peace of mind means avoiding common accounting pitfalls and knowing everything (regarding your business’s financial health) is in order. 

It all starts with the right mindset

Unless you come from a solid financial background, most business owners have a hard time managing the financial aspect of their business. They love getting work done, but looking at financial reports and spending time on financial planning will often be relegated to a lower priority. 

In other words, you may feel as if spending time looking at your finances takes time away from the actual work that needs to get done. 

This feeling toward your finances is understandable. For many business owners, this is the first time in their careers that they have to deal with accounting and financial data. But if you are to make a lasting change towards long-term financial security, shifting your mindset will be necessary.  

Here are two tips to help you change your mindset about your business’s financials. 

1. Tie your business goals to your financial milestones: The best way to stop seeing your financials as something that’s taking away your time is to tie them with your business goals. What happens to many business owners is that from an operational standpoint, everything is moving forward and progress is being made. But unfortunately, the financial statements don’t reflect the same results. Tying business and financial goals together helps you ensure both aspects of your business go hand in hand. 

2. Get your team involved: Every aspect of your business affects financial performance. The better your customer service team helps customers, the longer they’ll remain with your business. The more accurate your inventory, the better the bottom line. The marketing and sales crew obviously directly add to sales. Connect each aspect to the company’s financial success.

Make sure you have the proper foundation

Today you’ll find dozens of accounting and financial apps that can help you make managing your accounting significantly more accessible and more efficient. If you’ve managed your own business finances, this means no more staring into a spreadsheet for hours on end. 

Plus, there are a number of useful software tools. Some apps help you take care of your books, payroll, or inventory. Just about any aspect of your business that you can think of, there’s a solution making it easier. 

Accounting Software for Reconciliation

At the foundational level of your financial peace of mind is the bank reconciliations. This is made possible now with software like QuickBooks to connect an accounting system to your bank and credit card transactions.

There are a few key pieces to reconciliations that will set you up for success: 

1. Chart of Accounts

Reconciling your transactions involves categorizing everything that happens in your business. In order for those transactions to have meaning, it’s important you have the categories set up properly to begin with. This is your chart of accounts.

This is important, because an e-commerce business is going to have an entirely different chart of accounts than a manufacturing business. Having a professional help with your chart of accounts will make everything else flow more naturally.

2. Consistency

Once you have the right software and chart of accounts, you have to have the discipline (or help from someone) to stay on top of your reconciling.

When the transactions pile up, and you start to fall behind, it can become very challenging to play catch up.

3. Sync with your Bank

With QuickBooks, you can import or sync your bank and credit card transactions to make the process of categorizing much simpler. You should be able to see the flow of money, and do reporting without dealing with a ton of spreadsheets.

Payroll Software

Just like in bookkeeping, your payroll becomes much more efficient with the proper tools. QuickBooks again helps in payroll, because it does more than just pay your employees. 

With QuickBooks’ payroll you can also: 

Sync with your accounting: This means you don’t have to repeat work, and can have confidence your payroll information is consistent with your accounting

Deduct taxes and benefits: Building in your taxes and benefits in your payroll system allows you to have confidence in your compliance. A professional accounting firm like SFP can help with this.

Payroll again is a big part of the business financial picture and can cause a lot of anxiety. By getting the right setup in place, with the right tools, you can approach it with confidence.

Get your financial reporting in order

Since you now have your accounting software up and running, you can take advantage of the other great benefit of using financial apps. That benefit is reporting. 

Getting your financial reports with a few clicks is one of the best things you can do for your business. These reports will help you make informed financial decisions with real-time data. This way, you can have confidence that you won’t come across any surprises. 

Additionally, many accounting suites have the option to generate reports in real-time with graphic interfaces that make it significantly easier to understand and analyze compared to seeing everything on a spreadsheet. 

Here are some of the main reports you should generate consistently.  

• Financial forecasts: No one can predict the future, but you can prepare for it. Economic forecasts use your past data so that you can build models based on different outcomes. This way, you can have a plan in place for whatever results you get. The general idea is to create several forecasts ranging from worst-case to best-case scenarios. This way, you'll be covered and won’t have to improvise. 

• Cash flow statement: It’s said that cash flow is the best indicator of a business’s health. So if you want to quickly know if everything is okay without going into all your reports, then focusing on your cash flow statement is a good option. One of the main benefits is that if you have your bank accounts integrated with your accounting software, this report can be generated automatically. 

• Budget vs. actual: This report gives you a clear idea of how you’re doing versus your projected budget. This allows you to know if you’re on track with your spending versus your revenue generation, and allows you to meet your forecasted goals. This can help you detect areas that are under budget, which might be hindering your growth. Or, on the flip side, it can help you see if you are over budget so that you can make the necessary adjustments.

• KPI Tracking: This will depend heavily on your business model, but keeping a close eye on all the KPIs that directly affect your cash flow is a good practice. Customer acquisition cost, average order value, and lifetime value are some of the metrics that can help indicate that everything is going to plan.  

Find the right financial partner for your business

The last piece of the puzzle is finding the right financial partner for your business. Having a team that can help you with oversight, accountability, and being a second set of eyes to see the big picture, can give you the peace of mind that you need to focus on growing your business. 

The right partner will simplify your financials and communicate them back to you in a way that makes sense. You won’t have to worry about a big surprise at tax time, problems with payroll, and can even help you create your growth plan. 

Here are 3 aspects to keep in mind when looking for a financial partner. 

1. They have industry knowledge: A financial partner does much more than just keep your books or pay your taxes. They’re a strategic ally that can give you the insight you need to make the decisions that’ll bring you closer to your goals. As such, they need to take the time to understand your business and the competitive landscape of your industry. 

2. They provide the support you need: Besides having the required competence, a good financial partner gives you on-time reporting and services. A great deal of financial peace comes from quality data, delivered when you expect it. 

3. They want to work with you: This refers to their disposition to build a genuine long-term relationship with your business. This commitment makes the difference between just having someone help you with your accounting versus a team committed to helping you grow your business.  

Partner with SIMPLY Financials PLUS

Keeping track of your financials doesn't have to be time-consuming or stressful. If you have the suitable systems in place, you’ll find that having the peace of mind that your business’s finances are in order is easier than you thought. 

SIMPLY Financials PLUS can be the financial partner for your business. We work to understand your business, integrate all the right tools, and deliver the right reporting so you make data-backed decisions in your company.

Take a look at our services, or get in touch with us to see exactly how we can help you find financial peace of mind.

How to Make Business Accounting Easier: 4 Best Practices

Small business owners often manage their finances in the early stages. (According to one study, about 45% of owners do their own accounting.) But as things grow, it’s more and more difficult to keep a handle on financial matters. 

To keep the books clean and the company on track, you’ll need to make the accounting process easier. To help, here are four actionable ways to make the process easier and even make accounting more of an asset—instead of a chore.

1. Track and Improve Cash Flow

Much of what makes accounting seem difficult is tracking too many things that don’t drive business performance. If you’re keeping tabs of the right metrics, accounting helps you make decisions based on sound financial data.

One of the most important metrics a business can track? Cash flow. 

Cash flow measures what comes in (i.e. revenue, accounts receivable) and what goes out (i.e. material, labor, etc.) in a given time period (i.e. monthly, quarterly). 

How Tracking and Improving Cash Flow Makes Accounting Easier

• Easier to spot issues: If your company is growing at 10% per quarter, but cash flow remains the same or goes down, there’s a problem. By tracking the cash flow, you’ll be alerted to issues early, before they become a major accounting problem. 

• Gets you excited: Cash flow is something that many business owners love. You’re profitable, you can work to improve the positive cash, and seeing this number doesn’t seem like a chore.

• Make better decisions: If you don’t have great cash flow, should you increase prices? Focus on accounts receivable? Or if cash flow is great, should you spend a bit more on marketing? Or getting new equipment? Tracking cash flow empowers you to make informed decisions for the business.

2. Embrace Digital Finance

So many businesses pull out a lined notebook, or open up an excel spreadsheet each quarter to figure out their finances. This is even with many of those businesses already paying for software that has the ability to show you everything you need—in real time.

If you’re taking pen to paper, or trying to do formulas in a spreadsheet, think about embracing the current digital era and get connected with accounting software tools and apps.

How Embracing Digital Makes Accounting Easier

• Automation: Your accounts, spending, invoices, etc. are all in a single place and updated regularly. All you have to do is log into that one software and see where things are at.

• Reporting options: Using that automated data, a number of reports are readily available in an accounting software. Easier access means you’ll get a better snapshot of financial performance. 

• Obvious time savings: No spreadsheets, manual data entry, or forgetting to write something down.

3. Get to Know Your Accounting Tools

A large number of small businesses use QuickBooks. Maybe you use it, or one very similar to QuickBooks. Accounting software is a lot like chess, pretty easy to get started quickly, but it takes a long time to master everything.

Learning how to use your financial tools is immensely valuable.

How Improving Your QuickBooks Skill Makes Accounting Easier

You may be thinking, “It takes time to learn that stuff.” And you’re right. However, there are exponential returns for your time. Spending a few as a couple of hours learning often significantly reduces the amount of time you spend generating reports, manually entering data, or verifying all of your expenses. 

Plus, learning all of the features available helps you to either:

• Automate tasks you’re currently doing manually

• Understand how to perform certain tasks faster than before using best practices

4. Work with an Accounting Solution Tailored to Your Needs

Ok, so nearly half of businesses do their own accounting. That means the other half do use either an accountant, CPA, or an accounting firm. Partnering with a financial expert that understands small business is a bit like a not-so-secret weapon. Not to mention, it’s perhaps the biggest time-saving measure on the list, because you don’t have to tabulate anything after employing the services of an accounting solution. 

You give access to a bookkeeper, and they’ll: 

• Track key business metrics

• Keep your books clean

• And send you reports, keeping you up-to-date 

How SIMPLY Financials PLUS Makes Accounting Easier 

At SIMPLY Financials PLUS we offer just about anything to help small businesses, like yours. From basic bookkeeping services, to more advanced help with things like cash flow, and accounting system setup. 

We even offer training and consulting services to help you master QuickBooks. If you’re ready to make accounting much easier, contact us today.

7 Hidden Pitfalls that Can Ruin Your Accounting

It’s no secret mastering your accounting is a key component to your business’s success. There are plenty of numbers being used in various ways, and all are equally important. However, these numbers and measures carry a lot of weight, and if a mistake is made it can largely affect your business. 

The problem is, you may not even know you are making a mistake in your accounting. Some of these pitfalls are so hidden that you have to intentionally and actively avoid them. To help you know what to look for, we’ve compiled a list of seven hidden pitfalls that can ruin your accounting. 

Security Issues

QuickBooks Online is an important tool for many businesses. However, if you don't have the proper security measures in place, you’re running the risk of a breach and potential backup problems. 

QuickBooks Online assumes their clients will be operating under the Shared Responsibility Model which is explained in the graphic below: 

Source

The model shows that while QuickBooks Online does provide some platform infrastructure and security, the user is responsible for company and client data security. To help clients better combat this issue, Simply Financials has teamed up with Rewind. Rewind protects principally against operator error, sabotage, and information imported into QuickBooks Online software that ends up being wrong. Because there is no ability within QuickBooks Online to do a backup as you can with QuickBooks Desktop, Rewind offers the solution. 

Reconciliation

Proper reconciliation sounds like a no-brainer, but a mistake in this area can cause major issues to your business in the long run. Reconciling your account simply means making sure the numbers in your bank account are reflective of the numbers on your general ledger. When these two things don’t match up, it can lead to wrongful charges, missed payments, and unaligned books. 

As a side note, you should also be careful to assume bank statements are correct. Keeping track on your own and comparing that to what the bank says, is the best way to ensure your records are aligned and you don’t hit any of the roadblocks that come with a lack of reconciliation. 

Equating cash flow with profit

As a business owner, one of the most important aspects of analyzing your finances is knowing how much money you have. To find this number, people typically turn to their cash flow or their profit. However, a common mistake is often made when business owners begin to view cash flow and profit as the same or similar. 

While the outcome of these reports sound similar, they tell two different stories. Cash flow shows the money that is flowing in and out of your business during a given time frame. A positive cash flow is an indication of more money coming in than the cost of your expenses. Profit is the money left over after all expenses are paid. One is more fluid and shows growth or decline over time, while the latter is more firm.

It is important to remember that just because your cash flow is positive, there could be long-term expenses or other factors not being taken into account. It’s also possible to have a negative cash flow but a positive profit. Both of these are reasons why it is not ideal to equate cash flow and profit. 

Not separating payroll employees and contractors

It is easy to place the people who are working for you into one category. While you may consider both payroll employees and contractors as employees, the IRS views them as two different types of workers. 

Typically contractors are outsourced, meaning you do not have to withhold taxes or provide benefits to contractors like you would for employees. This is an appeal for many business owners. However, if you take this route, be sure you separate the contractors from your payroll employees to keep your costs in order. Clumping them can lead to tax issues and negatively affect your cash flow. There is also a possibility of fines if payroll employees and contractors are not properly identified.

Not keeping up with your budget

Your budget is incredibly useful for planning and ensuring your business is on track. Carefully following and keeping up with your budget can prevent you from overspending, can help you track progress in multiple areas of your business, and can act as a guide to help you make needed financial adjustments. 

With so many benefits, it is shocking how many businesses don’t rely on their budget more than they do. Simply reviewing your budget each month, or at least each quarter can prevent overspending, misuse of funds, and show you areas where you under/over-budgeted.

Not using a P&L

A P&L is a snapshot of your revenue and expenses during a set period. They are an excellent way to compare previous time frames to determine growth or decline in your business. 

Here are a few ways you can mine value from your P&L:

Go beyond monthly or quarterly check-ins

• As mentioned above, P&L’s are great for comparing numbers for certain time frames. While businesses typically look at monthly and quarterly numbers, P&L’s can be made for an entire year or for a particular time frame. For example, the time since an employee started compared to the time they weren’t with your business can show you the scope of your employee’s impact.

Identify your fixed and variable costs

• Fixed costs occur every month and variable costs are inconsistent and always changing. You can use your P&L to show you where your costs are. If you’re hoping to lower costs, this will provide a great overview as to where you may be able to trim down.

Understand the different types of profitability

• Net profit, gross profit, and operating profit all provide different ways of measuring your bottom line. Each shows you where certain areas of your business can improve. All of the numbers needed for the different types of profitability are found in the P&L.

Start thinking about opportunity cost

• Your P&L gives you everything you need to decide if the money you’re spending is giving you the most bang for your buck. Once you’ve found the places you can cut spending, you’re then able to begin finding other places to use that money.

Important: Not using your P&L in the ways listed above can lead to a misuse of funds and less awareness of ways you can improve spending.

Not working with an accountant

Working with an accountant is the best way to ensure you are not making any of these common mistakes. They will be able to explain what steps you need to take to correct any flaws in your accounting as well as explain how you can avoid these issues in the future. 

If you are searching for an accountant to help you avoid the hidden pitfalls that can ruin your business, turn to Simply Financials. We provided customized accounting and bookkeeping solutions for your business.

How to Mine Value from P&L

When looking at a profit and loss statement, it’s tempting to jump right to the end to see the bottom line. After all, business owners want to see they’re receiving more money than they’re spending.

But every line of a profit and loss statement contributes to the overall story of your business. By taking a deeper look, you might see some detail you missed as it was happening. These insights can inspire real changes to increase profitability and tap into that next level of growth.

Here are our tips to maximize the value from your profit and loss statement.

Go Beyond Monthly or Quarterly Check-ins

A profit and loss statement (or P&L) is a summary of your revenues and expenses over a period of time. Commonly, business owners will look at P&L’s for individual months, quarters, or years. But business doesn’t always comply with a set schedule. So why limit yourself to just the usual periods of time when looking at your finances?

Maybe you want to measure the impact of a new employee or a newly released product. You can understand how these adjustments impacted your business by taking the time to generate a P&L. 

When experimenting with how to grow and develop your business, consider your P&L a barometer of the financial success of your initiatives. These crucial financial statements provide you with all the information you need to understand how your business changed from a dollar and cents perspective.

Identify Your Fixed and Variable Costs

If you’re looking to increase profitability, you’re going to look at cutting costs. Looking through all of the expense types for something to trim can be dizzying. But understanding these expense types as fixed and variable costs can help you make a decision.

Fixed costs are the costs that you face every month regardless of how much or little business you conduct. Some examples of this are rent and salaried employees: it doesn’t matter how many sales you made, these costs are going to be the same. If you’re building out a budget for the new year, make sure you have the cash flow to cover these fixed costs.

Variable costs change with how much business is being done. Some examples of this are commissions and cost of goods sold: the more you sell, the higher these costs are going to be.

If you’re a newer business, start by looking to reduce fixed costs where possible. This will ensure you’re keeping your costs down as you find a balance in the amount of sales you’re making. But more established businesses with a higher volume of sales may want to look to variable costs first. 

Pick out some expenses from your P&L and identify them as fixed or variable costs. Then, the next time you’re thinking of cost cutting, you’ll have a starting point of where to look.

Understand the Different Types of Profitability

There are three main measures of profitability you should know.

Net Profit

Net profit (aka “the bottom line”) shows a business’s profitability after every revenue and expense is taken into account. Consider this the full picture of your business, since it captures all business activity. It’s the perfect number to refer to to see how much your business is making at the end of the day.

Gross Profit

Gross profit looks at two numbers: 

• Sales revenue

• Cost of goods sold (COGS)

You find your gross profit by subtracting your cost of goods sold from your sales revenue. This shows you how much money your business made on sales before you had any operating expenses like rent and utilities. Keeping a pulse on gross profit is important so you know how much money your business is generating to put towards those recurring operational costs.

Operating Profit

Operating profit is very similar to net profit except you exclude two costs from your calculation: interest expenses and taxes. While it may not seem like a big difference, there is still value to take from comparing your operating profit to your net profit. 

Example: If you have a negative net profit but a positive operating profit, it’s time to start budgeting more for taxes. Or maybe look to refinance your debt to reduce your interest costs.

Start Thinking About Opportunity Cost

Opportunity cost can be simplified as every dollar you spend on something can’t be spent on something else. That is to say, the real cost of spending a dollar is the opportunity of spending it elsewhere.

If you need to spend more money to grow your business, or gain new efficiencies, you can either earn more or spend less elsewhere. 

Look at your costs that are the easiest to change first. These costs will be the ones that aren’t essential to your business. A great example is any monthly subscription you’re not using. How often these days do we sign up for software solutions, then stop using it while continuing to be charged each month? These little monthly fees add up.

Thinking about opportunity cost will help you make decisions going forward. The next time you’re considering what to spend money on, frame it up as a sacrifice of all the other things that money can buy you. Maybe the return on a new office chair just isn’t worth it when compared to something like hiring a contractor to optimize your website.

Have Candid Conversations with an Expert

Staring at a P&L hoping to find some kind of answer or meaning will do you more harm than good. Instead, work with a trusted professional who can interpret the numbers and provide insights. A second set of eyes can make a major difference in the overall understanding of your business.

Even when business is booming, it’s important to be vulnerable and open about any concerns you might have, before thinking about them keeps you up at night. Plus these people will be supportive no matter what, there’s no question or concern you want to discuss they won’t want to help with.

If you’re thinking of bringing on professional help, outsourced controllership and CFO’s can help bridge the gap between where you are and where you’d like to be. 

These types of specialists can draw from years of experience working with other businesses to identify potential growth and cost cutting opportunities you might not be able to recognize. They can even boost your financial mastery by introducing forecasting, providing you with a picture of where your business is headed. Learn more about how you can start getting the expert advice you need by booking with complimentary consultation today.

5 Forces of Business Cash Flow

Every entrepreneur daydreams about growing their cash flow. It’s one of (if not the) most important stat lines when measuring a successful business. You want to see it go up, up, up!

On the surface it sounds easy, just make more money than you spend! But in reality, there are many forces that can drive cash flow (in the right and wrong direction). It is important to focus on these driving factors to improve the success of your business.

Which forces drive cash flow?

There are five main forces that directly impact the growth of your cash flow when properly managed: 

1. Tracking and Accountability

2. Accounts Receivable

3. Budget Variance

4. Vendor and Partner Terms

5. Product/Service Pricing

Each of these requires a lot of attention. However, with proper execution, you will see a huge amount of growth in no time. 

1. Tracking the Right Financial Elements

Tracking is potentially the most important force that drives cash flow. 

No matter how hard you work, the key is making sure the data points to the results you want. By tracking what’s happening, you give yourself a scorecard to help achieve your goals. This scorecard, creates accountability to keep you on track.
Because there are multiple facets that affect cash flow, having them organized in a way that is easy to read and shows the most significant measures for your business, will improve the way you analyze your metrics. When you have meaningful reporting, you can track how well those metrics are performing and make adjustments with the goal of improving cash flow in mind. 

Not only can you make these adjustments with real-time numbers to employ immediate changes, but you can also use historical numbers and create a plan to improve long-term cash flow as well. Budgeting based on historic metrics and cash flow results will play a huge role in the growth of your business. Be sure to properly track cash flow so you can not only maximize the growth of your business, but also the success.

2. Accounts Receivable 

Accounts receivable can play a tricky game with your cash flow reports. Because your cash flow is reflective of the amount of money coming in and accounts receivable is more of an “IOU”, a high number in the accounts receivable column can negatively affect your cash flow, making it look like you have more money than you really do. This causes problems when analyzing other metrics (like your budget) and leaves your business searching to figure out what your incoming funds really are. 
The good news is, this is avoidable for the most part. It is important to:

• Collect payments on time

• Track exactly how much you are owed

• Be aware of what’s past due

The longer a payment goes unpaid, the less likely you are to receive it, so staying on top of this is important.

When you put these into practice, your accounts receivable will be lower, which will increase your cash flow. A lower accounts receivable will give you a much better estimation of what you actually have, as opposed to what you will have. 

3. Budget Variance

Budget variance compares your predicted budget to what you actually spent. It is a helpful tool when analyzing where you made a mistake and why. Because it focuses largely on expenses, using a budget variance will point you towards where you are spending more money than you should be. 

The idea is that you will use your findings from your budget variance analysis and make adjustments to your budget to ensure a more steady cash flow. You can picture these adjustments as a plug to the holes that are draining your cash flow. Once the holes are plugged, your cash flow will continue to rise.

4. Vendor and Partner Terms

Every business goes into a contract with a vendor, a partner, or both. These contracts could be for anything from raw materials, cost of goods sold, or hosting/server space. While these contracts are essential for your business, they can also cost a pretty penny. 

To optimize your cash flow, be sure you are keeping up with these contracts. Make sure you know the terms and are timely with your payments. Falling behind will affect your budget and your cash flow. If at all possible, negotiate your terms. You always want to be getting the best deal for your business and sometimes the easiest way to do that is to ask.

5. Product/Service Pricing

It’s no secret the sales of your product or service are what drives revenue. A positive cash flow is reliant on your revenue exceeding your expenses. This means it is imperative to set the right prices.

You should develop prices based on what works based for your business and your revenue goals. Some examples of different ways to base your pricing include:

1. Product-based pricing: Product-based pricing is setting your price to reflect what you believe the product is worth. It can be risky and requires confidence in your product.

2. Cost-plus pricing: Cost-plus pricing is using the cost of the product, adding what you’d like to make as a profit, and selling it for that price. 

3. Value-based pricing: Value-based pricing relies heavily on what the customer is willing to pay. 

4. Competition-based pricing: Competition-based pricing uses your competitor’s rates to set your price.

If you’ve set your prices correctly, you should have a positive cash flow. 

However, if your expenses are in check and accounts receivable are up-to-date, cash flow problems could extend from underpricing, marketing or sales. If this is the case, you need to reevaluate the way you price your products/services. 

Partner with an Experienced Accounting Service

Having a trusted partner is one of the easiest ways to build cash flow in your business. An experienced accounting service will walk you through everything listed above; tracking essential metrics, managing accounts receivable, analyzing budget variance, understanding your vendor and partner terms, and even assisting in setting the right prices for your product/service. 

With all of these driving forces in place, and with experts backing you up, you will soon start to see a growing cash flow. One last bit of advice: don’t wait. Start implementing the steps it takes to build your cash flow now, so you don’t have to look back and wonder what you could’ve done better.

If you are looking for an experienced accounting service, Simply Financials Plus offers everything you need to track, improve, and build your cash flow!

20/20: Seeing & Setting A Clear Budget in The New Year

If you are not going through an annual exercise to create a budget for your business, you may not be seeing the full picture of your business.

While most business owners wait until the 4th quarter of the business’ fiscal year to create their budget, doing so can cost your business greatly…

Creating a budget in the early months gives you a springboard into the upcoming year. It helps you plan for what you want your business to achieve in the upcoming year.  Once you have a budget in place, you can then use it throughout the year to compare expected performance with actual results, identify any variances, and take action. Budgeting allows you to maintain control of your business and make timely adjustments in your processes or spending.

Since the budget includes details about the company’s revenue and expenses, start by looking at your company’s historical information and consider the following:

• Revenue or income streams:

  • Will there be any changes this year? Are you planning any price increases?  Increasing or discontinuing certain product lines or services?
     
     It is a good exercise to look at a financial report showing revenue by month to identify seasonal trends in your business. This will ultimately help with cash flow timing.

• Expenses:

  • Identify fixed costs that don’t vary month to month based on sales or revenue.  Make sure your business’ cash flow can support these fixed costs.

  • Look at variable expenses that can be scaled up or down depending on the state of the business and the sales that are coming in.

• Staffing needs:

  • Put together a thoughtful staffing plan that matches your budget so you won’t get caught in an unexpected situation.
     
     Make sure you identify the staffing needed for the level for which you are budgeting.  Paying people that you cannot keep busy or overworking your existing staff can create issues down the line. 

• One-time items:

  • Whether it is a non-recurring revenue item or expenditure, be sure to build these costs into your budget.

• Cushion for unexpected items:

  • What happens if your computer infrastructure or laptop crashes? Will you still be able to run your business?  Do you have funds in reserve to handle unexpected events?
     
    All budgets should have a reserve for unexpected events and changes. 

Creating a monthly budget may feel like a hassle, but it is essential to making conscientious financial decisions so your business can stay on track and grow.

Each New Year presents us the opportunity to hit the restart button. Be sure your New Year refresh helps you see your business clearly and have your most successful year yet!

We can show you how to create a budget in QuickBooks and view financial reports that will allow you to review actual versus expected results throughout the year.

How to Stay Connected to Your Finances… Remotely

Staying in control of your business and finances even when you are not onsite is important to business owners. The summer is a time when you especially want to be able to take time off and not be at your desk 24-7. In order to do this as a business owner, you need to be able to stay on the pulse of your cash flow and other financial accounting information for your business.

If you are using an accounting tool like QuickBooks to run your business what are your options?

Depending on your accounting needs for your business you may be using either a Desktop or Online version of QuickBooks.

Accessing your QuickBooks files remotely- QuickBooks Online

Since QuickBooks Online (QBO) is a cloud-based program, users can access their QuickBooks files from anywhere they have internet access.  It doesn’t matter whether you are using a MAC or PC.  What is better and easier than that? No access to your MAC or PC?  Downloading QuickBooks mobile app will enable you to be able to do some of your most important QuickBooks activities like create, view and email estimates, invoices and sales receipts; access customer information, convert estimates to invoices, receive payments, track expenses and download and reconcile bank transactions from your phone.  While the QBO mobile app works with iPhone, iPad and Android phones and tablets be aware not all features are available.  The best part is the app is included with your QBO subscription so there is no additional cost.

You say that sounds great but for my business I need to use the QuickBooks Desktop software, what can I do to be able to have remote access?

Remote access is also available for Desktop users via use of authorized hosting of QuickBooks Desktop software on third- party servers.

Accessing your QuickBooks files remotely- QuickBooks Desktop

QuickBooks Desktop installed on the server of hosting providers can be accessed via the cloud also.  The difference from QBO is you are logging into the server of the provider to access your QuickBooks software.  Using a hosted solution for your QuickBooks Desktop software allows the user to have full access to all the features of the desktop software and even supports cross device operation with a PC, MAC, smartphone and others.

Since QuickBooks Online and QuickBooks Desktop can be accessed remotely, you have the freedom to be away from your office and to keep on top of pulse of your financial information and business needs.  While user experiences are different, depending on which version you are using as noted above, either software will allow you to be able to work when you want and where you want.

Is Your QuickBooks Due for an Upgrade?

What’s in an Upgrade?  Do you need to plan for an upgrade with your QuickBooks Pro/Premier or Enterprise software?

We encounter this question time and time again.

If my QuickBooks Desktop Software is working, why would I upgrade?  Frequently businesses would purchase a version of QuickBooks Desktop Software and would stay on it for years, if not forever, if it wasn’t “broken”, and only consider upgrading to the latest version if they liked the newest features being offered.

There are several reasons a business should review their QuickBooks software regularly and decide when an upgrade is needed.

• Older versions have a hard time keeping up on new computers being purchased by the business.

As technology is constantly changing, many have found that the older versions can’t keep up, especially with the new operating systems.

• Intuit stopped supporting the version that you have

QuickBooks desktop versions are supported by Intuit for three years.

Every year on May 31st, Intuit “sunsets” which means retires and no longer supports the oldest version three years prior to the current version.  This means as of May 31st, 2019, Intuit will sunset the 2016 version of QuickBooks Pro, Premier (General Business, Contractor, Manufacturing & Wholesale, Nonprofit, Professional Services and Retail), Enterprise Solutions*, Mac, Accountant Edition and Point of Sale.

*will have access until expiration of your Full-Service Plan.

• Live Support services Customer support will no longer be available.

• Add-on services QuickBooks desktop versions have several add-ons features available that like the support services will not be available after May 31st. Add-on features are those that integrate with the software.

  • Online banking

  • Multi-currency features

  • Online backup service

  • The Accountant’s Copy File Transfer (ACFT) service

  • Critical security updates

  • QuickBooks Desktop payroll services

  • QuickBooks payments services such as credit card and check (ACH) processing

  • Bill Pay

• Your business may have outgrown the current version of QuickBooks

As a business grows, so does its accounting software needs.  It may be time to upgrade from QuickBooks Pro or Premier to Enterprise

• System becomes sluggish and has performance issues- may mean the current version can no longer support the amount of data that is being processed

• Need to further limit user permissions- additional internal controls needed

• Limitation on user access- have more than 5 users

• Advanced reporting needs- typically for business that maintain inventory

Whether it’s time to upgrade your existing QuickBooks Desktop software to the latest version or make a change in versions being used, we can help you evaluate based on your current accounting needs and expected future growth for your business.