Whether you are a small business owner doing your own books, have outsourced your bookkeeping to a bookkeeper, or outsourced to an accounting or CPA firm, there are benefits to updating your books on a daily basis.
First off, running a business in today’s dynamic world, you need to know your numbers and track them daily. You need the top line sales numbers, the overall financial picture, and you need to monitor your cash flow.
If your books aren’t being updated daily, you don’t know your cash position and can’t make educated decisions on the fly. All the outstanding bills haven’t been entered, all your income hasn’t been entered, and your next payroll isn’t estimated, so you can’t make a decision to buy more inventory, hire more staff, buy a capital expense or worse unexpectedly need to borrow against your credit lines or put money into the company. You might keep extra money in your business account to cover those “unknown” expenses tying up capital that you could use to grow your business or pay yourself.
I know that the LAST thing that small business owners want is to work on their books, but just like many things in life, if you do it in small bite size chunks, it will be easier. Even 15 minute a day pulling in bank feeds, entering expenses, bills and invoices will save you a couple evenings a week and probably a weekend every quarter.
Doing your bookkeeping daily will improve your chances of catching a problem early enough to resolve the problem quickly. This could be something small like an overpayment by a customer who will appreciate your diligence in refunding it or something more serious like a fraudulent credit card charge. It is your responsibility to report these in a specified timeframe, and if you use a debit card for your business, the money is immediately taken out of your bank account, directly out of your cash flow. Once you report the fraud to your bank, it could take 5 to 10 days to have the cash returned to your account, if ever, if you caught this problem too late.
Do you feel your outsourced bookkeeper, accountant, or CPA firm, could provide more value if they were checking your books daily? Would they be able to catch a fraudulent charge, keep you from bouncing checks, make sure you have enough to cover your next payroll?
It is our experience that most bookkeepers are 30 to 60 days behind, at a minimum, on updating their clients’ books, and when asked to provide updated financial statements it can take them weeks to catch up and provide numbers.
Can you imagine what it’d be like to receive accurate financial statements the same day or same week you requested them? When you want to meet with your banker, financial advisors, or partners, you can do it with financial statements in hand without having to wait for the accounting to catch up.
Would you sleep better, knowing your business finances are up to date and accurate? Imagine knowing that you can trust your financials so you can make better business decisions every day.
So update your books daily and expect your accountants to do the same.