How to Profit from Accounting

Accounting is more than just passively tabulating history. It is an active process of influencing management decisions and interpreting their results.

• Good bookkeeping/accounting procedures
• Reduce the probability of expensive errors.
• Increase the probability of making "good" business decisions.
• Reduce the disruption of audits and tax return preparation.
• Increase time for management to focus on the business.
• Improve confidence of bankers/investors.
• Budgeting/forecasting identifies objectives against which to evaluate performance.
• An up-to-date cash balance avoids inadvertent overdrafts.
• Accurate/timely billing improves collection of receivables.
• Careful processing of vendor bills
• Helps to produce a good credit rating.
• Produces "pass-through" billing to customers where possible.
• Takes advantage of vendor cash discounts when available.
• Avoids penalties for late payment.
• Avoids paying for goods/services which were not received.
• Avoids duplicate payments.
• Pays a bill when it is due, but not before.
• Cash flow projection helps to
• Maximize investment revenue.
• Minimize borrowing costs.
• Accurate inventory records
• Reduce unnecessary purchases.
• Discourage pilferage.
• Avoid disruptions of production due to material shortage.
• Reduce the likelihood of storing obsolete merchandise.
• Accurate/timely sales bookkeeping stimulates sales personnel.
• Accurate cost/expense bookkeeping
• Produces more competitive product pricing.
• Encourages personal accountability.
• Discourages extravagant spending.