Bookkeeping mistakes cost your business money. It's that simple. Even small errors in your accounting process can add up over time, resulting in significant financial losses.
Unfortunately, nearly a quarter of all SME (small and medium enterprises) owners admit to not understanding basic bookkeeping principles, exponentially increasing the odds of them making costly accounting errors.
Given the complexity of modern bookkeeping and its financial risks, it should also come as no surprise that around 35% of SME owners list bookkeeping as one of the most stressful aspects of running their business.
Your business's financial losses can accumulate from even minor errors in bookkeeping. It's crucial to avoid these costly mistakes.
The good news is there are steps you can take to help reduce the stress associated with bookkeeping and ensure your accounts remain accurate and up-to-date. Read on for six simple and easy-to-implement strategies that will help you improve bookkeeping at your business.
Ensure data integrity
The first step in ensuring your bookkeeping is as accurate as possible is to ensure that the data you're entering is accurate. This means double-checking all incoming invoices and vendor documents for accuracy and ensuring your outgoing invoices and customer records are correct.
It's also essential to make sure that any errors in the data entry process are corrected immediately to prevent inaccurate entries in the future.
It helps to have a guidebook that outlines your bookkeeping process, explains which accounts and records should be updated when certain events occur, and provides guidance on how to enter various types of data.
Having such a guide can help streamline the bookkeeping process by ensuring everyone involved knows precisely what they need to do and when it needs to be done. It also helps to cut down on errors and maintain data integrity by ensuring consistent standards are kept across the entire team.
Here are some critical tips for maintaining data integrity:
- Always double-check all incoming and outgoing documents for accuracy.
- Have a guidebook that outlines your internal bookkeeping process.
- Correct any errors in the data entry process immediately.
- Make sure everyone involved in bookkeeping is following the same standards and procedures.
Track payments properly
Interconnected with ensuring data integrity is ensuring you track all your payments correctly. Ensuring that all payments made and received are recorded properly can be challenging, but keeping your accounts in order is essential.
To help ensure you're accurately tracking payments, set up a system that clearly documents when invoices have been sent out and which customers have paid for what services or products. You should also document any refunds, adjustments, or discounts given out, as they can easily be forgotten if not recorded properly.
Having a system that is easy to use and understand will help ensure payments are tracked correctly and all your customers have an up-to-date view of their accounts with you.
It can also help prevent embarrassments that might impact your customer relations, such as sending multiple invoices for the same job or chasing a customer that has already paid.
Automation can also help to reduce manual errors. Unlike manual data entry, automated processes ensure invoices are sent out quickly and accurately, and payments are tracked correctly. Additionally, automated systems can be used to send reminders when payments are due, helping ensure that all your customers pay on time.
Below are some easy tips to help you track all your payments accurately:
- Set up a system that clearly documents when invoices have been sent out and which customers have paid.
- Document any refunds, adjustments, or discounts given out.
- Have an easily accessible view of all customer accounts to reference if needed quickly.
- Automate processes wherever possible to make the most of your resources.
Adhere to deadlines
Deadlines are a core part of any bookkeeping system. These deadlines might include tax filing dates, monthly or quarterly reports, or daily morning bank reconciliations. Regardless of their source, it's important to adhere to them if you're going to stay on top of your bookkeeping.
It can help set up a reminder system for any upcoming deadlines so you don't miss anything. These notifications could come in the form of emails, text messages, phone calls, or even calendar appointments; whatever works best for you and your team. This helps to keep everyone accountable and ensure deadlines are met.
It's also important to keep in mind that adhering to deadlines will help you maintain accurate records over time. Rushing to meet a deadline can lead to incomplete or inaccurate records that may come back to haunt you later on. This is especially true when it comes to filing taxes; failing to file your tax returns on time, or submitting an inaccurate tax return, can lead to significant fines and penalties.
The tips below will help you keep on top of your deadlines:
- Set up reminders for any upcoming deadlines.
- Ensure everyone is held accountable and knows their responsibilities.
- Make sure to file tax returns on time to avoid fines and penalties.
- Maintain accurate records over time by adhering to all deadlines.
Have a reliable filing system
The foundation of your bookkeeping system is a reliable filing system. Having an organized filing system ensures that all your paperwork and documentation is easily accessible when needed, saving you time and reducing stress.
You can start by creating a filing system that makes sense for your business. This should include folders for customers, suppliers, invoices, receipts, bank statements, taxes, contracts, and more. Having a dedicated filing system will help you quickly find the documents you need when you need them, without wasting time looking through piles of paperwork.
A spreadsheet-based approach can be a great alternative if you don't want to use a manual system. Spreadsheets let you easily organize your information into columns and rows that are easily referenced when needed. You can even include formulas that will automatically calculate totals for accounts or create summaries of invoices and payments.
Here are some tips for creating an effective filing system:
- Organize documents into folders based on their purpose.
- Consider using a spreadsheet to store and organize your data.
- Include formulas in the spreadsheets that will calculate totals or create summaries.
- Make sure all team members have access to the filing system so they know where to find documents when needed.
Use bookkeeping software
Bookkeeping software takes a lot of the stress and effort out of bookkeeping. Automating processes can help ensure that all your records are accurate and up to date without any manual effort on your part.
Bookkeeping software also has various beneficial features, such as invoicing, payment tracking, bank reconciliation, and financial reporting. All this data can be accessed in one place, making it easy to review your finances whenever needed.
Bookkeeping software also allows you to access your data on the go, making it easy to monitor your accounts even when you're away from the office. This is especially useful if you have multiple business locations or manage remote teams. See bookkeeping and accounting softwares recommended by Chaser.
To make sure you get the most out of bookkeeping software, here are some tips:
- Research different software options to find the right one for your business. Make sure the features are compatible with your existing systems and processes.
- Ensure you have secure access that can be used by multiple team members.
- Test out the system before committing to it so you're comfortable using it.
- Regularly back up all your data so nothing is lost if something goes wrong. Ensure your team is properly trained on how to use the software.
Consider outsourcing bookkeeping tasks
As we mentioned at the beginning of this article, 25% of SME owners don't know how to implement effective bookkeeping, and it causes 35% of them a considerable amount of stress. If you're one of those business owners, outsourcing bookkeeping tasks might be the best option.
Outsourcing bookkeeping can help to reduce costs in the long run and free up time so you can focus on other areas of your business. It also ensures that all your accounts are consistently managed by experts who know the ins and outs of bookkeeping.
Outsourcing is also often cheaper than hiring and paying a full-time bookkeeper, and you'll get expert help on day one.
Chaser's expert team of bookkeepers can help you with all your bookkeeping needs, including invoicing and payment tracking, bank reconciliation, and financial reporting. Contact them today to find out how they can help you save time and money.
If you decide to go down the outsourcing route, here are some tips:
- Ensure all team members have access to the same data so everyone is on the same page.
- Make sure there's proper communication between you and the bookkeeper.
- Ensure all deadlines are met, and records are kept up to date.
- Set clear expectations for accuracy and timeliness so you know what to expect from the bookkeeper.
- Regularly review your accounts to make sure everything is in order.
Keep on top of your bookkeeping with ease
Bookkeeping might seem daunting at first, but with some planning and organization, it doesn't have to be. By following the tips we've discussed in this article, you can ensure that your bookkeeping processes are running smoothly and that all deadlines are met.
For more information on how Chaser can help you with automating the accounts receivables process and ensuring smoother bookkeeping, contact us today or sign up for a no-obligation 14-day free trial.
