Farwah Jafri | May 16 2021
Effective bookkeeping can be very time-consuming and complicated due to the many loopholes lying around in its process. Many business owners end up diverting their focus from other important tasks and dedicate it to bookkeeping, which should not be the case. If you are one of those business owners for whom managing their bookkeeping has become a nightmare, then you are not alone, and it doesn’t have to be. Streamlining this process by making some impactful adjustments can save you a considerable amount of time and lay a solid foundation for your business’ progression. The goal is to have a simple process that keeps track of all your business’s financial matters, and to achieve that, here are five tips for efficient bookkeeping.
Many business owners have a lot of tasks to attend to, which leaves them with little or no time for productive bookkeeping. You need to consider bookkeeping just as crucial a task as any other business aspect and give it the due attention it requires. Failure to do so only will only lead to the accumulation of tasks in the pipeline, which can have negative impacts on your business.
Set aside a specific time for bookkeeping and make sure you are consistent. You can set aside a day each week or even more than a day, depending on your finances’ complexity. Updating your books helps you to analyze your cash flow and take the required actions, such as reaching out to clients who owe you and making payments to suppliers. Postponing this process to a later time can also lead to cash flow problems and loss of important documents such as receipts, bills, and invoices.
It’s common for people to start a business using their savings from personal accounts. You might be tempted to continue using this account even as your business progresses, which is very problematic. Having separate accounts comes with many benefits. You will not only save time when filing taxes, but you will also be making accurate returns.
Opening a separate account for your business is also advisable since you will be able to monitor your business finances precisely and make sound decisions. Also, you will be in a better position to qualify for financial aid like loans and investor funding.
On top of that, having an account solely for your business displays a high level of professionalism, which can make it easier for clients and suppliers to develop trust in your brand.
Practical bookkeeping software programs helps in recording and processing transactions that take place in a business. Recording all the transactions on paper can be a very tedious process and result in many inaccuracies. Using an efficient bookkeeping software will save you sufficient time since most of the processes can now be automated. The software will track your accounts receivable, accounts payable, sales, and bank transactions with much greater ease than before. You can also print invoices or send them digitally to clients, which also saves a significant amount of time.
Bookkeeping software programs also make it possible to retrieve information fast, especially during tax filing or audits. When using papers, you will have to look for files with the required information, which can be very time-consuming. These files can also get stolen or damaged., which is not possible with software programs since you can use a password to avoid unauthorized access to your business information.
It is crucial to record every transaction that takes place in a business as it provides a vast number of benefits. If your business is to be audited in the future, you’ll be required to produce all the business transaction documents. If they are all available, the auditor will take less time in auditing your business than when you have to look for every document that they ask for.
Staying informed about your business helps in making informed decisions as you will be able to analyze trends with greater ease and highlight the areas you need to improve on, to achieve both long-term and short-term goals. Also, do not forget to double-check your accounts frequently since it helps in spotting discrepancies.
Even if you are not responsible for bookkeeping, staying informed about your business finances can help you make informed decisions. Study your financial data thoroughly, and you can also get the assistance of an accountant to interpret the information for you.
If you feel like keeping up with the mentioned tips is unachievable, all is not lost. You can always outsource your bookkeeping to efficient bookkeeping services such as Monily, who will take the burden off your shoulder to let you focus on other aspects of your business while making sure everything is in tip-top order. Outsourcing comes with several benefits. You will save a lot of time that you can dedicate to your business tasks. You will also have a proper work-life balance since you won’t be handling and monitoring everything in your business.
Additionally, you will get accurate information if you don’t have a background in finance. Managing streamlined bookkeeping without the necessary knowledge can cause inaccuracies, which is not suitable for a business. A professional bookkeeper usually has great expertise in the field and will always deliver accurate results.
See Also: 5 Ways a Bookkeeper Can Save You Money
Outsourcing to competent bookkeeping services also helps you save money. Some business owners have the notion that it would cost them a lot of money to outsource services, which is not true. Outsourcing to the professionals ensures that you are not making any mistakes that can cost you money and that all your payments are made on time to avoid fines and penalties.
Managing efficient bookkeeping is not an easy task. It requires a lot of dedication and accuracy since a simple mistake can significantly impact your business. The good thing is that if you follow all the right steps, you will streamline the process and manage your finances effectively and increase revenue. Don’t ignore proper bookkeeping with the excuse that you don’t know how to do it or don’t have time for it, as it can cause problems. If you are not in a position to handle it, you can always seek the help of a professional bookkeeper who will maintain accurate records for you.
Farwah is the Product Owner of Monily. She has an MBA from Alliance Manchester Business School, UK. She is passionate about helping businesses overcome challenges that hamper their growth, which is why she is working at Monily to facilitate entrepreneurs to efficiently manage business finances and stay focused on growth.