Good bookkeeping is essential to help improve efficiency and save money within businesses. Keeping accurate financial records doesn’t have to be time-consuming though, so let’s have a look at how you can make it easier to manage your books.
Any new business should set up an accounting system as soon as possible, so that you can record expenses, income and tax from the very beginning. There are lots of different options out there, so spend time doing your research. The accounting system you choose should fit in with your daily activities, and we would recommend computerised accounting software as this can help save you lots of time compared with paper records.
It really does pay dividends having a set time to work on your accounts. Otherwise you will end up popping into and out of the software while trying to do other jobs at the same time. Try and stick to the ‘little and often’ approach here – this makes it easier to stay up to date, rather than ending up with hours upon hours worth of accounts to sort through. Up-to-date accounts are incredibly important when it comes to year-end tax planning too, as you will be able to see any cost-saving benefits easily.
Bookkeeping can sometimes get really heavy, and as a business owner, you have enough hats to wear as it is. There are lots of different rules that you may not be familiar with when it comes to bookkeeping too, so asking for financial advice is always a good idea. Don’t leave it until the end of the financial year before speaking with an accountant as it may be too late to undo historical data by then.
Matching the transactions in your bank account to the figures in your accounting software is essential. This means that all income and expenditure is accounted for, and everything should balance out. Accounting software can take care of this for you – simply import your bank statements and the software will automatically match the transactions with your accounts. This helps save businesses so much time throughout the month.
Late payments can have a devastating effect on cash flow, and can also cost you time when it comes to chasing up the client or customer. Be sure to follow up on any outstanding invoices as soon as possible. Depending on the accounting software you choose, there is often the option to send ‘reminders’ at certain intervals after an invoice is due.
It is all very well spending time looking at your accounts and checking invoices, but if you aren’t looking at the data the accounting software holds on your business, you could be missing opportunities. Producing accounts on an annual basis isn’t just for HMRC, these figures should give you an indication of how the business is performing year on year. Your accounts can also tell you if you are making a profit on a monthly basis, and where the business is spending too much money.
You aren’t expected to know everything about accounting (unless you are a qualified accountant), so it is worth investing in training. This will help you make the most of your software, and explore other reports and benefits it can provide.
By being proactive in managing your cash, investments and spending, you will have a much better idea of your business finances and be able to grow in a sustainable way.
*This article contains general information in order to assist all of our customers and is meant for guidance only – there are no guarantees that the information we provide will be suitable for your particular needs. If you require specific assistance, we recommend that you seek professional guidance on your individual circumstances. Reality Solutions are in no way responsible for any loss or damage arising from any information contained within our articles.