5 Common Bookkeeping Fails – and How to Easily Avoid Them

If you’re in business, you already know that careful financial management is important. But do you really aspire to spending your time dealing with numbers and paperwork? That’s probably not why you went into business!

Unfortunately, not keeping a close eye on your books can be very costly. In fact, 35% of insolvencies were reported as being due to “poor financial control, including lack of records”.

It’s clear that getting your bookkeeping right can make the difference between failure and success. Here are five simple tips to keep your bookkeeping on track.

1. Don’t mix business and personal

Don’t be tempted to take a “buy now, sort it out later” approach to expenses. Using the same credit card for personal and business purchases is sure to cause headaches down the track.

At the end of the month, you’ll be left pouring over statements, trying to sort things out. Mixing business and personal expenses costs extra hours of bookkeeping and will muddy your overall financial picture.

Avoid this pitfall by using a separate credit card and bank account for business purchases. And be disciplined about separating expenditures.

2. Take advantage of technology

Are you still relying on manual accounting methods?

While basic spreadsheet tools can get the job done, accounting software like Xero can do so much more. Track invoices, organise expenses, generate insightful financial reports, and more.

This isn’t a Xero promotion, but we are huge fans of accounting systems that make your life as a business owner easier. Not convinced? Read Brett’s story of how user-friendly systems have helped his business.

There are a multitude of apps available to help too: from tracking debtors to simplifying invoicing, getting paid quicker to managing payroll, managing sales data to managing jobs. But don’t go into overwhelm; you don’t need to be a tech-guru to work out what’s best for your business. A Synectic adviser can cut through what’s available – including what other businesses in your industry are benefiting from – and help you set up the best systems for your unique business. Find out more about cloud accounting services here.

3. Always keep receipts

If you want to claim deductions at tax time, you’ll need to keep receipts. Other evidence of your expenses might include motor vehicle log books, odometer readings and the like.

You could set up a special folder on your computer and scan your receipts straight into it.

Better still, use a system that does some of the work for you. Xero Expenses is one such system, letting you upload invoices, receipts and other documents, and storing them alongside your transactions.

Hey presto – less data entry and you’ll never lose track of your receipts again!

4. Keep accounts up to date

You probably don’t look forward to your quarterly appointment with “the books”. So try breaking it down into regular manageable chunks (say, weekly) to keep on top of it.

And make the most of cloud accounting systems (yes, such as Xero) that offer bank feeds. A list of your bank transactions will be automatically and securely created in your data file. You can also set up rules to automatically match transactions from certain suppliers. These two functions alone will save you so much data entry you’ll wonder why you didn’t do it sooner.

Setting up bank feeds will also give you an up-to-date picture of your cash flow – critical for good business management.

5. Don’t do it all yourself

We get it. You need to watch your budget and handling bookkeeping on your own seems like an obvious way to save.

But taking advantage of professional help – even on a part-time basis – can actually create substantial savings of time and money.

Don’t forget that your time is worth money. With the skills and passion that lead you to owning your business in the first place (let’s face it, it was never going to be easy!), you’re the best person to focus on growing your business. So, put yourself back in the driver’s seat by stepping away from bookkeeping.

Are you ready to save yourself time and headaches, and give your business the best chance of success? A Synectic adviser can help you improve your bookkeeping, so you can invest your talents and energy where they will be most profitable.