For many businesses, the word ‘bookkeeping’ stirs up panicked visions of untidy and overflowing files of invoices, looming payment deadlines, and laborious calculations.
Streamlining your bookkeeping system makes sense, saving your business precious time and money, drastically reducing stress and anxiety while boosting productivity.
Keeping on top of your finances means your business will be placed in good stead when it comes to impression management with suppliers, clients, and customers alike. Organized finances allow businesses to better understand their situation, approaching dealings with external parties with confidence, boosting the company’s overall reputation.
5 Steps to an Efficient Bookkeeping Process
By putting these 5 tips into action, you can ensure that your bookkeeping system is slick.
1. Go Paperless
If you’re really serious about streamlining your bookkeeping process, then there’s no place for paper systems. Sticky notes, handwritten invoices, and paper bank statements are difficult to organize, and you’ll quickly find yourself becoming overwhelmed.
It does not matter if your filing cabinet is a thing of beauty, perfectly organized. While it is neatly arranged, it is not the optimum means to circulate information with all the necessary individuals.
Settling on a centralized, automated accounting system is the first step to ensure that your bookkeeping runs as smoothly as possible.
Using cloud-based software systems, like Xero, simplifies the entire bookkeeping process, allowing your entire team and accountant to update and retrieve information from your accounts in real-time, around the clock.
No longer will files go missing or will your employees waste time sifting through piles of paper to find statistics they require. Your information will all be fully backed up and intensely secure on these paperless programs.
Another benefit of paperless systems is the ability to fully integrate all financial matters into one system.
While you may have moved away from paper, your accounts team may still be juggling multiple Excel spreadsheets and various e-mail chains. This is not the best use of their skills.
Using a single, automated, multi-purpose accounting program allows you to create and deliver invoices, receive reminders to pay bills in a timely manner, manage stock, and generate financial reports with the click of a button.
You can also arrange with your bank to receive your statements on these platforms.
Everything is stored in one place, smoothing out the process.
3. Educate Your Team
Having a clean, organized accounting system isn’t the end of the streamlining process. Regardless of the beauty of the automation, there is a human element to efficient bookkeeping.
Everyone in your office should be well-versed in how to use the new technology effectively and they must approach accounting tasks with the right attitude.
Recruiting the services of an experienced accountant is a good starting point to keep everyone on the right track. Their wealth of experience working through diagnostic problems with these platforms allows them to ensure they cover all bases with your team, so they can independently use the programs with ease.
When employing new software systems, it’s a good idea to set some ground rules with employees to iron out any creases in the re-designed process.
Employees must be instilled with a hard-working ethos, encouraging them to submit full and accurate data in a timely manner. Everyone must be on board and repercussions must be in place for those lagging behind.
4. Categorize Business Expenses
It can become all too easy to feel overwhelmed when managing the finances of your business. With money flowing in and out from multiple sources, it’s important to keep track of everything and be able to differentiate various expenses.
Take some time to organize your sources of revenue and expenditure into categories. This way, when you’re entering or retrieving data, you’ll be able to do so quickly and seamlessly.
When collating receipts or invoices, you can arrange them according to their overarching category, preventing the creation of duplicate entries.
When it comes to filing your taxes, these categories will quell any confusion, keeping stress to a minimum.
5. Create a Habit
Time is of the essence in the streamlining process, so ensure that you and your employees make a habit of attending to account maintenance on a very regular basis.
During stressful periods of work, updating financial data can easily fall to the bottom of the priority list.
The lynchpin of successfully streamlined bookkeeping is consistent management. Establish dedicated time slots to look over your accounts, keeping on top of issues that arise.
If you neglect to do this, miscalculations, missed invoices, and incorrect data entries may pile up rapidly. Rectifying issues will leech much-needed time at a later date, causing immense strain seeking out the source of problems that occurred weeks, and even months, prior.
Little and often is the key, and fostering this habit is part of developing a healthy approach to your bookkeeping process.
Conclusion - Streamline Your Systems for Effective Bookkeeping
These streamlining tips work for businesses of all sizes in all industries. Having concise and correct financial data at the click of your fingers is absolutely vital for simplifying the bookkeeping process.
Automating, digitizing, and integrating your system forms the crucial foundational step. Organizing your affairs into manageable chunks will simplify your efforts. Your workplace culture of consistent and accurate work underpins the success of your work.
With everyone in the loop and your account information under control, your energies can be devoted to more laborious tasks in the wider-running of your business. Your bookkeeping process will run like a well-oiled machine, requiring regular but minimal maintenance.
Our guest author Emily Allison is a writer for specialist small business accountants and tax advisers, Tax IQ, based in Edinburgh, Scotland. She regularly pens articles which emphasize the company’s expertise in a wide range of financial matters, for the benefit of freelancers, contractors, SMEs, start-ups and limited companies alike.