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Why Accounting in Business is Important

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StrategyDriven Managing Your Finances Article | Why Accounting in Business is ImportantAccounting is a crucial part of any business. From local startups to global conglomerates like Google and Amazon, accountants are inseparable from a company’s success.

Accounting is a measurement and communication process that supplies critical financial data to various users, including investors. It helps to establish credibility with these external users, enabling them to make informed decisions about investing or lending money.

Profitability

In business, profitability is defined as the income generated by a company from sales of products or services. It also includes the expenses that are incurred in running the business.

Expenses can include salaries, utilities, rent, and other items a business needs. A company might not generate profits if it had insufficient funds to pay these costs.

Profitability is a critical metric in business as it allows a company to determine its success and future growth. It also helps investors understand how well their investments are paying off.

There are many ways to increase a business’s ability and overall growth. A common practice is to decrease sunk cost, which occurs when a company spends money on unprofitable projects.

Liquidity

Liquidity is your company’s ability to pay its bills quickly. It’s a financial metric that accountants and investors look at when deciding whether to lend you money or invest in your business.

Liquid assets are cash, securities, receivables, and other financial assets that can be converted into cash within a short period, like a day or two. Intangible assets, such as buildings or equipment, are less liquid and can take longer to convert into cash.

When a business has too much liquidity risk, it might not be able to cover its short-term bills or liabilities and will need to restructure, sell assets, file for bankruptcy, or go out of business. Low liquidity also makes it harder to pay employ employees, order inventory, and pay recurring monthly bills like rent.


Taxes

Taxes are levied on goods and services by governments. These taxes serve various purposes, from providing revenue to aiding the development of the economy.

Some taxes, such as sales and value-added taxes (VAT), are applied at the retail level, while others, such as excises, are levied at a more administrative and bookkeeping pre-retail stage. Whether direct or indirect, all governments need income, but the challenge is to carefully choose the level of tax rates and the tax base.

As businesses become more extensive, tax accounting becomes more important. As a result, companies are more likely to have more taxable assets and liabilities. Additionally, businesses that rely on quarterly taxes must meet specific deadlines and reporting requirements to stay compliant.

Payroll

Payroll is another accounting process that businesses use to pay their employees for work performed. It includes tracking hours worked, calculating pay, and distributing checks to employees on payday.

It also involves deductions for local and federal taxes, social security, unemployment insurance, and employee benefits. Therefore, businesses need to track their expenses related to payroll accurately and ensure that they are acting under current tax laws.

A reliable payroll team helps increase employee satisfaction by paying their dues regularly and on time. This boosts employee loyalty and makes them want to continue working for the company.

Payroll also includes bonuses and other incentives for employees that encourage them to perform better. These incentives show employees their worth in a small business and motivate them to do their best.

Can Text Messages Help Your Accounts Receivable Department – Yes!

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StrategyDriven Marketing and Sales Article |Accounting|Can Text Messages Help Your Accounts Receivable Department Yes!Our lives are hectic, and technology can help the situation and make it worse at the same time. However, if your company wants to communicate effectively, it needs to rely on text messaging as a way to be more efficient and increase revenues. We look at how in this article.

Increased Response Rate

According to research, text messages are opened at a rate of 98% when compared to emails which are opened at a rate of only 20%. Also, text messaging is the preferred method of communication among millennials. Lastly, most people carry their phones with them wherever they go, which means that if you want to reach someone with an important message, you should consider texting them.

Knowing that, let’s take a look at how your accounts receivable department can benefit from text messaging.

Texts Notifications Are Pervasive

More and more communities, governments, and outreaches are adopting text messaging as the way to get vital information out to people. Nearly everyone checks their phone when they get a notification even if they don’t immediately act on it.

Texts & Accounts Receivable

Now that we’ve seen how widely used text messaging is, and people are more likely to read their messages, let’s look at how your company’s accounts receivable department can benefit.
Sending out paper bills that get left on the counter for days is old fashioned as is waiting for a customer to send in a check. Many customers now prefer to pay their bills via autopay or by visiting a website or using an app to pay with a credit card. Text messaging encourages a quicker response to pay a bill and ensures that invoices don’t get lost in the mail or forgotten about.

Also, sending out a text message as a reminder is seen as less intrusive to people than a phone call, and is more likely to be acted on than sending a letter in the mail.

Increased Response Time

Another considerable advantage to using text messages to notify people about invoices is that you’re more likely to get an immediate response than if you inform them by other means such as email, phone calls or snail mail.

When a person receives a notification of a bill that’s due, and an easy way to pay, generally speaking, they pay right away, which means increased cash flow for your company.

Makes Accounts Receivable More Efficient

In addition to a higher response rate from your customers, your AR department becomes more efficient thanks to text messaging too. The less time your AR department has to spend sending out letters and making phone calls trying to track down money means they can spend more time expanding their reach and becoming more efficient.

If your company isn’t making use of text messaging and push notifications, it’s high time that you research the benefits and experiment and find a system that works for you; you have nothing to lose and everything to gain.

Ron Kinkade is the Director of Marketing at Call-Em-All, an automated calling and  mass texting company that provides solutions for small and medium sized businesses, large corporations, membership organizations, community groups, and individuals. Ron has more than 15 years of experience with a proven track record of success. Ron is a graduate of Illinois State University.

Pronto Payments: Get Clients To Cough Up Quicker With These Tips

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StrategyDriven Customer Relationship Management Article |Payments| Pronto Payments: Get Clients To Cough Up Quicker With These TipsDo you have a problem with clients and customers not paying their bills and invoices on time? Not only can this be very annoying, but it can pose a more practical problem for your business when it starts to affect your cash flow. If the majority of invoices aren’t paid on time, you could find that the amount of cash in your bank starts to dwindle and you might even struggle to pay your own bills as a result. But you shouldn’t let it get that far! There are a few ways you can encourage your customers to pay on time and, in some cases, even early. Read on to find out more!

Offer A Range Of Payment Options

Firstly, it’s now necessary to offer your customers and clients numerous ways they can pay you. Even though most people will go online and do a bank transfer using their online bank account, there will still be some people who would prefer not to. So, you need to make sure they can just as easily pay you. You could give customers the chance to ring your office or headquarters so that they can pay with their credit card over the phone. Another option is to accept checks. Even though these are seen as quite an old-fashioned method of payment these days, most of the older generations who aren’t so tech-savvy still prefer to pay this way.

Ensure Payment Processes Are Secure

No matter what kind of payment methods you offer to your customers, you need to make sure that they are all safe and secure. The general public is now very aware of the various ways their sensitive data could end up lost or stolen, and one of the most common reasons for stolen bank details is using unsecured methods of payment. Ivrnet offers secure solutions for over the phone payments, so it’s worth contacting them if you want to continue to offer phone payments that your customers can trust. Make sure that you also use an ecommerce platform that is known for their tight security as well so that your online customers can shop with plenty of peace of mind.

Send Out Invoices On Time

Some companies wait until the very end of the month to carry out their invoicing for work that they have completed over the month. However, this means that you will be invoicing for projects that you did at the start of the month quite late. It’s a much better strategy to send out your invoices and bills as soon as the work has been completed. Your clients will then have a month to pay up from the end date of the work.

StrategyDriven Customer Relationship Management Article |Payments| Pronto Payments: Get Clients To Cough Up Quicker With These TipsDon’t Leave Any Information Off An Invoice

One of the main reasons some clients will give for not paying on time is because they were unable to. There are a few different reasons why they might have been unable to pay on time, but sometimes it is all down to not having enough information to do so. This could be because you have missed off some information from the invoice you sent them. The client will need more than just your bank details to pay. For accounting purposes, they will also need a date on the invoice, your company address, and also the address of your bank. It’s always worth asking them what information they need on your invoice when you first create one for them so that you don’t miss anything that could be important.

Chase Up Payments As Soon As They Are Overdue

Have you just noticed that one of your invoices hasn’t been paid and is now overdue? You need to chase it up right away. It’s worth sending a polite email to remind the client as they might have simply forgotten. It’s a good idea to direct this to their accounts payables department so that it goes straight to the individual who has the responsibility of paying it. If no one responds to that and the invoice continues to be unpaid, you might want to send a more formal demand for payment.

Add Late-Payment Fees And Interest To Overdue Invoices

It’s also important to add some late-payment fees and interest on invoices that are overdue by more than a week. You should calculate a new invoice that includes the original fee and these additions added on. Hopefully, these extra charges will prompt your client to cough up finally!

Follow these tips and your clients should start paying a lot quicker in the future!