In today’s fast-paced business environment, efficiently managing your financial operations is critical for success. As many growing businesses struggle to keep up with the complexities of in-house accounting, our outsourced accounting pros make it possible to position your business for increased growth in the new year. 

Here are some key monthly accounting practices that businesses should implement during the scaling process:

Leverage Technology to Streamline Accounting Systems

Technology is at the forefront of scalable finance practices. It can enhance your accounting systems by automating processes, improving accuracy and providing real-time data. 

In industries like construction, hospitality and healthcare, having a front-end system that integrates smoothly with the accounting system is vital.

Whether you’re in the restaurant industry using a point-of-sale (POS) system to track sales and inventory or a construction company using a project management tool, these systems can tie into your accounting system providing essential data. 

When it comes to automating your accounting practices, this can be an invaluable ticket to saving time and money. From accounts payable to expense reporting, today we have the technology to ensure you are taking advantage of early payment discounts, catching unpaid invoices and much more without the need for a watchful eye. 

The use and integration of these key systems eliminates the need for double data entry, reduces the risk of errors and improves the accuracy of financial data, enabling better financial insights.

Building Your Cash Reserve

One of the most critical aspects of maintaining a healthy business positioned for growth, is having a robust cash reserve. Whether you’re a small startup or an established enterprise, having funds available for unexpected expenses or investment opportunities is essential. 

On average, businesses should maintain a cash reserve equal to 10% to 30% of their rolling 12-month revenue or three-to-six months of operating expenses. This reserve ensures your business has the financial cushion to weather periods of slow revenue and economic dips or unexpected expenses, providing a safety net that can protect the company from financial instability.

Businesses should start small and gradually increase their cash reserves. By consistently building up savings, businesses will gain financial security and the flexibility to reinvest in new growth opportunities when they arise. 

Keeping Your Numbers Up to Date

To make informed business decisions geared toward growth, accurate and up-to-date financial data must be a top priority. This is best accomplished by ensuring key metrics and reports are updated regularly. Some best practices for keeping financial data up to date include performing regular cash flow reconciliations and staying on top of book entries. 

Making sure incoming and outgoing funds are properly accounted for ensures your cash flow is healthy and that you can identify potential issues before they become major problems. Keeping your books current should be a necessity and requires that all data is properly inputted and maintained on an ongoing basis. 

Set Key Performance Indicators (KPIs) and Track them

Setting KPIs might sound like an obvious thing to do, but many business owners get so busy with their growing to do list that setting and tracking performance indicators continues to fall further down the list of priorities. 

As you continue to grow, tracking these indicators can help you navigate decisions on spending and saving, and help you forecast for future growth. So, what should you start tracking? 

First, start tracking your earnings before interest, taxes and amortization. This will help you measure your organization’s efficiency, profitability and value. 

The second thing you need to track are your margins. This number gives you a clearer financial picture and helps give you a better understanding of your financial health. 

Finally, set additional KPIs according to your industry's best practices, your growth goals and big items that impact your bottom line. 

Unlock the Full Scaling of Your Business Potential

Doeren Mayhew’s outsourced accounting services enable businesses to leverage technology, build a financial cushion, maintain up-to-date financial data and set your KPIs. We help businesses optimize their operations and prepare for long-term success, while letting you focus on running your business.