Managing financial admin, like cash flow, invoices, vendors and taxes, probably isn’t your favourite part of running a business. Nevertheless, having basic accounting skills is essential to driving success, especially in the early stages when you’re getting your feet off the ground. 

This guide will show you how to improve your accounting skills to manage your finances effectively. We’ll cover the following:

  • Why you need to understand accounting
  • Essential accounting skills for entrepreneurs
  • How to improve your accounting skills
  • Simplify your accounting with Countingup

Why you need to understand accounting

Accounting plays a big part in every aspect of business management. After all, money is involved in everything from making sales and paying your bills, to buying new equipment or taking out a business loan. 

Since accounting is the art of managing, analysing and interpreting how money moves in and out of your company, you need it to keep track of your financial performance. 

Accountants can help you with this side of your business, but if you can’t afford to hire one, you need to be able to do it yourself. Even if you do have an accountant, having a decent understanding of bookkeeping, accounting and financial management will help you make more informed decisions.

It’ll also help you have more meaningful conversations with potential partners, investors, suppliers and clients.

Essential accounting skills for entrepreneurs

There are a few basic accounting skills that every business owner should have. We’ve listed some below. 

Cash flow management

Cash flow refers to how money moves in and out of your business. Understanding and projecting (predicting how it will change) cash flow helps you plan for the future. This way, you can ensure that you have enough money in the bank to keep your business running. Hopefully, being skilled at managing your cash flow will help you grow your company. 

Paying attention to your inflows (money coming in) and outflows (money going out) allows you to evaluate how your business performs financially. You can use this knowledge to prevent unnecessary cash shortages and use money left over to reinvest in the company. 

Learn more about how to improve cash flow management.

Maintaining a balance sheet

Your balance sheet provides a snapshot of your business’ financial health by listing your assets (items of value you have), liabilities (debts and other financial obligations) and equity (your company’s value). In other words, your balance sheet shows you what you have right now, what you owe and what your business is worth. 

Knowing how to fill in a balance sheet helps you keep your business in check and make sure you don’t spend more than you earn. Understand how it works, and the balance sheet gives you a clear view of where the company currently stands. 

Forecasting the future for your business

Growth is a key motivator for most entrepreneurs in some shape or form. While some are happy staying on the one-person business track and merely switching up to bigger, better-paying clients, others strive to upsize by adding employees. Either way, the goal is to maximise your revenue streams (sources of income) and make as much money as possible. 

However, a key part of running a successful business is predicting how it might develop in the near and far future. Forming accurate projections about the future requires a good understanding of how to make the most of your assets and minimise liabilities. In addition, it’ll allow you to make decisions that will fuel your company’s growth.

How to improve your accounting skills

Below we’ve listed some ways you can improve your accounting skills.

Learn to analyse data  

Accounting involves analysing data to gain important insights into your business. Unfortunately, most business owners aren’t number-crunchers at heart, so analysing data and calculations may be challenging. 

However, learning this ability is an excellent way to enhance your accounting skills. You can take an online or evening course in data analytics, scour the internet for resources or attend webinars discussing the topic.

Work on your agility

With technology evolving and market trends ever-changing, an important part of improving your accounting skills is learning how to move with the times. In other words, you need the ability to respond to financial curveballs (like a global pandemic), leverage new solutions and adapt quickly to different situations. 

Stay on top of accounting trends that affect your business and new software you could use to improve your financial management. The learning should never stop. 

Manage your time efficiently

As a business owner, you have to wear many different hats to run your daily operations. Therefore, you need to manage your time effectively to get the most out of every day without running yourself into the ground. 

Managing all your tasks in less time without compromising the quality of work would allow you to to improve your accounting skills and help your business grow.

Set aside time every day to go over your receipts, invoices, bills and other financial records you need to keep track of. However, there are several accounting systems you can use these days, so you don’t have to do it all yourself. For example, the Countingup app allows you to capture receipts on the go and automatically saves them in the free built-in accounting software.

Simplify your accounting with Countingup

Countingup is the business current account and accounting software in one app, automating all kinds of financial admin so you can handle your accounting more efficiently. You can view real-time insights into your business’ finances, profit and loss statements, tax estimates and the ability to create and send invoices in seconds.

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple and straightforward!

Find out more here.