Category: Accounting

Along the journey of running a business as an entrepreneur, have you ever heard of interim reports? These reports are the financial statements that a company will report for a period that is shorter than a year. A company may choose to prepare these reports monthly, quarterly or semiannually. Typically, instead of having a full financial audit (Also see Introduction to Operational Audit) by hiring an external audit firm in Johor Bahru, the internal auditors of the company will be those who will review these reports.

According to the requirement of laws, business owners only need to generate financial reports annually. However, interim reports would be helpful to the investors as these reports can provide updated information to them between the annual reporting periods. Hence, interim reports help to establish transparent and more efficient communication between the company and the investors.

As investors make investment decisions around the year, they will not wait for the annual financial reports that the company will only issue once a year when the financial year comes to an end. In the world of business (Also see Identifying the Profitability of a Business), which is subject to various changes all the time, interim reports will be able to provide the shareholders and investors with a better picture of the financial position of the company. Thus, interim reporting helps the investors and the management to estimate the company’s annual earnings according to its interim financials. They will also be able to predict the cash flow (Also see Ways to Organize Your Business’s Cash Flow) and determine the turning points of the financial position of the company.

As we can see, interim reports can bring a lot of advantages to the management of the company as well as to its stakeholders. With the help of interim reports, the company will be able to improve its connection with the investors. If a company generates interim reports, it will be able to detect any material misstatements, frauds or errors that occur in the financial statements. This helps in preventing mistakes in annual financial reports at an earlier stage.

Also, the company’s management will be able to design the internal controls as well as necessary control procedures based on the interim reports. Doing so would help to improve the company’s compliance with the accounting policies and framework. For companies that are made up of different types of businesses from various sectors, interim reports would be useful as they can use these reports to trace whether the short-term measures they have taken align with their long-term strategies.

However, generating interim reports have some downsides too. As interim reports emphasise on short-term outcomes, these reports may not show a clear picture of the financial health of the business (Also see How a Good Accountant will Help Your Business to Grow and Save You Money?), and the information may even be distorted. This can cause confusion and can be harmful to investors and management. Also, as there is no regulatory framework that specifies the disclosure requirements for interim reporting, the company can be uncertain about the extent to which it should disclose the information.

Furthermore, the company may incur some of the expenses in a quarter, and it will only earn relative advantages in the coming quarters. Such expenses include those that the company spends on maintenance, repairs, advertising and so on. Even though these expenses can be quite beneficial to the company in the long run, they may cause misrepresentation of the company’s financial status for a particular quarter.

There are several good accountants in Singapore. Likely, most companies will first check the search engines to try and get an accountant from the various accounting services in Singapore. A good accountant does not only work on obtaining your accounts done up; Good accountants will need to do even more work than they should because of the market requirements of it.

The most effective point that an accountant (Also see The Accounting Estimates That the Accountants Use) can make is to have the accounts of a company on hand and to be able to figure out how you can help the client to conserve up on expenses. The market has an average cost for every item and each section of fees, so if you realise that your client is paying more than they should, you should share it with them.

The accountant can advise you on maximising the revenue on specific products and reducing product taxes (Also see Guide to Deferred Tax Liability) . The accountant can also work with the suppliers to offer good services to the customers that wish to have the most effective services and, at the same time, affordable prices.

How you identify certain products can make a distinction in your tax submission quantities, which will reduce the tax expenses (Also see How Do Provisions and Accrued Expenses Differ from Each Other?) , you will undoubtedly incur. Tax is one of the highest items you can be paying, but for the tax, an accountant can give the most effective suggestions to the person that wishes to deal with obtaining something done at a reduced price. Singapore has a lower tax rate as contrasted to many nations. However, there are still ways that you can save money on taxes as a lasting strategy, and this can work out well for the businessman (Also see Ways to Organize Your Business’s Cash Flow). He wishes to devote more of their income to the growing company instead of paying tax obligations. We should also remember that this needs to be done legally and within the means of the regulation!

The accountant can be a great ally to you by your side and work hard to achieve something that can bring you further and improve you generally.

As a part of accounting fundamentals, all accounting professionals are assumed to clarify what occurs within the accounts payable. If you have no accounting expertise, do not hesitate to let experts from an accounting firm in Malaysia help you.

The Accounts Payable account is an open account that lies within liabilities or creditors. If a company purchases products in advance, the purchases are made on credit while the invoices are recorded in the Accounts Payable. As a part of double entry accounting, the Accounts Payable needs to be credited, while one more account is debited when the supplier billing needs recording.

The objective of the Accounts payable procedure is to identify legal invoices and bills of the corporation. Before the billing issued by creditors is entered into accounting (Also see The Accounting Estimates That the Accountants Use) documents, the invoices must include the corporation’s purchase order, what the corporation has received, additional terms and even more.

Yet another advised accounting practice for accountants would be to ensure that there are internal controls for the accounts payable process. This ensures that the company’s assets are guarded. Internal control’s account fundamentals consist of fraudulent invoice settlement avoidance, inaccurate invoice settlement avoidance, double settlement avoidance, and organization practices to ensure all supplier payments are accounted for.

Purchase orders are highly recommended to be prepared by companies. Relevant departments should have the capacity to obtain a purchase order replicate describing:

• A Purchase order number.
• Company name.
• Supplier name.
• Amount of acquired things.
• Unit costs.
• Date required.
• Delivering methods
• Other relevant information.

Delivery order should also be generated to document products the company has obtained, as they will utilize them to reconcile with the purchase order details.

Once both purchase and delivery order have been integrated, they will require comparison with the supplier’s invoice in an accounting practice referred to as a three-way match. The three-way match includes the distinction of service or product description, amount, rate, terms of purchase order, illustration and amount of the delivery order, and the amount, price, and billing terms. The process is done when all three papers remain in the agreement, and the supplier’s billing will be input right into the Accounts Payable for credit plan.

Handling cash flow can be challenging when you’re starting a new business. You may consider outsourcing a professional accounting services in Johor Bahru that offers to take care of your company accounting. Cash flow problems are one of the main factors small enterprises fall short of. Having a clear system could assist you in taking the uncertainty out of the procedure and exactly how you manage finances. There are three simple ways to enhance your company’s cash flow and increase your possibilities of success shown below:

Analyze Your Cash Flow

Before optimizing how you handle cash flow, you need to understand what cash flow is clearly. A straightforward meaning is that cash flow is the amount of cash moving into and out of your company every month. This consists of cash gained through sales and money paid out to cover operating expenses. Evaluating your inflows and outflows is the most effective method to manage your cash flow. Begin by taking a close look at each of your income resources. These may include:

• Earned Income.
• Passive Income.
• Interest Income.
• Rental Income.
• Investment Income.

You’ll require to deduct your expenditures from your monthly income to reach your net earnings. Think about all your recurring expenses, including rental fees, insurance policies, loans, payroll expenses, and strategic financial investments. These sorts of investments are essential to expanding your company. Considering that cash flow (Also see Preparing the Statement of Cash Flow) can differ from month to month, specifically for seasonal businesses, it’s essential to keep track of your expenses carefully to have funds available to cover them and avoid any problems before they appear.

Optimize Payments Process

As soon as you clearly understand your income and expenditures, it’s time to enhance how you process payments. Firstly, you should understand the different kinds of payment processing systems. By discovering your choices for payment processing, you could choose a system that matches your company’s demands wisely. Undoubtedly, we should choose the affordable one. However, there’s no assurance that it will satisfy your needs. Remember that there are costs in every transaction that goes through the payment processor in addition to the monthly charge and initial setup cost. You could get more benefits from a system with a higher fixed monthly fee but a lower transaction fee if you have high value transactions. Regardless, familiarizing on your own with payment processing systems can assist you in enhancing the payment process according to your consumer’s requirements which might help you get paid quicker.

Manage Your Finances

To completely enhance your cash management, we suggest closely evaluating how you handle your finances. Ensuring your business and personal accounts (Also see Definition of a Control Account) are kept separate is a vital step and it could help you prevent unpleasant surprises, particularly in taxes. Handling cash flow can occasionally feel tough and frustrating regardless of how long you’ve been in business. Applying new techniques can be a big step forward if you seek to optimize your company’s finances.

As a business owner, liquid cash is vital in maintaining a company’s running. However, many business owners in some cases go without cash (Also see Types of Cash Flow Activities – Cash Flow from Investing Activities) inflow into business. This is usually considered a sign of financial challenges for the company. The main reason why companies get involved in this condition is because of the lack of a better solution to preserve cash flow (Also see How to Prepare a Cash Flow Statement by Using the Direct and Indirect Methods?). A company works to keep its cash position and maximize its profit by preserving cash flow. As a business owner, instead of investing time and effort in accounting, you should employ an accounting services in Malaysia to help you focus on your core tasks.  

Can a company boost cash flow and make the best use of profits together? Indeed, below are some vital steps for doing so.

1. Make Postponed Payments

It’s very important to make sure the company’s cash flow is preserved at a specific level for running the business as a business owner. If you have suppliers with whom you have developed a good working partnership, attempt to work out a more extended payment period with them to ensure that the cash can be returned to the business. Doing so acts as killing two birds with one stone because you could make profits while also maintaining your company’s financial debt free at the same time.

2. Trade Products and Services

Instead of paying for whatever is supplied to the business using cash (Also see Why Do We Need Cash Flow Statement?), it would certainly be wise for every business owner to attempt and trade products for products (barter trade). Keep an eye out for the supplier that needs products and provide them with products you lack to run your company efficiently. This is an excellent way for any type of company to preserve cash and maintain cash inflow.

3. Buy Used Equipment

Before buying any kind of brand-new equipment, it is good to research whether you can obtain the same equipment that has been used yet is still in good condition. Buying used equipment is much cheaper than buying brand-new ones, which is a better method to conserve cash. Every company intends to make the best use of profits, and one of the methods is minimizing the expenses. If you cut the expenses will reduce the cash outflow, and if the cash inflow is increased, the company will optimize its profit.

4. Equipment Repairs and Maintenance

Instead of buying brand-new equipment, investing in your current ones is good. You need a regular maintenance program for all equipment the company presently has. Hire an expert equipment mechanic or technician with the certifications and experience to work on your equipment to make sure that all your equipment is in good operating condition constantly. This is vital since it will prevent you from commonly having mechanical malfunctions.

5. Layoff and Reduction

Another factor that can drown your cash flow is having too many staff members in your company. Instead of hiring new staff members whenever the company expands, it is suggested to use the current employees’ potential to their optimal potential. Before hiring a new staff member in the company, you should evaluate the advantages and disadvantages of such an action.