Why good bookkeeping is brilliant for your business
Posted on 18th August 2021
With accurate bookkeeping and useful financial reports, you can immediately see how well your business is doing.
You will be able to make fast decisions, based on up-to-date information.
Importantly, it will be easy to compare this month’s performance with the previous month, or the same month last year, for example. Opportunities and possible risks will be clear, and you can take action in good time.
You will be looking ahead and planning the future of your business. To do this with confidence, you can look at the patterns and trends that you can see in your financial records.
To make sure your business is in the best possible health, you need to know which activities are profitable and whether any are loss-making.
While you might be looking for all the new business opportunities you can grasp, your bookkeeper can keep an eye on the details where the Devil often hides. They can make sure your plan for the year ahead includes all your major expenses such as tax and VAT projections, insurance premiums or equipment purchases, for instance.
Keep healthy records
Have you ever asked yourself which ‘books’ your bookkeeper is actually taking care of? Normally, the books are:
• what you own and the cash in the bank
• your income and sales invoices
• your purchase invoices and receipts.
When all of this information is accurate and up to date, you can have an instant snap-shot of your business performance at any time. More importantly, you will know who is due to pay you, and the bills you will need to pay and when.
This is essential when you’re planning for the future because it will allow you to make forecasts.
Control overdue invoices
You will be well aware of just how busy you are, and how many invoices you have issued. You might feel that’s as good as ‘cash in the bank’ but if some of your customers are slow or unreliable in their payments you could run out of operating cash. Your bank might start to see you as a risk and withdraw any credit arrangements you might have with them, especially if you can’t clearly outstanding payments.
With your bookkeeper regularly reviewing payments received, you can be alerted if any are overdue and follow up with your customers quickly. In many cases it will be a simple oversight, but some might be persistently late with their payments or even have several outstanding. If this is the case, you might need to put any further work on hold until their account is settled.
If you and your bookkeeper aren’t rigorous with credit control, your business could be in trouble.
Keep track of expenses
Depending on your type of business, there could be dozens or even hundreds of transactions to keep track of every day.
Controlling your expenses is as important as making sure you receive regular payments.
Many of your expenses will affect your tax and VAT bills, so it’s important that they are under control. In the best case your bookkeeper can make sure you have enough money reserved to meet your obligations. In the worst case they will be able to let you know immediately if there’s a risk that your expenditure will exceed your assets and income.
If you would like some bookkeeping help to make your business even more brilliant, just get in touch.
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