Small business owners wear many hats. They often juggle sales, marketing, employees, production, strategic planning, finances, and countless other duties. Often, the tyranny of the urgent takes over.
Other than monitoring how much cash is in the bank, it is very easy to ignore recording and analyzing financial transactions. Then, suddenly, these financial records are needed for taxes, a loan, or a business decision, and the scramble begins to get everything updated. Problems pop up, and hours are spent trying to fix them or they are simply ignored - sometimes creating incorrect records.
So, what’s the value in regular maintenance of your business’ financial records? Just like your home, your car, and even your body, regular maintenance and checkups can prevent problems or catch them early so they cause less damage and are less expensive to fix.
Keeping your transactions updated can help you avoid the following issues:
Overdraft fees when you forget about outstanding items.
Duplicate payments, uncollected invoices, or notifications to clients for invoices that are already paid.
Automatic payments for items you no longer need or use.
Missed information on trends happening with your business - like a drop in sales in a particular category or excessive expenses in a particular category.
Just like changing your diet or exercise program, small, slow changes will increase your chance of success. Begin with time management, and make an appointment with yourself for a 30-minute, weekly financial update. Work on updating the past week’s activities. Have a few extra minutes? Start working backwards. Then put a monthly deadline on your calendar - perhaps the 15th of the month - to have everything updated for the month. When you get caught up, start doing monthly reconciliations of your bank and credit card accounts.
As you begin keeping records regularly, you can start running reports and really working on your business. These small changes will lead to less stress and more control when your financial reports are needed. You will also be able to begin analyzing your financials to assist in making decisions for the future. (More about that in a later post!)
Should you hire a professional to keep your records up-to-date? That’s up to you. A good professional can save you time and often save you money in the long run. They will know things you may not and can provide an extra set of eyes on your finances, often catching potential issues before they become bigger problems. However, you will still need to provide records and documentation as well as oversight. It is your business, your money, and your choice.
Need some guidance on best practices for your financial reporting? Schedule a complimentary intro call with us today!