How Medium-Sized Businesses Actually Handle Their Books

There’s a growing stage where everything you know doesn’t work anymore. The spreadsheets that handled five employees can’t handle fifty. The simple invoices that worked for one or two customers cannot handle hundreds. The books that required a few hours from the owner every week now require full-time attendance – even though the person solely responsible still isn’t caught up.

Medium-sized companies, which exist in the liminal space between come-what-may and corporate empires, need to navigate a unique set of accounting challenges. They’re too big to leverage the small-stuff tools; however, they are not equipped (or yet willing) to sink time and effort into enterprise solutions that come with enterprise costs and complications.

Reality of More than Simple

Most companies do not intend to open their accounting overhaul one day; they, instead, are thrust into it. It’s the fifteenth late invoice this month because someone forgot to update the system. It’s the email from the accountant saying she needs three extra days to close books because nothing reconciles. It’s tax time when no one can find half the documentation they need.

Small business accounting is supposed to be easy and clean enough for one person to do it all, provided the transactional volume supports that need. However, as departments begin to emerge, with separate revenue streams or products, inventory levels, state-to-state needs, it becomes a little more complicated.

Jumping to a mid-size means more than just increased revenue. It means increased complications. Different payment terms for different clients; accrual accounting becomes a possibility versus cash basis; multiple entities/location may sprout; project work may render separate departments requiring budgeting for operations and accounting purposes; immediately, the books become less about entering checks and balancing simple money coming in and going out and more about using data to create actionable insights for the business itself.

What Changes at Medium-Sized

It’s easy to see why one company looks nothing like the other with fifty employees versus five – at least one dollar amount difference – at least! More often, there is now an actual finance person (or small team) versus the owner doing this part-time on top of everything else they’re doing. This person needs actual functional tools beyond basic bookkeeping.

Real-time visibility for one. At five employees, the owner/founder/operator likely knows the financial situation without question; at fifty? No such luck; there’s too much going on. Finance teams need dashboards that report cash position, receivables aging, upcoming payables, and budget status without requesting five separate reports from other departments/head users to compile for one meeting.

Multi-user accessibility further complicates things; it’s no longer one person getting the login and password that assumes responsibility for access – now the finance team needs access; department heads want to see their budgets; managers need approval workflows for purchases; executive leadership wants reporting access but not everyone should see everything, meaning the system in place needs permissions/control settings.

Integration becomes paramount. Medium-sized companies typically operate through various systems – CRM for sales, project management for operations, payroll services, payment processors, banking platforms. When no integration exists between systems, someone has to transfer information from one place to another; that’s not only time-consuming but also where mistakes happen. Accounting software for midsize business makes sense only if it integrates seamlessly with other tools already in place to avoid doing more work than it helps.

The Automation Decree

Manual data entry creates accounting hell. It’s time-consuming – it makes people miserable – and humans operating at low volume do repetitive things make mistakes. This isn’t typical when accounted low-volume by a small business – this is common as a medium-sized company traps itself in manual data entry hell.

Companies that successfully navigate their books at this time have automated repeatable tasks; bank feeds pull transactions on their own; expenses are categorized based on existing rules; recurring invoices generate themselves and reminders for payments go out without anyone needing to recall someone owes money for something. It’s not about replacing humans – it’s about freeing up humans to do work that requires common sense judgment skills versus machine learning ability exclusively.

Expense management comes into play for this amount of time as well – when there were only a handful of employees spending money, it wasn’t hard to keep track of who spent what; when dozens and dozens spend money, managing what’s going on where becomes untenable without systems in place; collection of receipts could become a full-time job if not automated through accounting systems that capture receipts digitally, match transactions automatically and send everything for approval without a 500 email chain needing to approve a $20 receipt.

Month-End Close: Does It Really Work?

Ask any accountant when they know if their location’s accounting systems are working, and they’ll point toward month-end close as a telltale sign. Good systems allow finance teams to close the books in three business days or fewer; bad systems turn this into over a week plus of piecemealing together what’s been done over the month looking for information, reconciling questions, and tracking down why numbers aren’t adding up when they should have been all month long.

The difference often relies on whether or not information seamlessly travels throughout a month or whether everything waits until the end/start of the next period to be handled at once. When transactions sync automatically, expenses get approved in real time (provided there are systems through which they can track their approvals) reconciliation occurs continuously to avoid month-end close becoming just running five reports/updating notes red flags before anyone leaves the office early on Day 3 with an arbitrary deadline extended past first-day expectations.

The Compliance Conversation Nobody Wants

Small companies extend responsibility quietly; as mid-size entities develop, compliance requirements emerge that weren’t initially present – more sales means different tax implications; more employees mean payroll reporting needs become more intense; operating in various states requires filing in each one to comply with local business law; works with larger companies may experience audit needs that were otherwise avoided when working with only small firms for cash flow in.

This is where the appropriate accounting systems become invaluable relative to risk mitigation/access – when transactions are categorized appropriately, applied appropriately and audit trails exist because everything’s where it’s supposed to be – not strewn across ten spreadsheets housed under four email attachments and a Google Drive search history.

What Really Works

Medium-sized companies that book well have a few things in common – they’ve integrated systems that work with their size/current needs – not what worked three years ago and definitely not what’s anticipated five years from now – but they’ve mastered automation relative to repeatable tasks so their finance team can focus on data analysis/planning over data entry/tracking – meanwhile creating logical follow-throughs so everything works instead of grinding productivity level down.

They’ve also started to view accounting as a natural extension of spend management with cards/investments/banking needs – everything integrates so manually input things aren’t possible or else opportunities arise for mistakes to be made.

But maybe most importantly, they’ve recognized that it’s okay if accounting isn’t perfect at this stage – but as long as books comply with expected accounting systems of volume growth – and holes remain filled with caution over red flags/deadlines and expected compliance efforts find the edge lifted enough above waterline expectations that they realize books don’t have to be pretty – they just need accurate management timelines that require frequent attention throughout developments but should never pop up unexpectedly before a 12:30 PM meeting within a week of closing out a quarter.

Getting Accounting Right at This Stage Creates Everything Else

Getting accounting right creates plans for everything else; it keeps compliance issues manageable and keeps leadership informed about what’s coming next or what has just happened in what’s most appropriate for the company’s financial status. Those companies that recognize them stop being necessary evils – but instead – partners in growth that keep expectations under control without losing sight of critical budgets along the way.