see A freight broker has numerous tasks he needs to accomplish in order to be successful in his trade. One of these essential tasks is bookkeeping. Freight brokerage companies that overlook bookkeeping are likely to lose money in the long run. Here are common bookkeeping mistakes freight brokers should avoid.
Many freight brokers, especially startups, refuse to spend money on hiring a bookkeeper and instead handle the books themselves or delegate the task to someone else in the company. In either scenario, bookkeeping falls to the hands of someone inexperienced and not skilled enough. The move may save time and money early on but the inevitable bookkeeping mistakes will eventually lead to costly errors. These errors can lead to tax penalties, higher bond premiums, tighter financing terms, etc. Hire on a professional bookkeeper and have the task completed quicker, more efficiently, and with minimal to zero errors.
enter 2. Neglecting Bank and Credit Card Reconciliation
dissertation on niosomes Reconciling bank and credit card accounts is an important task that should be done each month. However, running a freight brokerage business is hard work. You never seem to run out of things to do. Many freight brokers treat bookkeeping as a low priority task and keep delaying it whenever something else keeps them busy. Postponing bank reconciliation can cost you money. Reconciling bank and credit card accounts lets you detect missing deposits, lost checks, and fraudulent charges and allows you to act on these issues before it is too late. Practice performing your bank and credit card reconciliation the same day you receive your bank and credit card statements.
A freight broker’s revenue generally comes in the form of receivables. It is essential that you are able to track invoices and receivables properly. Losing invoices and overlooking some receivables will lead to loss of money and can strain your cash flow. The delay between when you make payment to the carrier and when you collect from the shipper must be kept as short as possible. If you want to minimize the time difference between revenue accrual and collection, you can factor your receivables. A receivable factoring company will buy your receivables and pay you immediately. In exchange for a small fee, you won’t need to worry about collecting the receivables yourself anymore.
http://www.nahug.com/essays-written-by-smart-students/ 4. Overlooking Liabilities
Reversing a liability after payment has been made may seem like simple common sense. However, inexperienced bookkeepers sometimes forget to do so especially if there has been a lengthy delay between the accrual of the liability and its settlement. This leads to an overstatement of liabilities and an understatement of net income. Thus, your freight brokerage company’s reported financial position will be worse than its actual financial position. This will make your company look riskier. As a result, you will have to deal with higher interest rates whenever you need to take out a loan. Hiring an experienced bookkeeper can help prevent such a thing from happening. As an extra precaution, you can also review the balance sheet each month to try and look for unusual account balances.
Having a computerized accounting system is essential to any freight brokerage business. However, not all freight brokers are able to maximize all the functionalities their accounting software can offer. This is usually caused by the brokers being in such a rush to get their business up and running that they neglect to spend time learning about the accounting software they have just purchased and installed. Make sure you talk to your software vendor and have him assist you in mastering how to use the full potential of the accounting software so you can then do the same when you hire a professional bookkeeper.
Do not forget about these common bookkeeping mistakes that freight brokers should avoid and you will have an easier trek to success with your brokerage business.