10 Biggest Accounting Challenges and Solutions in 2021

Wednesday, 1 Dec 2021

Bookkeepers have struggled the most besides small businesses during the pandemic. The lockdown in Melbourne and restrictions impacted several business functions that were under the aegis of these professionals, such as inventory management, cash flow, debt, and payroll.

The changing government regulations further added to their workload. However, the business world has accepted the challenge and is moving towards a better tomorrow with solutions for every problem. So, here is how bookkeeper Melbourne are dealing with the biggest obstacles and overcoming them to keep businesses afloat and progressive.

1. Cash Flow Management

Small businesses affected by the pandemic struggled with cash flow during 2020, and it remained the most troubling part for 2021 as well. The lockdowns and impact on supply chain management reduced sales and brought down the profitability of businesses in Melbourne.

Thus, bookkeepers have been working twice as hard to bring the cash flow back to normal by reducing expenses, getting all the pending invoices paid, and paying the bills on time to avoid penalties. Downsizing and remote working have helped in reducing expenditure, and long-term relations with suppliers have aided in avoiding the late fee.    

2. Tax Changes

The Australian Taxation Office has announced changes in tax concessions for small businesses in Melbourne. Bookkeepers must keep track of these changing regulations and implement them to avoid penalties and wastage of money. For example, the instant asset write-off threshold has been moved up to $150,000 in 2021 from $30,000 in 2020.

Also, the company tax rate has been lowered for 2017–18 to 2019–20 income years. Some of the eligible businesses can also claim income tax offset, and the access to concessions has been expanded to include more small businesses. However, they can take advantage of these changes only when they are aware of them and their bookkeepers are on top of this information.  

3. Payroll Management

The Employment Law Changes after the annual wage review decision made by the Fair Work Commission came into effect from July 2021. According to the changes, the national minimum wage for adults who are working full-time has been raised from $753.80 to $772.60 per week.

Bookkeepers had to make amendments to the wages of every employee in Melbourne in the past few months to comply with the law. The new income threshold has also been increased, but the change has not been announced. Thus, bookkeepers must keep a tab on these changes and offer salaries accordingly to the employees to avoid mistakes while submitting the payroll taxes.          

4. Staffing Challenges

Many bookkeeping companies in Melbourne are suffering from attrition as many talented accountants and bookkeepers are giving in to the pressure of dealing with struggling businesses. However, they have been working on retaining experienced and knowledgeable accountants.

A solution to reducing low morale is to keep them motivated through new projects and the offering them the mission to help small businesses deal with financial problems. Rewarding them and allowing them to give their inputs freely without any restrictions can work in making them stick with their clients and company.    

5. Automation

Many businesses in Melbourne have transitioned to automation and AI during the pandemic to reduce their dependency on manual labour. However, the staff is still not skilled to handle the new technology, and it is creating an impediment to smooth transformation.

However, most bookkeeping companies were already using cloud-based accounting software, which helped them to work remotely for their clients during the lockdowns. Automation has helped in eliminating human error and improving efficiency for functions like invoicing, inventory management and payroll management.

6. Training

With automation becoming a part of the job, bookkeepers have the added responsibility of training the business owners and their teams in the effective use of the software. They must help them to infer the reports generated by the tools and how they can leverage the real-time data feature of the software.

They must impart the technical skills to the employees who are using the tool and maintain the security cover at each level to avoid any mismanagement of funds. They must keep a keen eye on the usage of financial data.    

7. Debt Management

Bookkeepers have been proactively working on helping businesses in Melbourne manage their debts during 2021. The first step is to prevent getting into debt. However, if the business is already in debt, they need to be handled by bookkeepers who can assimilate the total amount owed and how it can be paid in instalments. They can help businesses get rid of them quickly and plan the recovery of cash flow.

Government funding and assistance have proven beneficial for many small businesses during this period, and regular assessment of your financial status has helped protect businesses from financial deficits. 

8. Accurate Financial Projections

Since the pandemic has changed the global economic scenario, accurate financial projections have become a challenge. However, bookkeepers have continued forecasting by focussing on designing short-term budget plans for businesses. They have ensured that companies keep financial reserves ready in case of another lockdown or decline in sales.

Also, future planning should include the projects that have been successful in the lockdown and will continue to work in the next few months. They have been working on a range of scenarios and developed cash flow forecasting for each situation. It will help businesses to adjust quickly and maintain the incoming and outgoing.  

9. Cybersecurity

With accounting tasks taking place online and on the cloud, it has become necessary to be wary of cyber threats in Melbourne that have been on the rise in the past few years. Financial data is classified information for the business and should not be leaked or get breached.

Thus, bookkeepers must ensure that the business has a cybersecurity policy in place to protect its sensitive information. It also helps in reducing embezzlement and fraud as there are various levels of security that need to be crossed to access the files.    

 10. Economic Uncertainty

An economic slump is damaging for every business. The pandemic reduced the revenue for every entity and is still posing a challenge due to the uncertainty associated with it. Many small businesses in Melbourne had to shut shop because of the lack of sales and burgeoning expenses.

However, many of them were saved by wise bookkeepers who helped business owners to adapt their businesses according to the slow economy. They helped them to become digitalised and reach their audience online. They transformed their marketing strategies to connect with customers through the internet and develop innovative practices to sell their products.

Conclusion

Bookkeepers in Melbourne have been facing a turbulent time after the pandemic. However, the resilience of the professionals has helped in identifying various solutions to the current challenges and supported businesses to continue through the bad phase.    

  

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