Accounting is a fundamental aspect of the mandi business. It helps you to know crucial information about your business, such as your profits and losses. Not just this, with proper accounting you can also measure whether your business is going in the right direction or if you need extra capital to run it.
It is necessary to do accounting for your sabzi mandi business, but at the same time, you have to ensure that you do not do accounting incorrectly. This is because, not entering the correct information while accounting can affect your business’s financial position. In a situation like that, you will neither get profits nor will you be able to achieve the targets you fixed for your business. There can be many small and big mistakes related to accounting such as keeping financial records incorrectly, not tracking all cash and bank transactions, manual errors, or not doing regular audits for your business. All these mistakes can impact your business in the future.
Consequences of wrong accounting practices
1. Cash flow problems
If you are not able to manage your business accounting properly, then your mandi business may face cash flow problems. There are several factors that affect your cash flow such as delay in receiving payments from suppliers or buyers, lack of credit in the company, or overdrafts on the accounts. To improve all of these, you need a proper accounting system so that your cash flow also improves along with them.
2. Risk of internal fraud
You may trust your employees but you cannot always completely rely on them. Below you can find the reasons why your company may be at risk of internal fraud:
- Unsafe bookkeeping methods and accounting processes
- Not distributing work correctly among the employees
- Giving all the access to your confidential financial information to all the employees who work in the accounts department
These things can harm your business and if escalated, they can close your business too.
3. Wrong pricing
It would be hard to know the true total cost of your business unless you have a systematic process for tracking your business expenses and the work of your employees. If you don’t know your expenses, how can you make the right decision for your business’s product pricing? Due to the lack of accurate financial information, you won’t be able to calculate your actual profit margins. It’s important to have the right pricing. Else, it can reduce your profits. Not managing your accounts properly can also restrict you from knowing the true value of your products or services.
4. Ignoring financial performance
Finance is the fuel of your business! To understand all the financial aspects and their importance in your business, you need all the right data. The data tells you how well your business is doing, how much it earns, how much your employees cost you, and how much you sell and the profits you earn. However, due to incorrect accounting, you may not get a clear picture of your business or understand your financial performance over the years.
5. Decisions resulting from incorrect accounting
As a business owner, you are responsible for making good business decisions. For this, you need to maintain accurate records of all the financial transactions of your business. For example, you have to go through multiple account statements of expenses and earnings every month to get an idea of the financial position of your business. If your method of accounting is not right, then you can face many business-related problems. Due to this, your precious time and energy will be spent resolving old mistakes instead of growing your business.
Many mandi traders in India are struggling to deal with these accounting challenges which we mentioned above. If you are also one of them, then you need not worry anymore. ChargeERP Mandi Accounting Software can help you with everything. ChargeERP can help you to complete your daily mandi accounting work like recording daily sales, managing inventory, and downloading bills and reports instantly. However, if you want to explore more on ChargeERP software, feel free to dial +91 8588998844 or visit www.chargeerp.com. You can request a free demo here: https://www.chargeerp.com/#demo. We also suggest that you follow us on Facebook for regular updates. You can also view the latest instructional and testimonial videos on the ChargeERP YouTube channel