On average, business owners can spend countless hours each week recording, organising, and processing financial transactions – everything from accounts receivable and payable, to employee payments, expense receipts and supplier invoices.
While the process may be time-consuming, effective bookkeeping is the foundation of sound financial management – which in turn, is the lifeblood of the business.
Feeling overwhelmed by mountains of paperwork and complex calculations? Here are three bookkeeping basics to help ensure a healthy financial future for every small business.
Bookkeeping Basics 1: Faithfully track expenses in bookkeeping
Accurate and consistent expense tracking is essential to know how your business is going; it enables you to make timely and considered business decisions; and assists in ensuring your growth goals.
Small business owners should consider using a mobile app for simple, consistent expense tracking. Options like Expensify and Receipt Bank help do away with manual data entry with automated functions, including:
- Receipt data capture via the smartphone’s camera (no need to hold onto paper receipts, which can get lost or misfiled);
- Synchronisation with the phone’s GPS to track mileage of business travel; and
- Importing bank and credit card data, plus integration with accounting software.
Bookkeeping Basics 2: Systematic invoicing and filing
Efficient invoicing is about more than ensuring getting paid in a timely fashion. An invoice is an official record of the terms of each transaction and must be completed accurately to avoid errors in the bookkeeping process.
Here are a few tips for professional invoicing:
- Ensure each invoice includes all the important details: contact information, a tracking number, a detailed list of products or services rendered, and a breakdown of the total amount due;
- Provide an electronic receipt to reduce waste and create a “paper trail” if there’s ever a dispute; and
- Maintain an invoice-filing system that records when you sent the invoice, to whom, when payment was made, and any reminders sent out.
An online invoicing tool can streamline this aspect of bookkeeping process and provide an efficient backup filing system.
Bookkeeping Basics 3: Save time with accounting software
By law, every business is required to keep organized and timely financial records. However, manually posting income and expenses to ledgers and journals is time consuming – not to mention stressful for the math-averse.
Shave some time (and stress) off the weekly bookkeeping with an all-in-one accounting software solution like Xero.
Online bookkeeping offers numerous advantages, such as:
- Instant reports and real time insights on profits and loss, customer accounts, payroll – and overall financial “big picture”;
- Simplified data entry so all can collate and print invoices, purchase orders, and payroll much faster than with manual methods; and
- Improved accuracy through automation (once data is entered, the software handles all subsequent calculations and processes – including invoicing).
When it comes to accounting, vigilance is the key to mitigating risk and ensuring the long term profitability of every small business. Be sure to set aside time each day, week, and month to update and review the books to catch any red flags and ensure the finances are on track. If you’d like to talk to us about implementing or improving your bookkeeping process, click the link below to book a complimentary chat with Sarah.