BY EIDE BAILLY’S TRANSACTION SERVICES TEAM
The effects of COVID-19 have had substantial impacts on organizations and their bottom lines. For many, this environment has resulted in personnel cuts and lean business models for the foreseeable future.
As your organization looks for ways to contain costs, a critical factor to consider is the importance of financial statements and accounting information. Without up-to-date, accurate accounting records, you cannot make informed decisions about your operation.
Financial records will be key when it comes to most tax and economic relief provisions. As guidance continues to be issued, compliance with the provisions within many of the relief legislation measures will be crucial, especially as it pertains to potential forgiveness of loan proceeds. Having a trained financial professional review these will be a necessity.
THE IMPORTANCE OF YOUR FINANCIAL RECORDS
Preparation has always been critical for organizations. Now it’s crucial. Your finances influence most factors in your organization, from supply chain to inventory to new business models.
Monthly you should be doing reconciliations for the following common accounts:
• Bank accounts – this helps verify all revenue and expenditure activity is captured in your records on a monthly basis.
• Accounts receivable – this helps ensure your customers are paying in a timely manner and will also help your collection procedures.
• Accounts payable – this helps verify the amounts shown due are true payables and allows you to pay your vendors in a timely fashion. This may also help you take advantage of discounts given by your vendors for early payment.
• Capital asset inventory – this establishes that any capital outlays are added to your software and/or external schedule. This list is an audit necessity.
• Payroll accounts (accruals and expenses) – this verifies that payroll is being accounted for properly in the correct accounts.
Further, because the downturn could have a longer duration, you will need to pay attention to liquidity and make it a top priority. To do this, you’ll need to:
• Conduct financial modeling to understand how various scenarios and situations will impact cash flow.
• Manage the assets on the balance sheet.
• Focus on inventory and accounts receivable.
THE BENEFIT OF OUTSOURCING FINANCIAL POSITIONS
With tight budgets and limited resources, many organizations have instigated hiring freezes. Yet filling the role of your accounting staff is critical. That’s why many organizations are turning to outsourcing to gain the information they need without having to bear the burden of hiring someone full-time.
In addition to data entry and monthly reconciliations, financial staff can help you craft a plan to move forward, even during times of crisis and uncertainty.
Outsourced accounting staff with a high level of financial knowledge can:
• Ensure the accuracy and timeliness of your financial data
• Help you manage cash flow.
• Present your financial data in a useful and meaningful manner to you.
• Analyze market trends and help you define key performance metrics and benchmarking data.
• Understand business strengths and weaknesses and identify opportunities.
SAVE COSTS AND GAIN EXPERTISE WITH OUTSOURCED ACCOUNTING
Outsourcing through a trusted advisor can give you the answers you need to your pressing financial needs at a substantially lower cost. The economic climate may be uncertain, but your financial records should not be.
The Eide Bailly team can answer your questions and provide you with expert business outsourcing services.
CONTACT THE EIDE BAILLY BILLINGS OFFICE
RON YATES, CPA
Eide Bailly Billings Partner-in-Charge
DEBBIE POTTER, CPA
Eide Bailly Billings Partner and Tax Department Head
What inspires you, inspires us.
Originally published on EideBailly.com.
SEPTEMBER 2020 – NOVEMBER 2020 | LiNK | BUSINESSQUARTERLY 33