All the Signs that You May Need Assistance with Your Bookkeeping
- Learn the red flags of a bookkeeping system that needs help.
- Find out why business owners must have good recordkeeping.
- What does it mean if you can’t reconcile things quickly?
- Learn how effective bookkeeping can drive growth.
- Find out how better bookkeeping can help your profitability issues.
Especially in the early days of a business, it can be natural to want to handle as many day-to-day tasks yourself – bookkeeping included. Sometimes, it's in an effort to save money. Often, entrepreneurs just feel like they're in a better position to handle everything themselves. Regardless, this situation does seem to play out regularly.
But as your business continues to grow and evolve, those day-to-day tasks become harder. Your finances become more challenging, which naturally adds complexity to the bookkeeping process. Mistakes are more likely to be made and some of them, particularly as they relate to cash flow, can cost you dearly.
Thankfully, all hope is not lost. By simply paying attention to a few key red flags, you can become immediately aware of when you need help with your bookkeeping. Then, you can do something about it quickly.
Red Flag #1: Your Bookkeeping Records Leave a Lot to Be Desired
By far, one of the biggest warning signs that you need a bit of additional help with your bookkeeping has to do with when you find yourself in a situation where your existing records leave a lot to be desired.
To make sound financial decisions, you need a bird's eye view of everything. Records are a big part of it. This means not only receipts and bank statements, but also things like payroll records, invoices, and more. Not only will this help keep your business afloat, but it will also help avoid any problems when tax season rolls around again.
Even if you're keeping everything that you should be, you may not have an ideal system in place to help make sense of it all. Do you have to wade through 12 months' worth of documentation just to find information on certain expenses? In that case, the time you’re spending could be better used by focusing on more important matters. Enlisting the help of an accounting professional can absolutely help to that end.
Red Flag #2: You're Not Reconciling Things Fast Enough
Another critical part of the accounting process is the end-of-the-month reconciliation. This is when you take your bank statements and compare each cash account transaction with the information in your records. Essentially, you're trying to make sure that the two line up. Doing so gives you a complete financial picture that you can use to make decisions in the coming month.
In no uncertain terms, you should go through this process as soon as you see your bank statements posted online. If you wait too long, you'll make decisions based on incorrect information. Sometimes this might not be a problem. However, more often than not, it will and could be avoided by calling in a bit of additional help.
Red Flag #3: Your Goals Are Expanding
For many small businesses in particular, one of the biggest warning signs that they need bookkeeping help comes by way of the fact that their long-term goals are expanding and growing but they lack the capability to help meet those needs on the financial side of the equation.
In the early days of your business, your goals were probably simple: "keep the doors open and the lights on." But at a certain point, you'll want to think about expanding. You'll need to hire new people and you’ll need to know how many you can reasonably afford. You'll need to think about what other investments you'll need to make. All of this leads to a bookkeeping process that instantly becomes more complicated. At that point, you don't want to attempt to go at it alone.
In the best-case scenario, you'll make it harder for yourself to accomplish those goals that you've set for yourself. At worst, you'll be creating a series of bigger issues that will only escalate over time if things go unchecked.
Red Flag #4: You're Having Profitability Issues
Similarly, one precarious situation that business owners often find themselves in involves one where sales may be strong, but profits don't line up with those expectations. You're making a lot of money, but it's also going somewhere. Without the right approach to bookkeeping, you'll likely have little-to-no idea where.
This is another one of those reasons why having clear, concise financial records pays off enormously. If sales are strong and profits aren't, you can dive deep into the records to quickly find out why. You can find opportunities for cost savings to help get those two numbers closer together. At a bare minimum, you'll have actionable information to work from in terms of what must be done to optimize profits. There will come a day when it becomes too difficult to do this on your own. When that day comes, a financial professional is the first person you should call.
In the end, these are just a few of the many red flags that point to the fact that your bookkeeping efforts likely need a bit of additional help. While it can be a frustrating situation to find yourself in, it's also a critical one. Acknowledging the problem early on puts you in a far better position to address it quickly – before it has a chance to become a much more volatile situation later on. Enlisting the help of a professional will also give you a rock-solid financial foundation that you can build on moving forward, which is truly the most important benefit of all.
Want to find out more information about all the signs that indicate you may need some help with your bookkeeping? Would you like to talk to a professional about your situation in a bit more detail? Call Fiducial at 1-866-FIDUCIAL or make an appointment at one of our office locations to discuss your situation.
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