6 Things to Review with Your Bookkeeper Regularly

6 Things to Review with Your Bookkeeper Regularly

Many new and existing business owners often neglect looking at bookkeeping of their business until the end of the fiscal year (EOFY) approaches. Businesses have to maintain accurate and timely records. It is no secret that owners have a lot of jobs to do. Most would agree that the least exciting job is that of a bookkeeper.

This is one of the reasons businesses outsource their bookkeeping services. Remember to review some aspects from your end too. What are those aspects? To find out more about it, keep reading! 

Keep an Eye over Accounts Receivable

Does your accountant start a conversation weekly? Or at least once a month to ask questions and understand the business? To manage your books effectively, your bookkeeper needs to understand: 
  1. How do you make money?
  2. What are your company's goals?
  3. What challenging areas do you find? 

Regular meetings provide the education and information necessary for this process. One of the main causes of trouble is non-payment. The most common cause of non-payment is late payments. To protect your cash flow, watch how long it takes to pay your bills.

Getting paid is the most exciting part of any business. Managing your accounts receivable isn't that fun. When an invoice is issued, a receivable is recorded. This means you record that a customer owes you money. This way, you'll be able to see if a customer has an outstanding balance.

Too often customer deposits are reconciled at a later date because there are never enough hours in the day. That means when it comes to taxes, you still have a lot of customer deposits in your income account and mismatched accounts receivable.

If you don't know these things, you may have some issues. Follow these simple steps to learn how your bookkeeper works. A good bookkeeper will not only welcome your interest but also appreciate the opportunity to work together toward the financial success of a business.

Reviewing these things will help you understand the financial status of your business. Don't ignore these simple things that are making you up-to-date with the company's ins and outs. 

Review and Plan for Major Expenses Periodically

Whatever your business, there's always a chance that a piece of equipment needs replacing, a large stock order, or some other major purchase. Planning for all of these is essential to any business. It allows you to meet them without panic. Moreover, sufficient funds are required to cover them.

If you have planned it well, you won't need to divert funds from other areas. What's the convenient way to do that? The easiest way is to set it aside as a line item in your reports. Set up a special savings account. Why? Just to deposit a constant and fixed amount of money for future requirements.

So, when you need it, you will have it. When working with an outsourced bookkeeper, be sure to request an SOP that outlines: 
  1. The basics of bookkeeping
  2. The intricacies of your business.

It also ensures you get answers to urgent questions even if your primary point of contact is unavailable. Many business owners don't realize how much it costs to run their business. This is one of the worst things that a business can have. Knowing business expenses can help you spot deficiencies. Not only this, but it also helps find other issues early to avoid further losses.

Budgeting and management tools help you determine your operating costs. It alerts you to discrepancies that deserve attention. Update your budget when you start seeing consistent patterns. It indicates costs or sales are increasing. 

Review Process Automation

There are many software solutions for collecting and compiling transactional data and generating reports. Automating accounting tasks usually provides a more accurate picture of what's going on in your business, since financial reports are almost always up-to-date.

Software like QuickBooks has built-in automation options. However, there are also separate systems that can be added to make things run even more smoothly.

Review each task and see where there is an opportunity to delegate it to in-house staff or an outsourced accountant. Decide how often to run them. Set up a control system to ensure no task is overlooked.

Some bookkeeping services offer “CFO” level meetings where they sit down and update on their:
  1. Assigned responsibilities.
  2. Outstanding accounts payable or receivable
  3. System issues
  4. Interpretation of the financial statements.

Check out Cash Payments

The settlement of cash payments is an important factor in bookkeeping. Inaccurate bookkeeping can lead to significant risks to you and your business.

Many service providers also provide the ability to track cash inflows and outflows. Ensure to track cash in any software you use. Also, keep track of those transactions to save yourself trouble later. 

You Must Know How to Read Balance Sheet and Income Statement

The income statement documents the company's income and expenses. A balance sheet shows a company's assets and liabilities. Liability is what a company owns and owes at a specific point. Use the balance sheet to determine if you can meet your financial obligations.

Analyzing your financial statements will help you identify patterns in your business. Once you understand trends and development paths, you can forecast future needs and capitalize on growth opportunities.

Keep track of everything related to your business. The best way is to store receipts and use a dedicated business credit card and bank account. Track activity will help you see:
  1. How much are you making?
  2. Tax purposes at the end of the year. 

Keep your Business and Personal Expenses Separate

When you start your business, it may seem more convenient to use your existing personal bank account for everything. Many owners often use a business credit card for the occasional purchase.

It is essential to separate your expenses from those of your company. Mixing your personal and business finances can lead to a loss of liability protection. It is known as breaking the corporate veil. Separating finances can protect your wealth. 

Final Words!

Even if you have a dedicated bookkeeper, be organized with him. The only way to know where things are and to avoid making mistakes is by constantly checking books.

Don't leave bookkeeping at the bottom of your to-do list. It will improve your understanding of how your business works. Similarly, it will boost your financial credibility and accelerate your growth when you are ready.

Remember: Keep an eye over them until these things get more complicated!
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