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Salt Lake City Bookkeeping Blog

The Power Of Daily Bookkeeping

Posted by Matt Roberge on Jun 30, 2015 7:30:00 AM

The_Power_Of_Daily_BookkeepingFor years I have been preaching the power of daily bookkeeping to friends, colleagues, clients, and blog readers. Daily bookkeeping is exactly what you think it is, updating your books every single day. My daily routine when I wake up is to grab a coffee, open my business QuickBooks on one screen and my online banking on the other. My QuickBooks checking account is always sorted by cleared status so I can reconcile my QuickBooks bank account to my online banking ending daily balance. Aside from being a complete bookkeeping dork this does serve a purpose. Here is the power of daily bookkeeping.

Catching mistakes

One of the things that daily bookkeeping is really good at is catching bookkeeping mistakes. It could be a double payment to a vendor, a short deposit from your credit card processor, or a deposit that just has not been brought to the bank.

If you are like most people when you are looking at a transaction that happened 30 days or more ago you have a hard time remembering the details. However, if you are looking at a transaction that happened in the last day or two you most likely will remember what it is for. Additionally you will also be more likely to spot a transaction that just doesn’t look correct.

Cash flow

A huge benefit of daily bookkeeping is that it gives you the ultimate control over your cash flow. By sorting your QuickBooks bank account by cleared status and posting transactions as they happen you get a super detailed look at your actual cash balance. You get a glimpse into the future of your actual cash balance.

The majority of business owners put too much trust in their online bank balance. Your online bank balance is fairly useless, as it doesn’t take into consideration all of the checks you have written and deposits that have not cleared your bank yet. By reconciling your QuickBooks on a daily basis to your online banking ending daily balance you get complete control over your cash flow.

Strong Forecasting

So what if you know exactly where you are at from a cash flow standpoint, how can that help? Are you kidding me? Use that information to get a detailed view into the future of your financials by building out a financial forecast. Most small business owners use their bookkeeping system to look backwards at past performance. Sadly it is often too late to do anything when they do get accurate financial reports. What most small business owners fail to do is look forwards in the business.

If you are looking at actual financial reports in a timely manner it doesn’t matter whether you like them or not because that is what happened. Take that information to look forward into the future. You had a great month? Awesome! How can we capitalize on that to make the future even brighter? You had a rough month? That’s ok, regroup and see how you can get back on track. Creating and using a financial forecast is what I refer to as the ability to pivot.

Ability to pivot

The ability to pivot in small business is crucial to the success of it. In order to pivot you need to have updated financials, a financial forecast, industry knowledge, and the ability to make high-level critical decisions quickly with confidence. Daily bookkeeping sets the foundation by giving you the most updated financial reports you can possibly have.

Business owners seem to be good at looking at past data and over analyzing it. Your job as a business owner is to keep the business on track, not get hung up on what happened. Take your actual performance and forecast out what that means for the future. Do you need to make a critical pivot right now? If so what is required? Great business leaders are able to make smart decisions quickly and execute on those decisions.

Do you find value in daily bookkeeping? Why or why not?

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Topics: Cash Flow Management, Financial Forecasting, Financial Reporting, Grow Your Business