By Josh Tuohy – Former Finance & Accounting Support Lead
Outsource to the experts
Many small to medium business owners try to do their own bookkeeping. Most of them do these tasks themselves to save money rather than paying someone else to do it. They stay up late, burying their heads into bookkeeping tasks, accounting processes, and attempt to get it all balanced. This leads to exhaustion, which then leads to inaccuracy. Worse, to business stagnation.
Are you one of them? If you are doing your own bookkeeping are you 100% sure you are up to date? Check out these 6 essential bookkeeping tips you need to be following to allow you to get back to focusing on your core business:
1. Choose the best Accounting Software
The software you use to maintain your business finances will have a crucial impact on both your time and your visibility into your figures. To get the most value, your software should be Cloud-based, include Bank feed functionality and be setup to efficiently invoice your customers. Depending on the size of your business you may have further requirements, but these 3 are key to every business. Choosing to use Xero, Quickbooks Online or MYOB AccountRight might be the best decision you made towards getting on top of your bookkeeping.
2. Setup your bank feeds
The above-mentioned accounting systems all have the ability to import your bank transactions automatically, allowing you to never miss a beat and always stay up to date. In order to ensure you never miss a payment from your customer, never lose track of your expenses, and know exactly what is happening within your business, setting up bank feeds should be priority number 1. If you’re doing this, good job! If you haven’t explored this yet, you might want to start doing so. Technology will help you loads on growing your business.
3. Track your Payables within your Accounting Software
All businesses have suppliers and bills to pay, and while you might hate them, you can’t operate without them and you need to ensure you pay on time. By keeping a record of not only what you have paid but also what you haven’t paid, you can plan ahead and make sure you both keep your suppliers happy and successfully manage your cash flow. By recording these payables and their due dates in the system you can easily select which to prioritise and get a clear picture of what you have coming up to budget for. Add in the fact that you can also pay directly from your accounting systems via a batch payment and you will get both visibility and efficiency over your bills. Time to throw out that in-tray or stack of papers and opt for something more practical!
4. Follow a schedule
There are multiple tasks you need to stay on top of when it comes to your bookkeeping and being disciplined and having a clear routine will help a lot. Set a day each week when you pay your bills and catch up on processing your bank transactions and stick to it. This will allow you to have your financial reports at your fingertips and track your profit and cash flow regularly. Also set yourself some rules around when you invoice your clients. Depending on your industry you may be able to invoice your customers as soon as you finish a job (do it every day before you go home) which will allow you to get paid earlier and shorten the time it takes for your revenue to materialise.
5. Learn about your Payroll Obligations
This one’s important because a business is only ever as good as its employees, and you need to do right by them. That means ensuring your staff are always paid on time and at the correct hourly rate, that their PAYG Withholding is appropriate and that you never miss the deadline to pay their superannuation. If you haven’t already, take the time to read through the applicable sections of the Fairwork and ATO websites to make sure you are not forgetting anything. Make sure you ask your accountant or advisor about anything you don’t fully understand. Remember, it’s too important to get wrong.
6. Understand your Profit and Loss
Crucial to every business is to understand whether you are actually turning a profit, and more importantly, why (or why not). Take the time to analyse and review your Profit and Loss reports. You may be surprised what you find. Make sure you sit down at least once a month and check whether your revenue is on target for the month and start to look for costs you can reduce to increase your margins. If you can, schedule in a regular meeting with your accountant or advisor, they will be able to help you look deeper and make decisions to further increase the success of your business.
If one of these is getting neglected, you’re in for a bad ride. The good thing is you can do something about it which will give you more than you expected.
You keep your cool; we’ll keep your books.