No matter the size of your business, accounting can still be a challenge. Smart business leaders hire the help of accounting services in Singapore to learn how they can use this age-old science to enhance the bottom line of their respective corporate entity.
If you thought excellent financials are a result of high revenues only, think twice. Top Singapore accounting firms unanimously agree that the trick to attaining excellent financial health is being smart about the money already in your books.
Below are six accounting tricks for large firms.
Invoice on Time and Follow up on A/R
If someone, a business or client has enjoyed your service or product, don’t wait a minute before you bill them. Don’t put it off and deny your company the much-needed cash flow. A delay on billing triggers a similar response from the client, strangling your business of cash flow and crippling expansion. Instead, complement your highly efficient billing system with a consistent and accurate follow up a mechanism for your Accounts Receivable. It encourages the client to make payment on time and in full.
Extend Terms for A/P
A corollary to the first tip is extending the payment terms of your accounts payable. We all know that most bills fall due between 30 and 90 days. However, you can negotiate with your suppliers for reasonable extensions in your payment terms. Most businesses would not turn down a request for an extension by, say 15 days. You may as well choose to be craftier and negotiate these terms before you make a purchase.
Regulate Your Tax Liability
If you have a high income in a particular year, plan for high value asset acquisition or activities such as office repairs in the same year. Increasing capital expenditure during a high performance year gives you a healthy balance sheet while reducing your tax liability.
Hire a Reputable Accounting Firm
You may have been a knock out accountant in your heyday. But that will no longer be valid when you move to corporate leadership. If you want to keep your books on the right track, bring in a competent and reputable accounting firm to handle your accounting function. They have better perspectives and can advise you on ways you can cut unnecessary expenditure or avoid tax errors.
The Big Bath Technique
The Big bath technique entails consolidating losses or income into one set of a company’s accounts, making an exaggerated short-term outlook for the company. It can help you escape lousy performance with a slap on the wrist in the name of “a one-off event” or get a reasonable share price. This technique is often used to influence negotiations during mergers and acquisitions.
Accelerate Expenses Preceding an Acquisition
A target company can also choose to pre-pay as many expenses as it can manage before completion of the merger. After the merger, the firm will have a period of elevated revenues (since the payment was booked in the previous period). This move is also likely to boost the earnings per share of the combined entity, keeping the company’s financials looking healthy.
To conclude, Excellent Accounting Tricks but You’ll need to Be Cautious
The above techniques are handy for any large firm. However, there are several other tricks to make your financials look healthy. These tricks should only be used when advised by a reputable accounting firm in Singapore to ensure you stay the right side of Singapore’s financial laws.