Accounting challenges faced by every business owner

Greetings students. For this week i would like to talk about the word that most business owners dread or ignore completely and that word is accounting. in this instance we are talking about accounting for funds, resources, losses and other financial aspects of your business. I am not versed in business terms and ideas so i will keep my explanations simple so we all understand. Any business in order to have profits no matter how small the business is should have ways of accounting for every cent that goes in and out of the company. Because this is remarkably difficult many business owners face problems and the most common ones will be discussed below.Small businesses report their top accounting challenges are:

• accounts receivable/collections,

these refer to orders or claims that would have been made by the client. The client may order products worth $5, another will order products worth $10 and so on. These are monies owed to a company shown through invoices and books depending on the kind of owner. This simply means that the company's monies, your money will be out there and instead of generating income you incur debts because people just do not give you your money. One way to deal with this problem is to ask clients to pay a 50% deposit when they make their orders so that if they do not pay for the product you do not generate any losses and this requires careful planning and calculations.

• cash flow,

This refers to the amount of money available to an organisation. When i was going through some of the definitions i realised just how little i know about business lol...i was very distressed but i did get that cash flow is about monitoring the money that goes in and out of your company. This ensures that you have money to pay employees at the end of the month and ensures that you can get new products too. And again the only way to monitor this is to sit down draft a budget each month and have financial plans.

• managing paperwork,

For me, this aspect is particularly problematic as i have very little paperwork to deal with and suspect that none of the documents i have are important. This is however not true as any business owner has receipts, invoices, contracts and the like and thus should have a proper filing system. If you are really successful you can hire someone to do your paperwork for you but if you are a student then all you need to do is to create simple files on your laptop and arrange your files in folders or buy hard files and arrange them in orderly fashion. These problems were compiled in a business report called Small Business Accounting Report survey. I encourage you to look at this survey as it is brilliant and will help you in achieving financial literacy and ability. That is all for today happy moneymaking