Addressing the Common Accounting Issues Companies Faces as They Grow

If you’re running a business, one of the issues you must address is adapting to growth. The growth of your company indicates that it is doing it right in the right direction. However, as you move to the next phase, there are problems you can face. While growth is good, it may affect your company’s operational efficiency. Business owners may want to join Padgett to leverage the expertise of accounting experts and advance technologies that can help grow their businesses.

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The Main Accounting Issues in Businesses and Their Effects

Accounting-related problems are common, particularly for small businesses that want to grow. As your business grows, it becomes more difficult to keep track of accounting functions. There are other responsibilities you must pay attention to, including pursuing your company’s vision. Cash flow and budget concerns may not be focused when your attention is on big-picture decisions. The following are some of the common accounting issues that you may face:

Inefficient accounting software. Your company may have been using introductory software during its inception. Although this software has served its purposes, it may no longer meet your company’s growing needs if it’s not integrated into sophisticated software, resources, and functions. In turn, this can cost you money and time.
Insufficient internal procedures and systems. If your company doesn’t possess the tools, proper internal controls, and resources to support your accounting operations, you may not be able to manage funds properly.
Accounts receivable outrun your sales and collection capability. When there is sharp business growth, accounts receivable tend to increase quickly. The inability to collect payments efficiently can affect your cash flow.
Handling overhead costs. A part of your company’s net profits is used to pay monthly overhead costs. Thus, a software program or an accountant should correctly calculate such costs. As your business grows, hire an accountant to identify all overhead expenses and evaluate them as part of your long-term growth strategy.
Managing payroll. As the owner of your business, you must keep records of your employees, track employee hours, calculate pay amounts, and reconcile payroll. If your payroll is not managed correctly or you do not have the resources to effectively manage payroll, you may need to hire a payroll company to manage this process.
Closing the books accurately. To maintain the financial transactions of your company, you must finalize monthly or yearly reports. Failing to close the books will create misreporting in the earnings of the affected period and may lead to extra errors in your company’s current financial statements.
Tracking issuances. If you want to attract top talents, you need to offer issuances such as stock option grants. However, this must be executed delicately. Miscalculations in the early process can lead to costly and complex issues over time.

Solving Common Issues

As your company grows, you can expect accounting challenges. If your operations are dealing with such issues, do something to fix those looming problems. Hire a reliable accountant to help you manage your company’s accounting functions.

A lot of companies outsource part or all of their accounting services. Such a model enables cost-effectiveness and scalability in paying for specific services and resources that your company needs. For instance, an accounting specialist may address accounts receivable issues by automatically sending reminders to customers, so your company can more quickly collect payments and increase its cash flow.

The right service provider will manage the accounting and finance functions of your company while making sure you understand its financial position. Ultimately, if you are running a growing company, you must pay attention to your accounting operations. Although this may not be your specialization, it’s where your business funds flow in and out.