As a successful small business owner, you’re great at what you do – but you may not be great with balancing the books. Many small business owners have a true horror of bookkeeping, to the detriment of their bottom line. But good accounting practices provide a reliable view of your business that’s critical to your business success.
Here is a list of some sure signs that accounting issues may be holding your business back.
- Your schedule is full but your bank account is empty.
Cash flow is a struggle for many small businesses, and it’s important to know what’s affecting it. Are you taking too long to issue invoices? Do your customers owe you money? Are you spending too much? Without an accurate picture of your cash flow, it’s difficult to have the cash on hand you need to fund your next project.
- How to fix it? Track payments into and out of your account with a cashbook. An accurate cashbook will show you where you have cash flow issues and serve as both a historical record and an important forecasting tool.
- Your receipts are everywhere.
Each time you get a receipt, you put it in the first spot that occurs to you, whether it’s your wallet, your pockets, your car, or your desk. The problem is that tracking and categorizing receipts is critical to managing cash flow and determining tax implications.
- How to fix it? Keep a digital record of receipts and enter your receipts the same day you receive them.
- You put off invoicing.
With all the things you have to do to keep your business running, invoicing for your work may fall way down your list. And many small business owners find the process of invoicing and following up on invoices uncomfortable. But not invoicing in a timely manner may leave you short of cash, and not knowing where you stand on invoices makes it impossible to forecast your cash flow.
- How to fix it? Reframe how you think about invoicing. Rather than a burden, think of the task as an essential part of managing your cash flow. And keep a digital record of the status of all invoices.
- Where are the bank statements?
Losing your bank statements – or not reviewing them regularly – can lead to unpleasant surprises. It opens you up to the possibility of mistakes by your bank, or fraud that you might not catch quickly. Reviewing your statements regularly helps you spot anomalies and gives you an overview of your business performance.
- How to fix it? If you’re not already, consider using electronic banking. That way, you don’t have to wait for the end of the month to review your bank statements.
- Your spreadsheets aren’t as simple as they once were.
Spreadsheets may seem like an easy way to manage your finances, especially when you’re first starting out. But as your business grows, relying on spreadsheets can result in serious flaws in the accounting process. Spreadsheets involve manual data entry, aggregating information from multiple disparate sources, and hard-to-use templates – all of which increase the possibility of error.
- How to fix it? Consider moving your accounting to a cloud-based solution that offers real-time data visibility, mobile access, and one source of truth for all your finances.
- You think you don’t have time for bookkeeping.
Your accounting approach is time-consuming, and it feels like it takes you away from more important things – the things you started your company to do. So, you don’t take the time to do it well.
- How to fix it? Rethink your approach. Spending time now on sound accounting practices will save you time in the long run. More importantly, it will give you the tools you need to plan for the future of your business.
MicroAccounting is committed to your success and offers cloud-based business solutions that can streamline your finances and help you overcome your bookkeeping phobia. To find out more, call us today at 855.876.3773.