A big chunk of your company’s cash flow management initiatives center on monitoring your Accounts Payables and Receivables. To do that effectively, you need to understand what these financial statements are and why they are important to your business.
Accounts payables vs Accounts Receivables
In a nutshell, Accounts Payables are the things your business owes while Accounts Receivables are the things your business is owed. Keeping a close eye on both of these records is crucial in helping you spend your business finances wisely and ensure timely payments from your clients.
Initially, you can manage your Accounts Payables and Receivables by painstakingly documenting the movement of money in your company. In other words, you record your purchases and utility bills, as well as the invoices and receipts you issue to your clients upon receiving their payment. Does this method work? The short answer is yes. However, not all businesses can perform this task in a breeze. For startups that are beginning to grow, manually recording Accounts Payables and Receivables may be too tedious and time consuming. It may also be susceptible to data entry errors as growing businesses are likely to have more complex business accounting requirements.
Using a cloud accounting software
Putting together your Accounts Payables and Receivables doesn’t just require hard work. Rather, it requires a process that focuses on clarity and consistency. It also needs to provide the right context, especially when it comes to interpreting what the numbers mean and how you can use it to grow and scale your business.
The solution businesses are opting for is to use an online accounting software that can help them sort their Accounts Payables and Receivables. To date, more SMEs are automating their accounting systems to streamline the entire process and submit error-free financial statements to the management.
Accounting software benefits
One of the benefits of using a reliable accounting software to streamline your accounting system is that it allows you to automate your entire business accounting. By shifting to a cloud software that can do your data entry tasks, sort your books, and create financial statements, you can reduce the time spent on managing your financial statements without compromising the quality and accuracy of your critical business numbers.
Another advantage is the convenience of collaboration. Since cloud accounting software makes the records of financial transactions easily available to your accounting team, they can use this information to help the management make important business decisions. So for example, if there’s huge demand from consumers, you can refer to the Accounts Payables and Receivables to know for certain if the company can afford to purchase more items for production. But if money is a bit tight, the management may want to hold off procurement until there’s greater stability.
Accounting software is extremely useful in helping you manage your financial statements easily so you can focus more on building your business. Explore more ways cloud accounting software can help your business reach its full potential. Get in touch with our experts to schedule a free demo.