5 Bad Accounting Habits

Today's accounting experts have many different tools and methods at their disposal. Choosing the right tools is only part of the process, and business accounting professionals need to ensure that the companies they serve do not fall into one of five potentially damaging accounting habits. These business accounting pitfalls can leave companies with inaccurate figures and ultimately cause them legal or financial grief as time passes.

The first business accounting habit that can cause major problems for accountants in companies of any size is the failure to pursue collections in a timely fashion. It is vital for companies offering goods or services to ensure that all accounts receivable arrive as quickly as possible and always within the expected time periods. Inaccurate tracking can lead to the second bad business accounting habit—making late payments. Late payments can cost companies hundreds or thousands in interest or fees to vendors and utilities or service providers and result in undesirable delays in shipping.

Financial accounting experts must also strive to avoid the habit of failing to claim the correct amount of expenses for deductions on tax information. When a company relies on a specific tax preparer to locate deductions at the end of the year instead of tracking expenses throughout each fiscal period, it becomes more difficult to ensure that no deductions are missed. Overcomplicating tasks is the fourth bad business accounting habit, and simplifying every process from accounts payable and receivable to tax tracking can help prevent this pitfall from overtaking an accounting team or tax expert.

The fifth and final common bad business accounting habit is the danger of incorrectly pricing goods or services. Business owners and leaders rely on financial accounting professionals to help ensure that they price products at the best market value for maximum profits. Lower prices may attract more customers, but leaving money on the table can lead to problems in the future. Accountants must strive to avoid the trap of advising lower prices during periods where profitability is up, as it may lead to tighter times if and when sales slip below normal levels.

Avoiding these five potential pitfalls can help companies thrive and make a business accounting professional a valuable member of any organization. Failing to pursue collections or pay vendors on time can lead to serious supply and demand issues, and complicated information collection combined with the once-a-year mindset for tax deductions can create many problems during the final quarter of each year. Companies that rely on business accounting professionals for timely information that lets them accurately price goods need accountants who can give high prices as well as low and help maximize profits. Turning bad habits into good ones can dramatically increase the profitability and accounting prowess of almost any organization.

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