Want to be sure your small business never becomes a big business? A surefire method to ensure a lack of success is to have shoddy accounting practices. Knowing where your money is, how much of it there is, and when you can expect more are key to proper business planning. Without a plan, your endeavor is doomed to haphazard success, at best.
These days, of course, we are not enjoying a vibrant economy. One consequence is that many entrepreneurs find themselves confronting serious issues that should have been resolved years ago. These issues often involve accounting.
He continues to describe a businessman who was counting booked orders as receivables, thus confusing the time frame at which he could expect to collect the funds. It sounds like a very small error, but this error was threatening the health of the company, as the information for planning was incorrect.
While the article is geared for small businesses, nonprofits need to keep an eye on their books, too. While the staff often does the actual bookeeping and completes the day to day transactions, the board of directors is legally obligated to provide sufficient oversight. That means that the treasurer should provide monthly reports to the board. More information regarding best practices for nonprofits can be found at Boardsource.org.