It’s never too late to start organising your books. Being organised and keeping on top of your bookkeeping is essential when running a business which is why this month, we are giving our top tips for getting on top of your bookkeeping.
1, Keep up with it
Bookkeeping is like any chore – the longer you put it off, the longer it takes to catch up. Unfortunately, ignoring it doesn’t make it go away. Being organised and keeping on top of your bookkeeping is essential when running a business which is why we would recommend putting aside a set time each week and sticking to it wherever possible. Spending 20-30 minutes doing something you dislike is bad enough but having to spend an entire day or more catching up is unbearable!
You’ll also have better peace of mind! Disorganised bookkeeping can weigh heavy on your mind as a small business owner. With all the other demands of running a business, your bookkeeping worries should not be keeping you up at night. When your books are up to date, you can rest easier. If you’re running a small business or a start-up, it might be worth outsourcing your bookkeeping so you can concentrate on other aspects of the business and stay productive. If you would like any more information on this, we would be more than happy to help.
2. Check your bank balance
If you do your bookkeeping yourself, you should be prepared to reconcile your bank statements regularly. Bank reconciliation is a part of life as a small business owner, however, when not done frequently, the unreconciled items quickly mount up which is when it becomes an overwhelming job. If you work with a bookkeeper, like ourselves, then we will handle this for you.
When looking at your books, you want to know they reflect reality. If your bank balance and books don’t match up, you could end up spending money you don’t really have or holding on to money that you could be investing in your business. Bank reconciliations may not be fun but when you do them on a regular basis you protect yourself from potential future problems. Plus, there’s something zen about bank reconciliations…..they are about balance after all!
3. Bank Rules
You can save time when reconciling in Xero by using bank rules to help reconcile frequently recurring bank statement lines that you don’t need a receipt for. Bank rules allow you to set criteria for transactions and automatically allocate them to the correct accounts. Examples of things you might use a bank rule for are wages payments, directors loan payments, bank interest etc.
4. Check aged payables and receivables
In order to maintain profitability and encourage growth, we advise small businesses to look at their accounts payable and receivable reports each month. Aged Receivable reports show how much money is still owed to your business at a certain date and can show how overdue they are. Aged Payable reports show who you owe money to. Supplier relationships, especially in small businesses, are important and paying on time is crucial to maintain those relationships.
By looking at your reports each month you can follow up with overdue accounts promptly which often results in getting paid quicker. The longer an overdue amount is left unpaid the higher risk of it not being paid at all. Having an accurate understanding of how much you owe and how much you are owed can also help with cashflow.
We hope you found our top tips useful and if we can be of any assistance with your bookkeeping please get in touch. Also, keep an eye out for more top tips on getting on top on our social media.