I see it all the time: a small business is busy and growing and falling behind on the accounting; there are just too many other important things to do. A receptionist or clerical person is found who once paid bills for a trucking company and voila – they are now in charge of accounting. After a while management assumes that “no news is good news” in that things are going smoothly and few questions are trickling up so – problem solved.
Well, not exactly. When an AR report is reviewed, the president says “this can’t be right – I know that our big client is paid up yet this report says that they are delinquent.” There is a drill-down into other numbers and many are found to be incorrect. The new “controller” (that’s what she calls herself, and yes, I have seen this) thought that since QB accepted the entries, they must be correct. Is this a little like assuming that if someone knows MS Word, they must be a good writer?
Accounting Clean-Ups Can Be Expensive
Sometimes these bad practices go on for a very long time. We’ve been called in on several accounting clean-ups and often need to commit huge amounts of time to correcting mistakes going back for years. During this time, management has been getting numbers that were inaccurate and realizes that many decisions were made based upon bad information. And to add insult to injury all of the data-entry, the catch-up-from-behind effort costs more than if the accounting system had been kept up to date in the first place.
As everything gets sorted out, we have often seen cases where customers were not properly billed, and taxes were overpaid. I once showed a construction contractor how she had missed charging a customer over $38,000 for time and materials that were never charged to a home addition project. But the job was now finished. It was too late and too embarrassing to try and collect. Oftentimes corrected income statements result in different tax situations, however most businesses are leery of tax authorities and are not keen to file amended sales, income or payroll tax returns.
So how can these problems be avoided?
Avoiding Accounting Quagmires
First, avoid the “miracle receptionist” solution, where unqualified staff are drafted into accounting duties. Realizing that they are in over their heads, many will avoid asking questions for fear of being outed. Accounting cannot be learned “on the fly.”
Secondly, accounting and bookkeeping services do cost money. For accurate information needed by management, stakeholders and tax authorities, your business will need to pay either now or a larger amount later (when mistakes are discovered) so the obvious best practice is to get it right from the start.
Finally, about 75% of QuickBooks accounting work can be accomplished by lower-charge bookkeeping types, but sometimes additional expertise is needed. Work with a firm who can apply this expertise as needed, either by phone or via remote PC connections.
QB-LA can train your internal staff, or enter all of your transactions remotely. This often ends up as the least expensive, least disruptive and most accurate solution, as different levels of expertise can be applied exactly as needed.