Small business owners are so involved with other aspects of their business that they often neglect keeping accurate bookkeeping records. Up to date books are essential for the long term growth and sustainability of your business. Some of these tips may sound trivial, but you will be surprised how often they can be neglected, and before you know it, you are months behind on your bookkeeping! Here are some tips that should help:
1. Keep Track of Receivables and Payables
Bill your customers promptly once an agreement has been fulfilled, and follow up regularly to ensure timely payment of the debt. Record receipts regularly in your ledger so that receivables are up to date. As for payables, come up with a filing system to keep track of your receipts. For example, sort them by date or by category so they are easy to retrieve when needed. Again, record receipts regularly in your ledger so that payables are up to date.
2. Watch Cash Flow
Since the flow of money into your business can be on a different schedule than the flow of money out of your business, you need to be well aware of cash flow at any given time in a month. If you are able to detect this as a problem early on, it will give you enough time to arrange for alternate methods of financing to cover any shortfalls. Monitoring cash flow regularly will allow you to plan ahead and adjust your collections and payment policy if need be.
3. Compare Earnings and Expenses
How is your business performing? It is a good habit to regularly compare earnings and expenses, since it will help you identify which areas of your business are profitable, and which could require some more of your attention? Depending upon the size of your business, you could perform this task weekly, monthly, or quarterly.
4. Go Online
Having well maintained and accessible bookkeeping records will greatly help your small business. The trend in recent years has been to move away from conventional methods of doing business and move to more tech friendly methods using the internet. If online banking causes you to become more organized and efficient, why not apply the same to your bookkeeping.