Many small business owners look at bookkeeping as a hassle. A business owner that doesn't see value in their bookkeeping only sees it as a means to filing taxes. When you approach bookkeeping with this mindset you think that handling your books is nothing more than wasted time and money. When your bookkeeping doesn't add value it often gets pushed to the back burner as you focus on other business tasks that you consider more critical. However, your bookkeeping system can add value to your business if set up properly and updated regularly.
Experience With Many Businesses
As an outsourced bookkeeping service we have experience with all kinds of small businesses. We have worked with many different industries and come across lots of different bookkeeping situations. Bookkeeping is always changing as businesses evolve, as are the needs and wants of our clients. Think of the difference between the experiences of one person that did the accounting for the same business for 10 years compared to a bookkeeping service that has helped hundreds of clients in the last 10 years. The diverse experience that your outsourced bookkeeping firm has needs to be taken advantage of.
Bookkeeping As A Business Tool
As I said in the beginning many small business don't use their bookkeeping system to help them run their business because they don't see value. Ask a small business owner about bookkeeping and you will most likely hear a lot of groaning. The mere thought of bookkeeping for some small business owners is painful. If your bookkeeping is not providing you with valuable information on a regular basis then it is not being handled properly. A proper bookkeeping system can provide a lot of meaningful information if tweaked to your specific needs. When a bookkeeping system does not add value to you as an owner it is not typically due to the system itself or your bookkeeper, but usually it is a lack of communication. If you properly communicate to your bookkeeper what information would help you then they should be able to create a system that provides you with that information.
Lower AR And Increase Cash Flow
Cash flow is very critical for a lot of small businesses. You can maintain a healthy cash flow position by keeping a tight handle on your accounts receivable. I can't tell you how many times I have heard this exact quote from new clients: "if our sales are so good why don't we have any money in our checking account?" A quick report of the balance sheet reveals the problem; a large balance in accounts receivable. Quite often some of the receivables are so old that they will never be collected or are just wrong as the accounting was never handled properly. Here are a few tips to keep your accounts receivable minimal:
- Get paid up front or at least take a deposit
- Only accept credit cards
- Put recurring services on automatic payment
- Establish clear accounts receivable procedures and follow up on a regular basis on old balances
- Clearly communicate your billing policies to your customers
Custom Financial Reporting
A business that does not have any regular financial reporting in place is running their business blind. I talked about using your bookkeeping system as a tool earlier and financial reporting is a huge part of that. Once again it comes down to communication with your bookkeeper; what specific information are you looking for from your financial reporting? When we have helped clients in the past create custom financial reports that are meaningful to them it often leads to ah ha moments. Good reports that are tailored to your business and needs can really add a lot of value to your business. As you grow your business your needs will change and you will want to see more financial reports. You should create a group of memorized QuickBooks reports that you reference on a regular basis. I personally have about a dozen or so reports in my memorized group that I look at on a weekly basis.
Ask For More
The best way to get more is to simply ask for it. You should ask for more from your bookkeeper. If you are not getting what you want out of your bookkeeping system you need to communicate that to your bookkeeper. If they don't deliver what you need let them know, it's called holding everyone accountable in your business. If it is truly a lack of knowledge on your bookkeeper's behalf then find someone that can meet your needs. Raise your expectations of your bookkeeper and use your bookkeeping system as a tool to increase your profits.
Your bookkeeping system should add value and it can if handled properly. Don't look at your bookkeeping as a hassle; look at it as an opportunity to find ways to make more money.