5 Crucial Accounting Practices for Better Financial Management

Gauri Sachan | Updated on: March 22, 2024

As a business owner, you know your accounting practices and how you manage your cash flow and other assets/liabilities determine your business success. These are also the areas that pose the most pressing challenges. However, when managed properly, they can bring in excellent growth opportunities for you.

This blog will shed light on five important accounting practices you need to follow to overcome the challenges of 2024 and improve your business’s financial management.

Priority is always on fundamentals

As a business owner, you might see new financial and accounting trends with every passing year. Most businesses are tempted to focus on these trends rather than taking care of their accounting fundamentals.

You can easily adapt to these trends if you have a strong accounting & finance framework for your business. Some points you need to focus on to strengthen your fundamentals are:

Selection of accounting method – You can opt for either the cash method or the accrual method of accounting, depending on the nature and size of your business.
Management of cash flow – The financial management of your business will improve when you manage your cash flow properly.
Segregate business expenses from personal expenses – Always keep your business expenses separate from your personal expenses, as it will help you track your progress, pay your taxes, and make accurate forecasts.

Getting friendly with technology

With the advancement of technology, it is only natural for you to introduce technology in your business to streamline your finance & accounting processes. Using the latest accounting software tools such as TallyPrime can help you reduce manual errors to a considerable extent.

The best part of using these tools is you can automate your accounting operations and learn cloud-based accounting practices. This way, your processes get standardized and can be seamlessly integrated into your operations.

Some of the new accounting and finance trends that you can imbibe in your business for 2024 are:

Using accounting software and fintech tools to automate your repetitive, error-prone processes regarding finances and accounting
Ensuring that all accounting operations comply with the regulations of the government, irrespective of the trend you follow
Using shared folders and cloud-based systems to encourage remote work and dynamic nature of work, wherever possible
Focusing on data security, cyber security, and risk compliance while recording accounting entries

Preparing accurate financial statements

Your accounting entries give you an idea about the financial health of your business, helping you make the right business decisions at the right time. So, you must adhere to the proper rules while recording your entries.

Here are the three most important financial statements that you have to maintain accurately, at all times.

Balance Sheet: It helps you understand your business’s value, as it contains your assets, liabilities, and shareholders’ equity.
Profit and Loss Statement: Also known as the income statement, it tells you if your business has been making a profit or not.
Cash Flow Statement – This statement records your cash inflow and outflow accurately and lets you know your liquidity position for a given period.

Hiring an expert

With more competition every year, you must remain on top of your operations at all times. Accurately recording and classifying accounting entries may take up a lot of your time, leaving you with no spare time for your other operations.

Whether it is 2024 or any other year, the smart thing to do is to hire professionals to take care of your finance and accounting operations. Having an in-house professional accountant (with knowledge of many accounting software tools) can help you in the following ways:

Ensure financial compliance for every single transaction recorded
Payment of taxes on time
Preparing accurate financial statements with detailed reports and analytics
Helping the management make critical business decisions
Professionals bring specialized knowledge in various factors, thereby helping you identify errors quickly

Say hello to new finance trends of 2024

Using accounting software, artificial intelligence, and machine learning are already steps in the right direction to transform how businesses carry out accounting.

A few other noteworthy trends that are set to rule the finance world in 2024 are:

Machine Learning tools to make predictive financial models and interpret financial data better than before
Blockchain Accounting to change the conventional way of bookkeeping and recording entries
Cloud-based accounting to access real-time data from anywhere any time
Data privacy and cybersecurity compliance to protect the confidentiality of sensitive financial data
Sustainable or green accounting to account for environmental factors in financial reports
Customized and predictive accounting to prepare tailor-made reports for customers

Bottom line

As you can see from the above tips, you can easily improve the financial management of your business if you adhere to the basics of accounting at all times. The first 4 tips mentioned here are not just trends to be followed in 2024, but they are accounting best practices that you should always follow. When you take care of these, the 5th tip of adapting to new finance trends will come naturally to you.