Successful small business owners are great at what they do. The clients are happy and work keeps pouring in. But often, in the world of money, things aren’t so rosy.
That’s because lots of small business owners have a horror of bookkeeping – and it’s holding their business back. Here are six tell-tale signs you may be suffering from bookkeeping phobia, and what to do about them.
You’ve got loads of work—but no money in the bank
Is it because you haven’t been paid? Is it because you’re spending too much? Is it because you haven’t invoiced? Cash flow is the bane of many growing businesses. To keep afloat and fund expansion, you need cash to invest, as generally you don’t get paid until the job is done. Without proper management of cash flow it can be difficult to fund the next project and keep the business growing, especially if you need to make regular loan repayments.
What you can do: By keeping a cashbook, or equivalent, to track payments into and out of your bank account, you can keep on top of cash flow, helping you understand where your bookkeeping needs more attention. And a well-tended cashbook can become a forecasting tool rather than just a historical record.
You keep finding receipts in strange places
They’re on your desk, in your wallet, in your pockets and in the glove box of the car. You’ve no idea which are in the hundreds and which are for a few bucks. But without ordering and recording your receipts, you don’t know how much tax you are likely to owe and what tax you can claim back. That’s important when forecasting how much cash will be in the business in the future. The problem is, receipts are usually on paper, and you might be out of the office when you get them. Once they start to stack up, they really become a problem, and procrastination sets in. “Tackle the receipts? No, I have more important things to do!”
What you can do: Regular attention to receipts and keeping a digital record can help the business run smoothly and avoid unnerving hiccups in cash flow.
Invoicing is way down your priority list
You’re great at your job and you’re busy. You trust your clients and you want to keep the relationship sweet. So invoicing isn’t always at the top of the list. And when it’s not, you can forget to do it. When you do invoice, you struggle to keep tabs on how many are outstanding and which ones have been paid. It’ll look bad if you chase up a client for an invoice that’s actually settled, but it’s worse for your business if you leave them unpaid all together.
What you can do: Understanding where you are with invoices will help you know how much cash you’ll receive in the coming months and how much work you need to win to keep thriving. Don’t think of invoices as a burden, but rather as the tiller that steers the ship.
Download Sage Advice’s invoice templates to help you get paid faster.
You can’t find your bank statements
If you don’t like nasty surprises, losing bank statements is asking for trouble. Being vigilant over the state of the bank account is a prime responsibility of small business owners. It helps combat the risk of fraud and mistakes by your bank. But reviewing statements regularly will also help you gain a better understanding of where you’re spending money, when you’re earning it and how the business is performing overall.
What you can do: With electronic banking, you don’t need to wait until the end of the month to know where you are. Ultimately, if you keep your banking under control and never breach your credit limit, you stand a much better chance of getting finance when it comes to expanding the business.
Your spreadsheets are too complicated
OK, so you feel good about controlling your business on the computer. On spreadsheets, no less. Organized, right? Well, maybe. Spreadsheets need to be carefully constructed to do the job you need them to do. For effective financial management, you need to join up different aspects of your business: tenders, sales, invoices, cash flow and banking. That can mean quite a few formulae. Mistakes are easy to make but hard to see. Continually keying in data also makes spreadsheets prone to error.
What you can do: Moving your business management to spreadsheets can just lead to a better-looking mess, so investigate more intuitive tools to help you with your bookkeeping.
You “don’t have time” for bookkeeping
The final sign you might be suffering bookkeeping phobia is you tell yourself you never have time for it. Your business is too successful and you’re too busy. Besides, you didn’t go into business to become a bean-counter.
What you can do: Remember that making time for bookkeeping will save you time in the long run. Less time spent digging out and adding up receipts. Less time spent chasing up invoices. Less time spent juggling cash flow. Finally, being proactive will free up time to do more of the work you love.
Bookkeeping might not be the reason you went into business, but it will help you make a success of it. Luckily, there’s help at hand to make bookkeeping easy, quick, and—dare we say it—even enjoyable.
7 tips for small business accounting
You work hard at making your business a success because you love what you do—not because you love balancing the books. But accounting is a business essential that’s crucially important to your success.