Every entrepreneur wants to see their business grow. However, rapid growth also brings along significant accounting and operational challenges. If you’re not prepared, it can quickly strain your staff and resources.
Below we’ve outlined the top accounting challenges of rapidly growing companies and how to overcome them.
Issues related to accounting processes are common in fast-growing companies. Here are some significant ones:
The rapid growth of a business leads to a sharp increase in accounts receivable. If you do not have the mechanism to collect efficiently, your cash flow can be severely affected, and your liquidity can take a hit.
The basic accounting system that you adopted at the start may no longer be able to meet the needs of your growing business. You may need to invest in additional software with sophisticated features that supports efficient account analysis and decision-making.
Growing companies need to strengthen their internal controls with adequate tools and resources. Inadequate control can expose the business to security risks, reduced productivity, and revenue loss.
When a business grows in volume, bookkeepers often struggle to close books on time. Last-minute reconciliation leaves room for error, manipulation, and misreporting.
As an entrepreneur, you cannot ignore payroll management if you want to avoid severe disputes later on. But as the staff grows, keeping track of their working hours and pay amounts becomes difficult, and businesses often turn to payroll specialists for support.
If the challenges in accounting processes are impeding business growth, entrepreneurs need to take action to solve the problem. The first step could be hiring a good accountant to handle the growing accounting functions.
A new trend in accounting is outsourcing all or part of the accounting processes to accounting outsourcing service providers. The service providers efficiently manage your finance and accounting functions while you can focus on core business functions.
Regardless of whether companies outsource their accounting process or hire in-house accountants, entrepreneurs need to take an active interest in accounting operations. They must understand how the funds flow and where the business stands financially.
Risk management is an essential part of the accounting process. But before delegating the task to accountants, the board must be clear about its risk appetite. What type or degree of risk are they willing to take?
Once the risk tolerance level is communicated to the accountants, they can assess risks while preparing financial statements and create strategies to improve the accounting process.
Technology plays an essential role in improving the productivity and efficiency of the accounting process. Accounting teams that embrace technology are able to adapt better to changing circumstances and overcome challenges.
Here’s how growing businesses can leverage technology for accounting efficiency:
So are you ready to upgrade and scale your accounting process with the best accounting outsourcing service provider for businesses?
OHI is a specialized finance and accounting outsourcing service provider with over sixteen years of finance and accounting outsourcing experience. We have strong functional outsourcing expertise in end to end accounting processes covering daily accounting activities, reconciliations, month end and year-end account finalization processes, employee reimbursements, payroll processing, management reporting and financial analysis.
OHI serves close to 300+ clients across USA, UK and Canada. We invite you to experience finance and accounting outsourcing through us.
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