If you have a produce business that’s flourishing but an accounting process that’s a little bit outdated, it may be time for an upgrade that will take your company into the future.
But where should you start? Will updating your accounting process improve your business, or is it just another added cost? These are just some of the questions that business owners may ask.
Part of ensuring the success of your produce business is having an efficient accounting system. Even businesses with the right products and clientele collapse due to inefficient accounting systems.
Suppose you find it challenging to manage your produce accounts. In that case, this company is among the most recommended for produce businesses looking for software to streamline all necessary accounting tasks.
This article will outline seven actionable accounting tips for your produce business.
Table of Contents
Separate personal finances from business finances
This is one of the most common pitfalls of small to medium-sized produce businesses. Separating personal finances with business finances ensures that every dollar spent is accounted for.
The initial step to separating personal and business finances is having separate bank accounts.
Produce companies should open a checking account for daily transactions, a savings account, and a merchant account.
If your business has been around for many years, you may tend to ignore the power of technology in favor of a more traditional way of handling your accounting. But once you get the hang of using new accounting software, it can change your business for the better.
Produce companies deal with seemingly small transactions. And tracking these can be challenging, especially when seeking to achieve accurate records.
This process can be simplified by having an automated system in which every aspect, including sales, inventory, accounting, and reporting, is in sync. Automating every step eases every aspect of the business.
Here are features to look for in accounting software:
While most accounting software provides basic accounting solutions, software that offers comprehensive reporting will serve your produce company better. Prioritize software that provides advanced records that are vital in monitoring the company’s financial health.
Most accounting software is a one-stop shop for all accounting functions. However, while one function may work optimally, another may not. This is why it is important for produce companies to get accounting software that can be integrated with other beneficial software that can elevate their operations.
Errors can occur, even in the best systems. As such, prioritize accounting software providers who also offer excellent customer support.
Plan for major expenses
Major expenses are inevitable as enterprises scale. However, this can curtail operations, especially if the large expenses are unplanned. Often, you will see a business spending lots of funds to expand, only to collapse thereafter due to insufficient stock or debt.
While running a business is complicated, significant expenses such as equipment upgrades and tax deadlines should be carefully thought-out. And they shouldn’t be a surprise. Budgeting and forecasting are some ways that produce companies can avoid emergency and unplanned major expenses.
Track all business expenses
Even minor expenses will add up in the long run. And they can save certain costs such as tax. Tracking business expenses is a clever way to maximize tax credits and write-offs. Produce companies can track expenses by labeling and categorizing expenses. For example, they have different categories such as produce purchase, company vehicle expenses, out-of-town business travel, gift receipts, marketing, software purchases, and more.
Hire an accountant
If you have a small produce company, consider hiring a professional for a few hours or on contract. This way, you get accurate financial reports without worrying about expensive mistakes. One of the areas some produce companies struggle with is taxes, and these can be solved by hiring a professional. They will ease the department workload and help entities determine loopholes, potential fees, and eligible tax deductions. Consider hiring Blueprint CFO to help you create strategies, forecasts, and pathways to achieve future financial goals.
Decide on the accounting reporting method
You can either choose between accrual accounting or cash-based accounting reporting methods. Accrual accounting entails reporting revenue when it is earned instead of when the cash is received. The same applies to expenses, which are reported when incurred rather than when paid.
Budget and forecast
This is another vital tip for produce companies. The markets are marred by various risks, some of which can impact your entity’s profitability. Budgeting and forecasting go a long way to cushion your business against these risks. While there is a wide variety of software and apps that can help with forecasting and budgeting, discipline is critical.
For instance, if a produce company does not record all incomes and expenses, then the chances of getting misleading forecasts are high. This is because forecasting relies on the company’s historical data, market trends, and prevailing conditions.
Accounting is the backbone of any business. Following these tips will get the guesswork out of the way and ensure that your produce company finances are healthy. As a business owner, ensure you are also involved in the financial management of your company.