Accounting Archives - Accountex

What Are Controllable Costs?

accountexwordpress — Thu, 27 Jul 2023 18:22:54 +0000

What Are Controllable Costs?

The answer to the question, ‘what are controllable costs?’ is fairly simple. Controllable costs are costs a manager can control. It is important to recognize controllable costs because it leads to a deeper understanding of a company’s profitability.

If you want to understand where you can cut costs, or why your company’s profit margins are small, knowing which costs are controllable and which are not, is a key part of solving the problem.

Examples Of Controllable Costs

Of course, the next question becomes: what costs are controllable? What expenses can a company truly reduce at will, and what costs are fixed?

The truth is that most costs can be controlled. This doesn’t mean that these costs can be reduced to zero – it just means that managers have a choice in how great an expense they will incur. Some broad examples of controllable costs include:

Raw materials
Supplies
Maintenance expenses
Labor costs, including employee training costs, benefits, and bonuses
Advertising expenses
Corporate social donations

Clearly, some of these costs are more controllable than others. Most companies cannot reduce these expenses indefinitely – you must have materials, you must pay labor costs.

Many of these costs are directly tied to other costs in the market. Material costs are determined by suppliers. Employees can leave for higher paying jobs. Most companies are not so well known that they can afford to eliminate their advertising and marketing.

Some of these costs are what you might call “partly controllable”. Employees may dictate the cost of human labor, but labor costs can be reduced with technology. Advertising expenses can be directed to more efficient channels. Donations can be reduced or eliminated in some instances.

Controllable vs Uncontrollable Costs

On the other hand, there are uncontrollable costs. These are fixed every period, and cannot be reduced in the short term. Examples of uncontrollable costs include:

Depreciation
Interest payments
Rent expense
Taxes – these are not necessarily fixed, but are not determined by the company and its actions

Some of these uncontrollable costs can be reduced in the long term. Interest rates can be negotiated; new leases can be signed. When looking at controllable costs, though, we’re looking at the short term. Can we reduce this cost next month, or next quarter? Not in the next year.

Establishing Cost Controls

The best way to establish strong cost controls is through responsibility accounting. Responsibility accounting means assigning each cost to the person who is most likely to understand that cost and its drivers.

For example, it makes sense to assign responsibility for labor and material costs to the operations department. On the other hand, corporate donation decisions should most likely be made by a higher level executive, like a CFO or CEO. By assigning the costs this way, the company will be able to manage costs in the most efficient and realistic way.

How Accountex Can Help

Accountex offers bookkeeping services, accounting services, and CPA firm-level consulting services. While we are based in the greater Dallas-Fort Worth area and serve clients around the country.

Accountex can help you identify controllable costs that can be reduced, and work together with your management to create responsibility accounting protocols to keep your business profitable into the future.

The post What Are Controllable Costs? appeared first on Accountex.

The Pros & Cons of Outsourced Accounting Services

accountexwordpress — Wed, 26 Jul 2023 20:17:09 +0000

The Pros & Cons of Outsourced Accounting Services

What Accounting Services Can Be Outsourced?

As an entrepreneur, your days are filled with countless tasks and responsibilities, leaving you with little time to handle all the accounting responsibilities necessary to run your business smoothly.

Fortunately, outsourcing has emerged as a viable solution for businesses like yours. But which accounting services can you effectively outsource?

Outsourced accounting services have gained popularity amongst those seeking to reduce overhead expenses and increase their overall efficiency.

By outsourcing your accounting and bookkeeping services, you can not only save precious time and money but also gain access to high-quality financial expertise and advice.

At Accountex we provide a range of accounting services for small businesses. Take a look at how we can help you.

Accounts Payable (Bills & Payments)

Things like invoice processing and payment reconciliations can be time consuming. By outsourcing your bookkeeping services, you can ensure accurate and timely bill payments, reduce the risk of errors and late fees, and maintain positive vendor relationships.

Accounts Receivable (Invoices & Collection)

Outsourcing your accounts receivable function helps you stay on top of cash flow. Professional accounting services can handle invoicing for you, follow-up on outstanding payments, and manage collections, ensuring a healthy revenue stream.

Daily General Ledger Maintenance

Maintaining an accurate general ledger is crucial for your financial reporting. By outsourcing your daily general ledger maintenance, you can ensure that your financial records are up to date and compliant with accounting standards, providing a solid foundation for your reporting.

Time Tracking & Job Cost Reporting

Time tracking and job cost reporting are useful components of accounting services. They provide valuable insights into project profitability and resource allocation. These reports offer a comprehensive view of the time spent on different tasks and associated costs, allowing you to assess project performance and make informed decisions.

Many businesses often overlook this aspect, but it presents an easy win for you. With these reports you can reduce costs, eliminate unnecessary time wastage, and optimize your project outcomes. This could be a real win for your business!

Payroll Processing

Payroll processing involves complex calculations, tax deductions, and regulatory compliance. By handing over this key accounting service to a professional, you can guarantee accurate and timely employee payments, tax filings, and regulatory reporting, while also alleviating the burden of staying up to date with constantly changing payroll laws.

Expense Classification

Properly categorizing your expenses is vital for financial analysis and budgeting. It gives you detailed and organized records which in turn allows for accurate expense reporting and the ability to identify cost-saving opportunities. This is really the foundation of accurate reporting.

Sales Commissions

Managing sales commissions can be a complex task, especially if you have a large sales team. By outsourcing this accounting service, you can ensure accurate commission calculations, timely payments, and transparent reporting, motivating your sales professionals and driving performance.

Sales & Use Tax Filing

Complying with sales and use tax regulations can be overwhelming. Opting to put it in the hands of professional accounting services will ensure accurate tax calculations, timely submissions, and minimize the risk of penalties or audits. Who wouldn’t want to avoid that?

Bank Account, Credit Card, and PayPal Reconciliation

Reconciling your financial accounts is an important part of maintaining accurate records. You can identify discrepancies, detect fraud, and ensure that all your financial transactions are properly recorded and accounted for.

Balance Sheet Generation And Review

Outsourcing the generation and review of your balance sheets allows you to have a clear snapshot of your financial position. Good accounting services can take it a step further and provide valuable insights and recommendations to you that will help you improve your financial health and identify areas for growth.

Budgeting & Forecasting

Your business should be putting together accurate financial projections to help you plan ahead and make informed decisions. At Accountex we help you develop realistic budgets, monitor your financial performance, and adjust strategies as needed.

Monthly Reporting Packages

There are a number of accounting services that can be outsourced but what you really need as a business owner is information. Monthly reporting plays a vital role in keeping entrepreneurs informed about their company’s financial performance. These reports provide a snapshot of key financial metrics and facilitate informed decision-making.

At Accountex, our monthly reporting package includes:

Balance Sheet
Profit and Loss Statement – Month
Profit and Loss Statement – YTD
Profit and Loss Statement by Class – Month
Profit and Loss Statement by Class – YTD
Cash Flow Statement
Accounts Receivable Aging
Accounts Payable Aging
Prepaid Expenses by Vendor
Accrued Expenses by Vendor
Deferred Revenue by Customer
Open Sales Order by Customer
General Ledger

Outsourcing your accounting and bookkeeping services offers you a range of benefits. By entrusting these essential financial tasks to the experienced professionals at Accountex, you can focus on your core competencies, drive growth, and make informed decisions based on accurate and reliable financial data.

FAQs

What is financial accounting advisory services?

It involves providing specialized guidance and support to businesses and individuals in navigating complex financial accounting matters. These services may include assistance with financial reporting, regulatory compliance, accounting standards interpretation, and strategic financial decision-making.

Why outsource accounting services?

Outsourcing accounting and bookkeeping services allows businesses to leverage the expertise and efficiency of external professionals, reducing costs, improving accuracy, and freeing up valuable time and resources.

What is accounting and bookkeeping services?

Accounting and bookkeeping services involve the systematic recording, organizing, and management of financial transactions and records for businesses or individuals. This includes tasks such as maintaining financial books, recording income and expenses, reconciling bank statements, preparing financial statements, and ensuring compliance with accounting regulations.

The post The Pros & Cons of Outsourced Accounting Services appeared first on Accountex.

9 Ways a Resource Plan Can Help Your Business

accountexwordpress — Wed, 28 Jun 2023 10:34:59 +0000

9 Ways a Resource Plan Can Help Your Business

How A Resource Plan Can Help Your Business

A simple resource plan can make a significant impact on your business. It’s easy to overlook the power of resource planning tools and assume that only grand changes can bring the results you want.

A well-thought-out resource plan can save you time and money as well as create a sense of control and motivation among your staff. With everyone on the same page, tasks are completed smoothly and efficiently.

What Is A Resource Plan?

A resource plan is a detailed strategy that identifies and allocates the necessary resources needed to successfully complete a project or achieve specific objectives. These resources can include people, equipment, budget, and time. This plan helps organizations to effectively manage and utilize their resources, ensuring that they are allocated in the most efficient and optimal way to support project goals and meet timelines.

When Should A Business Use A Resource Plan?

A business should use a resource plan when undertaking projects or initiatives that require the allocation and management of various resources. Here are a few situations where a resource plan can be beneficial:

Project Management

When embarking on a new project, a resource plan helps identify the specific resources needed, such as personnel, equipment.

Capacity Planning

Businesses can use a resource plan to assess their current resource capacity and identify any gaps or limitations.

Resource Optimization

By having a resource plan in place, businesses can optimize resource utilization, preventing overallocation or underutilization of resources.

Business Expansion

When scaling up operations or entering new markets it’s important to know what resources are available.

10 Benefits Of A Resource Plan

A well-executed resource plan offers many benefits to your business. Here are 10 ways a resource plan can help optimize your operations and drive success.

1. Efficient Resource Allocation

A resource plan helps you allocate resources effectively, ensuring that the right people, tools, and materials are available when needed. This avoids delays, bottlenecks, waste and unnecessary costs.

2. Improved Productivity

You can streamline workflows and eliminate inefficiencies. This leads to increased productivity as tasks are completed in a timely manner, maximizing output.

3. Effective Time Management

You’re able to prioritize tasks, set realistic timelines, and allocate resources accordingly. This improves time management and ensures that projects are completed on schedule.

4. Better Decision-Making

With a comprehensive resource plan, you have a holistic view of your resources, enabling informed decision-making. You can identify potential constraints or gaps and make adjustments proactively.

5. Risk Mitigation

A resource plan allows you to anticipate potential risks and allocate resources to mitigate them. It helps you identify potential bottlenecks, dependencies, and resource shortages, enabling proactive risk management.

6. Cost Optimization

By effectively managing your resources, you can control costs. A resource plan helps you identify areas where cost-saving measures can be implemented, leading to improved financial performance.

7. Scalability & Flexibility

With a plan you’ll have insights into your business needs and capacity. It allows you to scale your operations efficiently, whether it’s expanding your workforce, adjusting project timelines, or accommodating changes in demand.

8. Improved Communication & Collaboration

Communicate and collaborate within your team better. A plan provides visibility into resource availability, enabling effective coordination and reducing conflicts.

9. Strategic Alignment

With a resource plan, you can align your resource allocation with your business goals and strategic objectives. It ensures that your resources are aligned with your priorities, optimizing your overall business performance.

FAQs

What makes a good resource plan?

A good resource plan includes clear objectives, comprehensive inventory, accurate resource assessment, effective allocation, timely scheduling, regular monitoring, risk assessment and mitigation, collaboration and communication, flexibility and adaptability, and performance evaluation.

What are key recommendations for planning resource management?

Here are some key recommendations for planning resource management:

Understand project requirements.
Identify resource dependencies.
Conduct resource gap analysis.
Prioritize resource allocation.
Consider resource constraints.
Implement effective communication channels.
Continuously monitor resource utilization.
Plan for contingencies.
Leverage technology and tools.
Regularly review and update resource plans.

What resource planning tools can I use?

Online accounting software: Xero, QuickBooks Online, or Wave.
Project management software: Tools like Microsoft Project, Asana, or Trello.
Spreadsheets: Microsoft Excel or Google Sheets.

The post 9 Ways a Resource Plan Can Help Your Business appeared first on Accountex.

The 8 Steps Of The Accounting Cycle

accountexwordpress — Mon, 05 Jun 2023 10:35:27 +0000

The 8 Steps Of The Accounting Cycle

There are eight accounting cycle steps that every small business owner can follow to ensure proper bookkeeping. While accounting software and technology programs certainly help automate many of these steps, having a solid understanding of the accounting cycle is important – especially for small businesses with minimal technical support.

The steps of the accounting cycle provide a clear guide for recording, analyzing, and reporting a company’s financial activities. With the right knowledge and tools at your disposal, you can confidently manage your finances and take your business to the next level.

What Is The Accounting Cycle?

This process is a series of steps that businesses follow to record and track their finances, from the initial transaction all the way through to the final reporting stage.

Every individual company will need to modify the eight step accounting cycle to fit its business model and accounting procedures, including the choice between accrual and cash accounting and single-entry versus double-entry accounting (but let’s not get too technical right now)

Step 1: Identify Transactions

The first step in the accounting cycle is to identify all the transactions that occur in your business during the reporting period. This includes sales, purchases, expenses, and any other financial transactions that occur.

Every transaction must be properly recorded on your company’s books to ensure accurate financial statements. It’s important to keep proper records of transactions as this information will be used to create financial reports at the end of the cycle.

Step 2: Record Transactions In A Journal

Once transactions have been identified, they need to be recorded in a journal. A journal is a record of all financial transactions, including the date of the transaction, the accounts affected, and the amounts involved.

This step in the accounting cycle is important as it ensures that all transactions are recorded in the correct accounts and with the correct amounts. This will make sure that your financial statements accurately reflect the financial position of the business.

Step 3: Posting

After transactions have been recorded in the journal, it’s time to move them over to the general ledger. This is where all the financial transactions for your business are recorded and organized by account. By grouping transactions in this way, you’ll be able to get a clearer picture of your financial position and monitor your business’s status more easily.

Step 4: Unadjusted Trial Balance

As the accounting period comes to a close, it’s time to take a closer look at your finances and ensure that everything is in order. That’s where the unadjusted trial balance is useful. This helpful step in the accounting cycle calculates the total credit and debit balances, giving you a clear picture of your company’s unadjusted balances in each account.

By comparing these balances, you can ensure that your financial records are accurate and up-to-date, and take the necessary steps to address any discrepancies.

Step 5: Worksheet

The fifth step in the accounting cycle involves analyzing your worksheet and identifying any necessary adjusting entries. This process is crucial for ensuring that your debits and credits are equal and that your financial records are accurate. By creating and using a worksheet, you can easily identify any discrepancies and make the necessary adjustments to get your finances back on track.

Step 6: Adjusting Journal Entries

In the sixth step, a bookkeeper makes adjustments. Journal entries are used where adjustments are necessary. Adjusting entries are made to ensure that the financial statements accurately reflect the financial position of the business at that point in time. These adjustments are made to account for items such as depreciation, bad debts, and other items that were not recorded in the initial journal entries.

For example, often your business may have issued an invoice but not received the income in the same period. That income needs to be reported in the period in which the invoice went out, meaning that an adjusted journal entry needs to be made.

Step 7: Financial Statements

Once all the necessary adjusting entries have been made, it’s time to generate your financial statements in the seventh step of the accounting cycle. These statements provide a comprehensive overview of your business’s financial position, including important details like revenues, expenses, assets, and liabilities. And they’re not just for internal use – investors, lenders, and other stakeholders will use these statements to evaluate your company’s financial health and make important decisions.

Step 8: Closing The Books

Congratulations, you’ve made it to the final step of the accounting cycle! In the eighth step, it’s time to close your books and prepare for a new reporting period. By doing so, you’ll be able to analyze your company’s performance over the previous period.

At this point it’s a good idea to meet with your accountant and get their insights into your business. A good accountant should be able to go through your records and identify areas to cut expenses, save tax, and boost profitability.

What Is The Purpose Of The Accounting Cycle?

By following this eight-step process, small business owners can maintain accurate and efficient financial performance analysis, making it easier to make informed decisions and plan for the future.

Accounting Cycle vs Budget Cycle

What’s the difference between the accounting cycle and the budget cycle?

While the accounting cycle looks at past financial transactions and creates reports, the budget cycle is an estimation of revenue and expenses over a specified period looking forward. It’s used to forecast revenues and expenses in the future. It also looks at future financial projections and is a useful resource for creating plans.

Can I Outsource the Accounting Cycle Steps?

Outsourcing your accounting functions offers several benefits, including cost savings, improved accuracy, and access to specialized expertise.

As a busy entrepreneur, you’re always looking for ways to streamline your business and make your life easier. Accountex can take care of all of your accounting needs and provide you with the advice to run a better business. Reach out to the team today.

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