Home » Top Financial Mistakes Made by SMEs that Accounting Services Outsourcing Can Solve
Top Financial Mistakes Made by SMEs that Accounting Services Outsourcing Can Solve
Even in a robust ecosystem like Singapore’s, around 30% of new businesses are projected to fail within the first three years, and one of the most common mistakes made is underestimating the consequences of poor financial management.Young SMEs and startup owners often assume that outsourcing accounting services is probably not essential. After all, new technologies and accounting software have made bookkeeping and accounting simpler without the hassle of hiring a full-fledged accounting team, so what is the need for outsourcing, right? The thing is that technology has not yet eliminated costly accounting errors. Some mistakes can be fixed and may only have a little impact on the company’s finances. However, some errors are critical and may significantly harm a firm by misrepresenting its genuine financial situation. With this article, let us examine five of the most typical accounting mistakes and explore how to avoid them with professional help from a reliable corporate services provider.
Most Common Financial Mistakes SMEs and Startups Make
Missing out on timely reconciliations
A small business’s performance depends on reconciling balance sheet accounts at least once a month, such as bank and credit card accounts. On the other hand, reconciling is verifying the accuracy and correctness of an account balance as it appears on your books. The procedure aids in spotting issues before they become out of control. Some advantages of reconciliation are:
Knowing your actual available credit or cash flow
Confirming that there was no fraud,
Detecting bank problems and being aware of bounced or unsuccessfully posted consumer payments.
While many apps come with a reconciling tab, they mostly come with limited features and might not be able to share detailed insights based on the data available. This is where accounting experts with years of experience and industry knowledge can help guide. Furthermore, by outsourcing accounting services, you do not have to worry about missed timelines- you can focus on business development and product launches while the experts handle the reconciliations.
Overestimating capital needs
Hundreds of startups have failed despite raising millions of dollars. WeWork, Stayzilla, Juicero, Ofo- the list goes on. An app can tell you about your cash flow and help manage your books but the same app cannot guide you on when to raise and how much to look for. These companies were big names that raised series after series but still failed. The companies most likely had big accounting teams but due to a lack of guidance on where the focus should be at a given time, they eventually shut down incurring losses to entrepreneurs, VCs, and all other stakeholders involved. If you outsource accounting services to a reliable partner that helps you keep your financial health in check and guides you by sharing deeper insights, that helps your overall business growth.
Poor documentation: lost invoices and fake receipts
You risk losing critical tax deductions for your business if you do not keep track of certain business costs. The tax department does not accept expenditure claims that are not backed by supporting paperwork. From establishing strict company rules ensuring that payments for reimbursements and expense reports are not made unless receipts are provided to employing reliable Etech solutions- there are multiple ways to ensure proper documentation.The easiest and most hassle-free way to go about this is by outsourcing accounting services to ensure thorough bookkeeping and proper documentation.
Data entry error
Small businesses often use one worker to perform the tasks of ten, with little to no training. It pays to have someone competent and properly trained in bookkeeping and accounting. One of the most common reasons for needless financial loss is human error when entering data. This can be avoided by leveraging outsourcing accounting services where teams of finance and data entry experts work tirelessly to ensure accuracy. Plus, these professional corporate service providers have access to the latest, most advanced tech solutions that help eliminate human errors ensuring maximum efficiency.
Not seeking help from a professional corporate services provide
Not seeking help or not choosing to outsource accounting services is one of the biggest mistakes you can make. You are in charge of growing a company from scratch while having a thousand things to handle. You cannot do everything yourself. Where you know you need it, ask for help. Perhaps you enjoy managing the books for your company but require assistance with phone support or payroll processing. Know your strengths, and pay someone to cover your flaws. Everything will go out of balance if you wait to get help when you need it, and it will cost you extra money to hire someone to clean up the mess.Also Check : Top Three Benefits Of Accounting Services Outsourcing For SMEs And Startups In Southeast AsiaIf you are running an SME in any industry in Singapore, Malaysia, Hong Kong, or anywhere in the region and beyond, and are keen on finding a reliable corporate services provider, you can trust PikoHANA. Our main objective at PikoHANA is to support the growth of SMEs throughout Asia by offering comprehensive back-office solutions, including accounting services. Through a streamlined and user-friendly interface, we provide small businesses with access to crucial financial metrics, deeper insights with thorough reports and audit statements, accurate balance sheets, current cash flow records, and a variety of other diversified business data. Discover more about how PikoHANA can benefit your company here.
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