Understanding the Common Mistakes to Avoid in Your Company's Finances

Every company — whatever industry they may be in — will always need to do bookkeeping and accounting tasks to help their operations run smoothly and effectively plan for further growth.  

This is where the accounting department comes into the picture. 

 
As the central place that manages the company’s finances, the accounting department has a crucial role of keeping track of the organization’s expenditure and overseeing the accuracy of all financial statements. These tasks may sound simple enough but there's more to it. 

Working with numbers can be tricky, not to mention the need to make smart financial decisions that bring positive returns. A slight oversight can result in serious accounting problems that can then negatively impact the company’s bottom line.  

So, what are the common pitfalls that you should avoid so you can protect your company's finances? Here's a quick glimpse of some of the accounting mistakes you should stay clear of and the company strategies you can put in place to prevent them.  

How to Avoid Common Company 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  

Be Responsible with Your Bookkeeping 

It is very likely for businesses to put off the task of accounting and bookkeeping until the 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.  

Track Your Petty Cash 

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.   

Work with Competent Finance and Accounting Professionals 

While as a CFO, you may have the finance and accounting knowledge to handle all aspects of your company finances, this doesn’t mean that you should do it. 
 
As your company grows, your in-house accounting team or outsourced accounting support should be able to handle your routine accounting tasks – positioning you to be able to focus on core company tasks.  

With this, make sure you scale your accounting support as your operations scale up. Alongside this, employing an accountant or a tax adviser will significantly help you adhere to tax compliance standards while keeping your books in order.  

Having enough accounting professionals onboard can further help you avoid mishandling your finances and reduce errors in your accounting processes. 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   

Need Help in Handling your Company’s Finances?  

We have a wide expertise in assisting chief financial officers and accounting departments across various industries and broad experience in using top-of-the-line software to better handle your finances. Contact us today and we will help you find the right financial management strategy for your needs.   

Download our Premium CFO Solutions today and find out how we can be your reliable outsourcing partner.  

This post was first published on 12 January 2015 and edited 03 January 2025. Edited by: Aly Tagamolila