Accurate Accounting Can Boost Your Business’ Value Here’s Why

Accurate Accounting Can Boost Your Business’ Value Here’s Why

Learning how to determine the value of a business requires taking several different factors into consideration. One of the most important factors to the value of a business is the accuracy of its accounting procedures.

Without accurate accounting, your business won’t hold any appeal to outside people -- whether it be potential employees, current employees, customers, clients, or even investors. It makes it difficult to feel confident with your business’ success when learning how to value a small business.

Since accounting affects every aspect of your business, you need to ensure you have the proper accounting tools, resources, and principles available to your business. It helps ensure accuracy and puts your business in a healthy position moving forward.

If you’re wondering how accurate accounting can affect your business value, we have nine reasons to give you. We’ll discuss them each in more detail below.

1.  Improved Marketing Forecasts

Owning a business comes with a wide range of expenses, but none can get out of hand quite like marketing costs. Before launching a campaign, you have to know your business is prepared for everything that comes after.

You’ll need cash flow, employee time (which costs money), and a campaign idea that’s built to work. That’s a lot to ask, but accurate accounting allows you to take any guesswork when launching a campaign.

With improved revenue forecasts, accurate cash flow statements, and expected expense reports, you can perfect the art of planning and budgeting when it comes to your marketing strategy. You’ll feel confident when launching your campaign and will have more time to focus on things that matter.

2.  Sustained Financial Success

Imagine setting out on a journey to a destination without a map or GPS to guide you there. You might run into small successes here and there when you come across a sign that helps you out, but it won’t be a sustained and effective way of getting to that destination.

Accurate accounting is your GPS when determining how to value a small business. You have goals and expectations for your business -- everyone does -- and accurate accounting is what helps guide you there.

It breaks down your current financial status, creates forecasts for the future, keeps a tab on your budget, income, revenue, expenses, and everything else you can think of. It helps you plan, prepare, and overcome anything your business encounters.

3.  Quality & Efficiency At Its Finest

There are going to be times when your business is presented an investment opportunity -- either outside the company or within the company. Some of these investment opportunities are going to be hard to say No to and others might even be a no-brainer.

Unfortunately, making smart, quality, and efficient decisions when it comes to investments requires accurate accounting. Even the ones that seem like a no-brainer aren’t always the best decision when looking at your business’ current standing.

With accurate accounting, you’ll know when the best time to invest in new equipment is or whether you have the funds to afford to hire more employees to improve efficiency.

4.  Employee Satisfaction

Speaking of hiring employees, accurate accounting can help you take better control of your human resources. Looking for employees when you’re in a tough spot leads to rushed hires and quick turnover. Looking for employees when things are working in your favor, however, can give you the time to find the right candidate. 

Accurate accounting also helps you know when to hire when to lay people off, and when it’s time to grow your business. Just like business growth makes an owner happy, it makes the employees happy. It means better benefits, better wages, and a better work environment.

The different departments in your business work together like the different organs in the human body. When one department is underperforming, it directly affects the rest of the departments. This is no different when it comes to the accounting and human resources departments.

5.  Preventing the Risk of Fraudulent Acts

Accurate accounting and seamless reporting when it comes to your current financial status help keep you better in-tune with the money coming in and out of your business every single day. You’ll know your expected expenses beforehand and will be able to better compare those expenses to what’s really being charged. 

This level of non-stop management becomes extremely easy with the right accounting software and helps prevent fraud throughout your company. You’ll be able to spot fraudulent acts as they occur and detect unwanted changes in real-time.

Catching these acts before they truly start to damage your business inside-and-out is essential to limiting the amount of damage they can do. You’ll save the rest of your employees, clients, and customers from a sticky situation, as well.

6.  Managing Business Costs

Any business is going to experience a wide amount of costs, whether it be daily, weekly, monthly, or yearly. There are fixed costs and variable costs, all of which need to be accounted for in real-time to effectively control your business’ costs.

Let’s say you need to cut costs in your business. Without accurate accounting, you might start cutting costs in places that shouldn’t or don’t need to be cut -- whether that be letting go employees or saying goodbye to certain products.

At the same time, you’ll be avoiding the key areas where you’re spending too much and can afford to cut costs. It’s a vicious cycle that could be prevented with the right accounting tools, resources, techniques, and assistance.

7.  Improved Security Where It Counts

Accurate accounting today requires an efficient software platform that gives businesses everything they need when managing their bookkeeping. Of course, this software also presents a level of security that spreadsheets, handwritten documents, and Microsoft Word simply can’t provide.

Anything handwritten can easily be lost, anything on a USB is prone to be damaged or unreadable, and anything on the internet can be hacked. That’s why you need secure software tailored to meet your business’ needs to help you stay safe when managing your company’s accounting.

8.  Financial Management

Poor financial management can quickly deteriorate your business value and it’s something that won’t go unnoticed by your customers, clients, and employees. They’ll see the warning signs and it’ll start to affect the success your business is supposed to see on a daily basis.

On the other hand, good financial management and accurate accounting have the opposite effect on your business value. Customers will feel comfortable investing in your business and employees will want to work there.

9.  Building & Maintaining Relationships

As a business, you have several people you need to satisfy on a daily basis. You have employees that want to know their job is safe. You have vendors that want to know their invoices will be paid. You have customers that want to know you aren’t going to close randomly.

Building these relationships is difficult, which makes it even more tragic when those relationships are destroyed. With accurate accounting, you can effectively maintain these relationships and keep your business in good standing with the community you’re surrounded by.

If you’re learning how to determine the value of a business and are starting to realize how important accurate accounting is to the process, we can help. We have the necessary tools, resources, and expertise to help you take control of your accounting procedures and center it all under one roof.

Contact Consultants In-A-Box today to discuss more how we can meet your accounting needs.


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  • Jordan VanMaanen
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