Real-time
accounting is when your books are caught up to the present and you know exactly
where you stand with your account balances, revenue, and profit. It’s truly doing your accounting in
real time.
The
opposite of real-time accounting is getting your books done once a year (or
worse, being years behind). When
you wait to do your books once a year, say at tax time, you lose the power of
being able to monetize opportunities in real time. Some examples are realizing your prices are too low
and your profit margins need adjustment, seeing what’s selling well and restocking
sooner than later, or discovering a worker is not productive based on your pay
rates and prices.
Today’s
cloud accounting systems and bank feeds allow you the potential for real-time
accounting, where the benefits include:
·
Better
cash flow management
·
Faster
correction of pricing, hiring, stocking, and margin mistakes, saving money and
increasing profits faster
·
Faster
identification of any tax liabilities as well as the ability to reduce or
eliminate penalties from paying late or underestimating taxes due
·
Ability
to see whether you are making a profit or a loss
·
Potential
to catch fraud or identity theft much faster if you become a victim
·
Lower
accounting costs when errors snowball over time
·
More
peace of mind
·
Ability
to be more proactive in your business management, capitalizing on opportunities
that show themselves in the numbers
Consider
moving to real-time accounting if you haven’t already. For example, if your books are done
annually, moving to quarterly or monthly services will begin to provide the
advantages listed above.
