Managing finances can be challenging, especially for small businesses. Keeping track of expenses and ensuring that they stay within budget can be a daunting task, but it is essential for the success of any business.
One way to manage finances effectively is through cost controls and daily reconciliation bookkeeping. Here’s how you can corral cost controls and daily reconciliation.
Cost Controls
Cost controls are a system that helps a business to manage expenses by setting limits on the amount of money that can be spent. This system involves setting a budget for each expense category, tracking expenses, and comparing actual spending against the budget. The first step in implementing cost controls is to identify the areas where the business spends the most money. This could be anything from supplies to marketing expenses.
“Once the areas of high spending have been identified, a budget should be created for each category,” suggests Jennifer Scott, HireEffect’s founder and CEO. “The budget should be realistic and based on the actual needs of the business and take into account any seasonal or cyclical fluctuations in expenses.”
“Implementing efficient cost control measures and systems can give your business access to valuable insights to make more informed financial decisions,” added Scott.
Cost Control in 5 Steps
Cost control techniques may be broken down into five areas, including:
- Planning your budget
- Monitoring expenses
- Using change control systems
- Time management
- Tracking earned value
After the budget has been created, expenses should be tracked daily. This can be done using a spreadsheet or accounting software. Each expense should be entered into the system, and the total spending for each category should be tracked. This allows you to see how much money is being spent and whether it is within the budget.
If you want to see this in action, give us a call. We’d be happy to show you the tools we use to corral costs.
Daily Reconciliation
Daily reconciliation bookkeeping is another essential tool for managing finances. This involves comparing the business’s bank statements to its accounting records to ensure that everything is accurate and up-to-date. Daily reconciliation bookkeeping can help prevent errors and fraud, and it ensures that the business is aware of its financial situation at all times.
To implement daily reconciliation bookkeeping, the business should designate a specific time each day to reconcile its accounts. This should be done by comparing the bank statements to the accounting records and verifying that everything matches up. Any discrepancies should be investigated and resolved immediately.
Reconciliation Tips
- Keep your documentation up to date
- Reconcile at regular intervals
- Remember the cash register if you’re a retailer
- Look for common discrepancies like duplicate entries, missing transactions, misplaced decimal points, and transposed digits
- Outsource and automate (our personal favorite)
Cost controls and daily reconciliation bookkeeping are critical tools for managing finances effectively. By implementing these systems, a business can gain a better understanding of its financial situation, prevent errors and fraud, and ensure that it stays within budget. While implementing these systems may take some time and effort, the benefits are well worth it in the long run.
That’s why hiring bookkeeping services, like ours, takes tasks off your plate while we reduce your administrative headaches, drive process efficiency, and unlock your growth potential.