Accounting is often not the forte of every business owner, but it’s a vital part of ensuring the growth and continuation of your business, says accountant Alexandra Keleti. Maintaining your books doesn’t just keep the IRS happy, it also allows you to forecast the financial future of your business, which can help you make major decisions like when to hire new employees, buy new equipment, or consider expanding.
Alexandra Keleti, Kansas resident has a list of helpful tips for anyone who is attempting to keep their books balanced and get the most out of their financial information.
Keep A Close Eye on Your Cash Flow Says Alexandra Keleti
As you perform your regular reviews, whether that’s monthly or weekly, you should consider making a cash flow statement, says Alexandra Keleti. A cash flow statement basically monitors the ins and outs of your income each month. This statement can help give you a broader understanding of where your money goes, how money is spent, and what payment cycles look like in your company.
Once you have a handle on where your money is coming from and going, you can better anticipate your expenses and plan for them in advance. You can also use cash flow statements to build financial projections that let you plan further into the future and visualize exactly how you want to grow.
And the best part is, you don’t have to be an Excel wizard to generate a cash flow statement! In fact, most financial software, like QuickBooks, will generate them with the click of a button.
Understand the Difference Between Receipts and Invoices
Mixing up your receipts and invoices can be a complete disaster for a business. But it’s actually a really common mistake, states Alexandra Keleti. An invoice is a bill you send to your client to charge them for your services. It’s a reminder of what services you provided and a declaration of how much they owe for those services. Invoices are very useful for creating cash flow statements, financial record keeping, and making sure that you’ve been paid for your work.
Receipts are the proof of payment you give to your client once you’ve been paid. This is how your clients prove that they have paid to keep from being double charged. And it’s how you keep track of your true (rather than projected) cash flow. Don’t rely on your memory! Make sure you separate and catalog both your invoices and your receipts, Alexandra Keleti says.