Most entrepreneurs focus almost exclusively on the product or service to be sold: how it can be manufactured, marketed, and improved. While passion and excitement about products and services drives entrepreneurs to start businesses, only the companies responsibly tracking finances can remain open for business. The success of a company’s products/services, marketing campaigns, and product development – the lifeblood of a business – cannot be measured without an effective accounting strategy in place. An operative accounting strategy involves three steps:
The first step, Development, assists a business owner in establishing a foundation for a company’s approach to accounting, helping to decide which method of accounting will work and to organize a basic bookkeeping structure to record and retain the company’s financial activity. In development, an entrepreneur learns the basics of bookkeeping, which bookkeeping methods will be the best fit for the company and how to apply those methods to the specific nature of the business.
- Determining Which Accounting Method Your Company Must Follow
- Understanding Cash Accounting
- Understanding Accrual Accounting
- Understanding Hybrid Accounting
- Tax Implications
- Accounting and Bookkeeping Basics
- Profit and Loss Statement (P&L)
- The Balance Sheet
- Cash Flow Statement
- Double-Entry Ledger
Implementation, the second step to setting up a business accounting strategy, is when a company gathers all of the financial tools necessary to its accounting plan and institutes the method. Understanding the different types of accounting and bookkeeping tools available to companies will ensure the right tools are adopted and the most efficient plan is established.
- Collaborative Accounting
- Accounting Software
- Cloud Based Accounting Services
- CFO Functions
The third step of the accounting strategy is Measurement. This step shows a business owner how to track and measure the valuable information gained through proper bookkeeping practices and how to improve company performance through setting goals and making adjustments. Regularly measuring a company’s performance will help the business reduce costs and increase revenue, becoming more and more successful over time. By establishing and realizing an organized financial plan, a company can accurately track and measure its level of profitability, thereby foreseeing imminent financial complications and predicting future successes.
- Suggested Key Performance Indicators
- Goals & Benchmarks