Knowing how to properly manage accounting for small and mid-sized businesses may seem like an easier task due to the smaller nature of the companies. However, many times it is the founders and senior members of the company who are tackling the daily ins and outs of small and mid-sized business (SMB) accounting. In addition to taking their valuable time away from the running of the business, having to deal with cash flow, financial planning, and compliance add an additional level of stress to an already stressful (but rewarding) career. Here are some of the financial pain points and tips for how your business can stay be prepared for whatever comes your way.
Monitoring Cash Flows
Probably the number one headache for SMB’s is cash flow management. Clients pay late, payroll falls on a weekend and has to be paid two days earlier than usual, or that annual fee for your life-saving software is due. Monitoring cash flows and predicting expenses goes beyond the recording of debits and credits. It’s important to have accurate and timely bookkeeping reports so you are aware of your short and long-term cash needs and can plan or pivot accordingly.
Operating a successful small business requires detailed financial planning. Which projects are most and least profitable? Are they priced right? Are your resources fully utilized? How do you know when your business is nearing a thin margin or approaching the negative? It’s equally as important to know when you are profitable and when it is safe to reinvest profits to grow and scale your business or save for leaner times. Having this picture in a multi-month and multi-year forecast is invaluable.
Compliance is important for businesses of all sizes. You need to be sure that you are operating according to the legal requirements for federal, state, and local laws. If not, you may be “subject to fees and penalties that are chosen by the state rules, industry standards, and federal laws” (3). Unless your small business specializes in compliance issues, a typical small business owner has much that they would prefer to do than look up the compliance requirements for their particular industry, state, and federal laws to make sure they are in alignment and avoid penalties and fees.
Focusing on Accounting
It takes a focus on accounting to take steps towards creating a risk management plan. This information will help you to identify and be aware of potential internal and external risk factors, warning signs, and ways to monitor and implement a business strategy. For accounting, this pertains to taxes, retirement plans, and more.
How Tentho Can Help
Tentho has been featured by Bloomberg Tax, Authority Magazine, Startup Nation, and many more reputable companies for our success in helping small and mid-sized businesses with their finances. Whether you need help with accounting for a small business or fractional CFO services on a larger scale, Tentho can help with a team of highly qualified, dedicated professionals. We are able to help SMB’s with bookkeeping, accounting, and all things finance so they can focus on the business.
Tentho has a wealth of knowledge and CFO’s to offer their services to pair with your executive team to create a strategy towards success and profitability. From fractional CFO services to elite accounting membership packages, Tentho offers a wide variety of services tailored to the specific needs of SMBs. If you are ready for a dedicated financial team on your team, schedule your free consultation to learn more so you can focus on what you do best.