Setting up Accounting procedures and systems

Collecting Financial Documents

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Financial records are critical components of any accounting system. Both small and large businesses should implement systems to ensure that all income and expenses are recorded in some way, whether physically, electronically, or both.

Cash register tapes, invoices, incoming bills, salary records, tax forms, and travel receipts are all important financial documents. Financial documents can come from a variety of locations and employees. Set up a system to ensure that these documents reach a central accounting department in a timely manner.

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Posting Transactions

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Accountants used to manually enter transactions into the various accounts in the company's accounting system using financial documents. While this is still true to some extent, a growing number of businesses are utilizing technological solutions to automatically post transactions.

For example, proprietary automatic ordering software can be configured to automatically adjust the accounts in the accounting system via the company network. Accountants in this case use financial documents to verify accounting records and investigate any discrepancies.

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Account Reconciliation

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Accounts should be checked against external records on a regular basis in an accounting department. Checking internal records of company assets against bank account and investment portfolio statements, as well as checking your accounts payable records against the records of your suppliers, can alert your accounting team to any discrepancies.

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Accounts Payable And Receivable

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Accounts payable includes all money owed by your business to its suppliers and lenders. Accounts receivable is the inverse of accounts payable, and it includes all money owed to you by customers and other debtors. A comprehensive accounting system includes systems for tracking the due dates and statuses of accounts payable and receivable, and can even be set up to automatically pay bills on time or notify delinquent account holders.

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Internal And External Reporting

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An accounting system's ability to generate reports for management, investors, and other company stakeholders is critical. Internal reports help managers make decisions by presenting operational data in a strategic context, allowing them to identify trends and areas for potential improvement.

Throughout the year, publicly traded corporations are required to submit a variety of financial reports to federal authorities, including the annual report, Form 10K. However, even privately held businesses may be required to produce reports for external stakeholders such as lenders and private investors.