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Inventory And Accounts Receivable Services You May Need For Your Small Business
Louane Dumont
Small businesses need many different types of accounting services, including services relating to inventory and accounts receivable. If your business sells goods on account, you may want to hire a company to help you manage these two important facets of your business. Here are two tasks that relate to these aspects of business that you may need help with.
Taking a Physical Inventory
Periodically, any business that carries inventory should complete a physical inventory. Taking a physical inventory is something that involves counting and recording every single piece of inventory the company has on hand. Depending on how much inventory your business has, this process could take an entire day or much longer.
You could take a physical inventory yourself, but this could be very time-consuming. A better option is to hire an inventory service company to do this for you, and this method offers several benefits. The first is that it is done by professionals, and the second is that it will be completed quickly.
Taking a physical inventory is important for many reasons, including that it:
- Will help you update your computer system so it accurately reflects the inventory you actually have on hand
- Can help you uncover theft issues occurring in your company
- Is designed to ensure that your inventory account has an accurate balance on your books
After you take a physical inventory count, you may discover that you have less inventory than you expected. You can assume that some of the items you are missing may have been items that you could not sell because they were broken or packed improperly.
You should expect to be missing some inventory, but if you are missing a lot of inventory, it could indicate a problem with theft in your company.
Updating the inventory account in your computer system is also part of this process, and this is something that is very important. If your inventory account was at $10,500 before the physical inventory, but the actual amount of inventory you have is $9,500, you must post a transaction so the balance in the account is accurate. If the inventory balance is not accurate, it can be misleading on your financial statements.
Updating And Managing Accounts Receivable
The second task related to inventory involves the accounts receivable account. This account is used to track credit sales, and it too must be updated from time to time. Just like with your inventory account, keeping an accurate balance in the accounts receivable is also important.
An accounts receivable account is typically off only when the balance includes accounts that are considered uncollectible. An uncollectible account is one that you are assuming will never get paid. While there is no set timeline as to when you should write an account off as uncollectible, your business may institute some guidelines about this. For example, you could state that once an account is 180 days past due, it should be written off as uncollectible.
If you need assistance writing off accounts, you can hire an accounting firm to help you, but there is another thing you can do with these accounts. Instead of simply writing off the balances and assuming you will never collect what is owed, you could use one of these options to help you generate some cash from them:
- Hire a collection agency – Collection agencies offer a type of money service that could be useful in helping you collect at least part of the money you are owed.
- Sell your debts – The second option you have is to sell your uncollectible accounts to a debt purchasing company. When this happens, you will receive cash for the debts in exchange for the rights to them.
Running a small business often requires hiring other companies to help you with various types of accounting services. If you would like to learn more about how these services can help you, look for a company that specializes in accounting services for small businesses.
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