Collecting Financial Documents
Financial records are vital in any accounting system. Small and large businesses alike should put systems in place to ensure that all income and expenses are recorded in some way, physically, electronically or both.
Important financial documents include cash register tapes, invoices, incoming bills, salaries records, tax forms and travel receipts. Financial documents can originate from a diverse range of locations and employees. Put a system in place to ensure that these documents make their way to a central accounting department in a timely manner.
Traditionally, accountants used financial documents to manually enter transactions into the various accounts in the company’s accounting system. While this is still true to a certain extent, a large number of businesses have taken advantage of technological solutions to automatically post transactions.
Proprietary automatic ordering software, for example, can be set up to automatically adjust the accounts in the accounting system via the company network. In this case, accountants use financial documents to verify accounting records and investigate any discrepancies.
Checking your accounts against external records should be a regular activity in an accounting department. Checking internal records of company assets against bank account and investment portfolio statements can alert your accounting team to any differences between the two, as can checking your accounts payable records with your suppliers’ records.
Accounts Payable And Receivable
Accounts payable consists of all money owed by your company to its suppliers and lenders. Accounts receivable is the exact opposite, and consists of all money owed to you by customers and other debtors. A thorough accounting system involves systems of tracking the due dates and statuses of accounts payable and receivable, and can even be set up to automatically pay bills on time or send notifications to delinquent account holders.
Internal And External Reporting
Creating reports for management, investors and other company stakeholders is a vital function of an accounting system. Internal reports aid managers in decision-making by presenting operational data in a strategically relevant manner, allowing them to spot trends and areas of potential improvement.
Publicly traded corporations are required to submit a range of financial reports to federal authorities throughout the year, including the annual report, Form 10K. Even privately held companies, however, may find themselves required to create reports for external stakeholders, such as lenders and private investors.