Time to Review Your Bookkeeping – 7 Areas to Focus on to Help Manage Your Money Better

Spring is in the air and summer is just around the corner. if you haven’t already, then It’s time to spring clean your home. It’s also the perfect time to spring clean your bookkeeping and review your accounting processes.

Below are 7 areas you should consider when reviewing your bookkeeping to make sure you’re doing everything you can to manage your business effectively and efficiently, helping you to stay compliant and to manage your money better.

1

Are you using the right software or using that software effectively?

Too many businesses aren’t using the right accounting software. They waste time and money trying to process their accounts on outdated technology.

With the explosion of cloud-based software, smartphones and increasing computer power, the software options available to manage your business are now huge! If set up right, they can save you considerable time and money, while giving you better information to manage your business.

2

Do you have an effective process to raise and record sales, chase and take payments?

Without this, there’s a danger that sales are missed, or payments aren’t received. It’s important that you have an effective way to manage your sales and customers.

Most accounting systems have the functionality to manage this, but too often we find business owners who don’t understand how this operates.

We had a client recently where the owner spent every weekend going through all of his sales manually to work out who owed him money. We updated his process and he now knows exactly what he’s owed directly from his accounting software without needing to spend all weekend going through his invoices.

This has helped improve his ability to run his business and he’s got his weekends back!

3

Do you have an effective process for authorising and checking purchases, processing invoices and completing payments?

If you don’t, it can be very difficult to manage your cash flow, and you’re a lot more likely to make a mistake.

We had a builder recently who, when we asked them how they paid their purchase invoices, they pointed to a big pile of invoices and told us they went through that pile and paid the ones that were due.

This was taking them hours and leading to many mistakes. They had paid some invoices twice and never really knew where they were at. It was a time-consuming mess.

We reviewed their process and set it up so that they could use their accounting software to let them know when invoices were due. This saved them hours each week and helped avoid silly mistakes.

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Do you have an efficient and effective method for controlling, processing and reconciling bank transactions?

You need to control your bank account and be on top of what’s happening.

The latest software and technology really help with making this process a lot simpler and much quicker. This is an area where we can make your process a lot more efficient and have stronger controls.

Do you maintain your payroll properly and comply with the rules and regulations?

This is a huge area where a business can have compliance problems. Maintaining a payroll and complying with the rules and regulations is complex. If you get it wrong, you can end up facing penalties, extra costs and legal claims from employees.

You have to make sure you have all employees’ information, you’re paying them at the right rates, calculating their net pay, making deductions and super properly, recording their leave entitlements and so, so much more.

Do you maintain your GST properly and comply with the rules and regulations?

This is another area where businesses often have compliance problems. GST is a huge and complex tax. Mistakes are common, and sometimes these can be costly.

We’ve worked with many clients who’ve missed out on thousands of dollars that they could have claimed, or where they’ve failed to comply with the rules and have been caught out and faced penalties.

Do you use your figures or financial reports to manage your business?

Numbers are the language of business. They show what’s working and what’s not. If you don’t even look at your figures or financial reports, how are you supposed to tell if what you’re doing is working?

We wouldn’t watch professional sport if we didn’t keep score or understand what the score meant. It’s the same in business. You need to review your numbers, understand what they say and what that means for your business.

Warren Buffett, someone who knows a thing or two about numbers, says:

“If you can’t read the scoreboard, you don’t know the score, and if you don’t know the score, you can’t tell the winners from the losers.”

Most business owners I meet don’t use their figures and financial reports to manage their business or don’t have a clue what they mean. They actually find it boring, which as accountants we find that hard to believe!

Here’s what Robert Kiyosaki, the author of Rich Dad Poor Dad, says about numbers:

“Now, accounting is possibly the most boring subject in the world. It can also be the most confusing. But if you want to be rich, long term, it could be the most important subject.”

If you’re not using your figures or financial reports to manage your business, then you’re missing ou

Next Step

We hope you find the above information useful.

If you need any help with any of the issues above, we’d be happy to help you. Simply call 07 5649 7650 to talk to one of the team.