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In today’s fast-paced business environment, establishing and maintaining best accounting practices is an integral part of your organization to ensure solid financial data is kept. Doeren Mayhew’s business advisors share these tips to help maximize efficiencies and cash flow:
1. Cash Management – Cash is key to effectively managing an organization and positioning it for growth. Consider the following to help manage your cash:
2. Accounts Receivable – Measure your accounts receivable performance and identify areas for improvement by establishing a monitoring key performance indicator (KPI). There are some ideas you can immediately implement to streamline your accounts receivables, such as establishing payment protocols for large orders or overseas customers, using an efficient delivery method to send invoices and ensure prompt payment, reviewing the KPI with key personnel regularly (preferably on a weekly basis), adhering to a thorough collections policy and documenting payment history for each of your clients.
3. Inventory – Consider establishing procurement and sourcing practices to ensure proper inventory levels are maintained. Key inventory procedures should include:
4. Fixed Assets – Your fixed assets represent an integral part of your operation, so consider the following to help ensure they are maintained effectively:
5. Accounts Payable – An efficient accounts payable system ensures vendors are paid in a timely manner and also frees up working capital for the organization. To streamline your accounts payable process:
6. Bill and Pay – As your organization grows, the ability to track payments and invoices may become more challenging and can affect your bottom line. To help mitigate these issues, incorporate a bill-paying approval process that requires a manager approval, plus the date, account coded to and invoice/bill amount. If using company credit cards, create separate expense reports for charges on company credit cards versus reimbursable expenses, set credit card limits and get them all on one monthly statement.
7. Notes Payable – To streamline this process, consider providing the person who posts the payment with an amortization schedule, analyzing agreements to understand covenants and tracking them regularly, and preparing borrowing base reports in advance.
8. Accruals – To close early, estimate accrual by using last payroll of prior month. Consider adjusting your pay cycles to limit the need for an accrual (i.e., ending on last day of month). For all accruals, use reversing entries if your system has them.
9. Month-End – Consider the following to help make this routine process more efficient for your organization:
Our robust Business Advisory Group works with a variety of clients to help maximize efficiencies within their organization. For assistance implementing some of these best practices, contact Doeren Mayhew’s business advisors today.
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