Atkku provides accounting and bookkeeping services for small businesses includes accouts receivable management, accounts payable management, bank statement reconciliation, credit card reconcliation and petty cash reconciliation.
Tuesday, October 14, 2014
Monday, October 13, 2014
Accounting Tricks of Big Companies – Small Businesses to Follow
Large corporations are much better in managing their accounting processes than small businesses. They have highly trained expert pool of accountants and talented audit firms. Below are the few tricks which can small businesses can follow and get the results of big company.
1. Extending the Accounts Payable terms:
During their Recession period, most of the large corporations extends payments to their vendors and pay their bills to 60 or 90 days. If there is a reduction in cashflow, the companies send a note to vendors on extending their payments within the required days and making the payment later within the terms. Most of the vendors will accept it.
2. Getting Paid Forthright:
Most of the big companies will not give credit at any stage as credit is a privilege and not a right. They can successfully implement this strategy by requesting credit card payments, thus customers cant find any excuses for not paying forthright. Also, they accept electronic transfer of funds for immediate payments.
3. A/R Invoice Followups:
Large Companies follows a tracking discipline to improve their cashflow and lower their overall accounts receivable process. They follow up with a call (or) e-mail to ensure their invoice was received and collect the details from their customers on expected schedule to pay. If payment was not made in the promised date, they follow up regularly with a reminder call until the payments done.
4. Credit Card Usage:
Many large companies use their credit cards only to pay their overdue invoices (30 to 90 days from purchase). This gives them another 30 days of healthy cash flow without hinderance. This option should be applied only if the credit card balance payments are paid each month regularly.
5. On Time Billing:
Large companies bill daily and do not wait until the end of the month. The biggest mistake small business owners make is that they do not bill at accurate date and rushing the billing processes only at the end of the month. This severely affects company's cashflow and the fund expansion ability.
6. Careful Accounting:
For Manipulation of sales or profits, large corporations use techniques with help of accounting advices such as:
i) Blocking the provisions for bad debts
ii) Clear recognition on the income of a long-term contract
iii) Recognition of selling fixed assets as normal sales
iv) Making changes in depreciation policies
v) Showing some operating costs as investments
1. Extending the Accounts Payable terms:
During their Recession period, most of the large corporations extends payments to their vendors and pay their bills to 60 or 90 days. If there is a reduction in cashflow, the companies send a note to vendors on extending their payments within the required days and making the payment later within the terms. Most of the vendors will accept it.
2. Getting Paid Forthright:
Most of the big companies will not give credit at any stage as credit is a privilege and not a right. They can successfully implement this strategy by requesting credit card payments, thus customers cant find any excuses for not paying forthright. Also, they accept electronic transfer of funds for immediate payments.
3. A/R Invoice Followups:
Large Companies follows a tracking discipline to improve their cashflow and lower their overall accounts receivable process. They follow up with a call (or) e-mail to ensure their invoice was received and collect the details from their customers on expected schedule to pay. If payment was not made in the promised date, they follow up regularly with a reminder call until the payments done.
4. Credit Card Usage:
Many large companies use their credit cards only to pay their overdue invoices (30 to 90 days from purchase). This gives them another 30 days of healthy cash flow without hinderance. This option should be applied only if the credit card balance payments are paid each month regularly.
5. On Time Billing:
Large companies bill daily and do not wait until the end of the month. The biggest mistake small business owners make is that they do not bill at accurate date and rushing the billing processes only at the end of the month. This severely affects company's cashflow and the fund expansion ability.
6. Careful Accounting:
For Manipulation of sales or profits, large corporations use techniques with help of accounting advices such as:
i) Blocking the provisions for bad debts
ii) Clear recognition on the income of a long-term contract
iii) Recognition of selling fixed assets as normal sales
iv) Making changes in depreciation policies
v) Showing some operating costs as investments
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