If you've recently set up a small business, you probably feel (quite rightly!) that there are more pressing issues to worry about than monitoring your cashflow to an accountant's exacting standards. Most small businesses start off with a shoebox-style accounting system rather thanbusiness software like Peachtree Accounting. However, there comes a time in every business's life when enough is enough! Is it time for you to ditch the shoebox? Here are some great reasons to do so.
- Because it's easy not to get paid
If you don't have a formal way of tracking your accounts receivable, it's very likely that they'll just get lost in the minefield. If you don't take action on overdue accounts fairly soon, there could actually be a lega loophole that lets a customer off paying.. - Creeping expense levels
If you aren't monitoring your spending on a regular basis, it is very easy to overspend. The mentality is the same as with a credit card - it doesn't feel like you're spending money, so you assume that you're as rich as ever! Until you actually do the figures one day… - The disaster factor
If your shoebox is actually a fireproof and floodproof box bolted to the office floor this is less of an issue. If not, then your business risks not being able to track creditors, and not meeting legal obligations. - Cash flow monitoring
There's nothing more humiliating and concerning than having your business credit card turned down when you need something. Even if it isn’t permanent, you can avoid it by tracking cashflow with business software like Quickbooks or Peachtree. - A cost delayed is a cost increased
If you leave all the sorting-out until the end of the year and ask your accountant to do it, it will cost you far more than simply the time it takes to organize your data as you go. - The specter of bankruptcy
The majority of businesses go bankrupt within 5 years, and bad cashflow management and accounting awareness is a prime cause. Don't leave it until it is too late; don’t hope for the best - ensure that it happens for you!
