If you love your business but hate bookkeeping, help is at hand. Follow these six tips to spend less time doing admin and more time doing what you love.
If you’re like most small business owners, you don’t usually feel a thrill of excitement at the prospect of doing the books. Aside from being boring and time-consuming, it isn’t the reason you went into business in the first place.
But in the long run, if you want to make your business venture the success it deserves to be, you’ll need to get on top of your financial admin. Here are six tips for beating the bookkeeping blues.
1. Ditch unnecessary paperwork
OK, so not all paper will go. The paperless office is like science fiction’s flying car: always predicted but never quite arriving. Still, it would be hard to argue you need all that paper in your office when there’s software out there that can tackle bookkeeping more efficiently. The problems with paper are legion. It gets lost or misfiled; coffee gets spilled on it; you use it to scribble notes on when a client calls and then accidentally throw it away; it’s hard to locate documents when you need them (like at tax filing time); and it’s difficult to keep up to date.
What you can do: The more you record digitally, the quicker it is to access and the less time you spend doing the books. Use bookkeeping software to declutter your workspace of all that paper.
2. Digitise your receipts
If you added up all the time you spend gathering, sorting and filing receipts you’d regret not spending it on more productive tasks. The biggest problem can be finding them: if you run a business on the move, they could be anywhere. Once they pile up, they’re difficult to tackle. Getting on top of them takes a larger and larger chunk out of the day, so you put them off endlessly. But avoiding managing your expenses will lose you money in the long run. You’ll probably end up paying more tax than you need to, and it’ll play havoc with your financial forecasting.
What you can do: By scanning and digitally recording receipts for just a few minutes every day, you can keep on top of them, keep the business finances up to date and save time. You can use a smartphone app or a desktop scanner, included in many modern printers.
3. Invoice on time
It’s easy to become so busy with the day job that invoicing gets forgotten. Don’t let this happen. If you want to keep cash flowing into your business, you need to invoice as soon as the work is finished and accepted.
What you can do: If a job is particularly large you could figure out how to invoice some of it in stages, to ensure you can keep your business running while you work on the project. Good bookkeeping software will support invoicing, flowing data from purchase orders, automating repetitive tasks and avoiding the time-consuming and error-prone rekeying of data.
Many clients will automatically pay within the agreed period, usually 30 days. But some might need a nudge, which brings us to…
4. Make sure your clients pay on time
No one likes chasing clients for payment. After all these are the people you need to win work from to keep your business growing. You don’t want to upset them. But if they’ve agreed a fee and an invoice schedule, and accepted your work, they should pay on time.
Some might miss payment dates by mistake. Others might try hanging on to their cash until they really have to pay: a gentle form of trying it on. Others still might be in real financial trouble and are desperately short of cash. The last of these you can do without; the remainder will pay with a little encouragement.
What you can do: Look for software that will track when invoices are overdue, and either alert you, or send an automated invoice reminder. Sometimes an automated reminder is all it takes, relieving you of the unpleasant task of having to call to chase up your money.
5. Automate your tax
No small business can avoid submitting tax documents – and that means finding and collating lots of different bits of information. If that information is all over the place – in paper receipts and invoices – this becomes an annoying and burdensome task. You’ll probably put it off till the last minute, causing you extra stress.
And if you’re the kind of person who forgets to keep receipts, or accidentally throws them away, you can end up paying more tax than you have to.
What you can do: Much of the taxation process can be automated by the right software tools, if you keep your accounting up to date. If you keep records throughout the year in your bookkeeping software, your tax return needn’t be a pain in the year-end.
6. Bank in real time
Why wait for a bank statement to learn if your finances are fighting fit or at death’s door? Internet and mobile banking make it easy to stay on top of your transactions as they happen – and with the right software, those transactions can be automatically reconciled with your business accounts so everything adds up.
What you can do: Most banks offer online access accounts and a good bookkeeping software package will automatically pull transaction info from your bank account and reconcile it with your accounts. You can be proactive in managing your cash, spending, investments and borrowing. It will help your business access finance in the future and set it on a path to growth.
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