Being considered such a customer can facilitate delivery, improve services and can be an excellent source of new business leads. Disbursements are made by pre-numbered check. Pre-numbered checks are primary source documents for accurately determining expenses. Not using them increases the time spent on bookkeeping, makes it difficult to monitor expenses accurately, increases the probability of double payments and communicates to suppliers that the business is a marginal operation. The company projects cash flow needs.
Most small businesses use a cash basis rather than an accrual basis of accounting.
Though a cash basis is easier and takes less time to maintain, it often gets the business into trouble, because the business has incurred expenses for which there is no proper accounting. By keeping track of accounts receivable and accounts payable, it is relatively easy to project cash flow needs. Payrolls are met without problems. When a business has a problem meeting its payroll, drastic action is generally needed to save it from financial ruin. Generally, the owner-manager has not been watching the books closely enough.