4 Common Mistakes to Avoid in your Company's Finances

While bookkeeping and accounting functions might not have been part of your plan when you decided to start your own business, the reality is that you cannot run your company without basic accounting knowledge.  

At the very least, you must be able to keep track of your company expenditure while keeping tabs on your financial statements. These two may sound simple enough but there's more to it. This is why most CFOs encounter small business accounting problems when organizing their own books. 

So, what are the common pitfalls that you should avoid to safeguard your company's finances? Here's a quick glimpse of some of the accounting mistakes you should stay clear of. 

How to avoid financial mistakes

 
Stop throwing away your receipts 

Organizing your invoices and receipts is a must for every company. Beyond that, keeping the invoices and receipts is also equally important. For one, having a copy of the financial transactions and purchases your business has made for the year makes it easy to come up with financial statements in the long run. Moreover, these records are also vital in case your business needs to undergo audit checks or other processes for regulatory compliance. 

Read: 4 Reasons You Should Always Keep Your Receipts 

 
Avoid hasty number-crunching 

It is very likely for businesses to put off the task of accounting and bookkeeping until the very end of each quarter – or even worse, until the end of the fiscal year. It may seem like a handy way to fix your accounts and finances in just one sitting but be warned, delaying these tasks will rob you of the lengthened period you need to get your financial data in order. After all, number crunching functions are tedious tasks--getting these done in a very short span of time will most likely lead to errors and miscalculations. 

 
Organize your petty cash management 

Every company needs petty cash at hand for operational expenses such as company purchases and payables that need to be settled immediately in cash. Note, though, that it is not enough to have petty cash at hand; rather, you must also be aware of how these resources are being utilized. Otherwise, you will lose track of how a significant portion of your much-needed financial resources have been used. And that could add a definitive strain to your budget and is a big mess for your books.  

 
Avoid being your own accountant 

It is very normal for business to take charge of basic bookkeeping and accounting. However, as your business grows, so do its accounting requirements. And more often than not, a complex set of books requires the assistance of an accounting expert. Seeking advice from an accountant or a tax adviser will significantly help you adhere to tax compliance standards while keeping your books in order. 

For most businesses, accounting and bookkeeping roles are frustrating and bothersome. But this does not mean that you should not take it seriously. To avoid mishandling your finances and errors in your accounting processes, seek available resources immediately to help you change all that. By taking these steps to take care of your company's finances, you'll see your business’ growth improve tremendously.

Read Next: 4 Tips to Protect your Company's Assets  

Know how to better handle your finances today 
 

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This post was first published on 12 Jan 2015 and edited 9 June 2023. Edited by: Aly Tagamolila