If you are behind on your small business's bookkeeping, you are not alone. Who can blame you or any other business owners? Bookkeeping is not sexy, nor is it fun. Bookkeeping seems to be a hindrance for most small businesses. It is typically so far behind that it is useless to the business. Bookkeeping for those businesses is usually updated just once a year, an event that is done only to file taxes. However, there is a lot of value in your bookkeeping if you keep it updated and use it to help grow your business. If you are looking for help because your bookkeeping is always behind, here is how to keep it updated and use it to grow your business.
Get It On The Calendar
In my experience, scheduled tasks are the ones that get finished. If you only keep bookkeeping on your mind, but don’t actually schedule it as a task, it will never get done. Business owners have a way of always pushing bookkeeping to the back burner. If you don’t enjoy the task and it doesn’t produce any value to your business, then obviously you will avoid it at all costs. The first step in getting value from your bookkeeping is finding the time to keep it updated. Whether it's daily, weekly, or monthly, put bookkeeping on your calendar. I have found that if you make a small amount of time each week (typically 30-60 minutes will suffice), then your bookkeeping remains up to date. Handling the bookkeeping on a weekly basis is a lot less daunting of a task compared to updating your books monthly, quarterly, or annually. Additionally, it is a lot easier to remember what a given transaction was for when you update the books once a week.
Develop A Value-Added Bookkeeping System
Bookkeeping can be seen as a means to filing taxes at the end of the year, so it's no wonder why there's such a negative connotation surrounding it. Nobody likes paying taxes, so if your only association with bookkeeping is using it to pay taxes, you obviously won’t see much value in updating your books.
Develop a bookkeeping system that adds value to your business. Your bookkeeping should be a tool that you can use to help you understand the finances of your business and make calculated business decisions.
Develop a bookkeeping system that delivers information on the key metrics for your business. Every business is different and every business owner has different information that they deem important. Identify what financial information is important to you and make sure that your bookkeeping delivers exactly that data to you, so that you can use it to move the business in the right direction.
Get Professional Help
One way to ensure that your bookkeeping gets done is to get the help of an outsourced bookkeeping professional. You can divvy up the bookkeeping tasks between yourself and your bookkeeper to make sure things get updated.
You definitely don’t want your bookkeeper to have full authority within the bookkeeping system. There are certain tasks that you don’t want to lose control over. You certainly don’t want your bookkeeper to have the ability to pay bills, sign checks, or move money on your behalf. That leaves you pretty vulnerable to bookkeeper theft. You want to stay involved with certain bookkeeping tasks to keep the right checks and balances in your system.
Use Bookkeeping To Grow
Once you have a bookkeeping system in place that is updated regularly, accurate, and providing you with information on your key business metrics, you are set up to use it as a growth tool. The whole point of a good bookkeeping system is to provide you with accurate financial reports on a regular basis.
Develop a set of customized financial reports that are meaningful to you. Set expectations with your bookkeeper regarding how often you would like to look at reports. Then use the financial reports to steer your business in the right direction: the one that that aligns with your mission.
Don’t get completely hung up on the past financial performance. While it is important to look at the past, it is more important to take the information and use it to predict the future. Building a financial forecast can help you spot opportunities and potential problems long before they actually happen. Your forecast will allow you to make critical business pivots and keep your business on track.
If your bookkeeping is always behind and you want to turn it from a hindrance into a growth tool, feel free to reach out to us.