Bookkeeping Advice for Small Businesses

As small businesses get back on their feet, looking after their finances has become a priority for the most part. Whether it's reworking bookkeeping or using technology to streamline the process, here are six tips small businesses can use to improve their bookkeeping in 2021. Let’s get into them!

1. Brush the Dust off Your Financial Books

If you haven’t already thought about tallying your books, now is the best time to do it. This will help you stay up-to-date with all your transactions and help you in better financial planning for the future.

Ensure that none of the important financial paperwork is missing.

Reconcile your bank and card statements so that they match.

Investigate and review your profit and loss, cash flow statement, and balance sheet for any inconsistencies or red flags.

Thorough verification of all your records is an excellent place to start to get your business back financially stronger.

2. Arrange Your Accounts Receivable

In unpredictable moments like this, measuring reality and minimizing potential losses should be your second priority. Accounts receivable are money that your debtors and clients owe to you. As they could be one of the primary means of receiving income, make sure they pay on time.

It's not unlikely that debtors will turn into bad debts due to the crisis, but make sure you have a clear record of your accounts receivable in place. Customer risk management to prevent bad debts is vital for any small business at this time.

3. Get Help From a Professional Bookkeeper or Software

Better financial planning does not allow for mistakes. While manual accounting is typically the way to go for most small business owners, it's a good investment to have executed it professionally. Accountants are seasoned financial planners who can help you detect unnecessary expenses or irregular financial inconsistencies.

Besides bookkeepers, you could also hire an accountant. They can analyze financial data compiled by accountants and help small businesses take care of their financial health. It is best to hire a certified public accountant (CPA) to manage your finances more efficiently.

4. Manage Cash Flow Effectively

Unless this is your first time running a small business, you probably already know that cash flow is essential to any business. Managing your company's cash flow is critical for businesses in times of cash pressure. Failure to effectively manage cash flows could mean closing the deal once and for all.

5. Keep Track of Payments

On a regular day, it wouldn't hurt to set aside payments for a time. But in a post-pandemic situation, every payout matters. It is crucial that you stay current on all your payments and follow up with them until they are received.

Delayed payments can hurt your cash flow pretty badly and can be devalued in times of business downturn. A tradius reports that the pandemic has left 43% of bills in the United States, Mexico and Canada outstanding beyond the due date. You must support the business until it recovers from the pandemic.

In Summary

Bookkeeping service a critical function in a company by compiling its transactions and other financial information and ensuring that data is readily available to be evaluated to allow making informed business decisions.

The need for accountants and CPAs will only grow as businesses struggle to get their fiscal house in order for the coming year. With a professional accountant on board, there's nothing to worry about.

But you may prefer to track your business expenses on your own. I'm sure these tips will help you keep your books current and manage your finances.

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