Four Reasons Your Business Can’t Afford Bad Bookkeeping

Four Reasons Our Businesses Can't Afford Bad BookkeepingWe go into business for a thousand reasons. Maybe we’re doing something we love, or maybe we just want something to call our own. We rarely do it to keep a good set of books, but here’s the reality: How you keep your books can be the difference between sleeping well at night or spending your days going from one financial mess to another.

What can bad bookkeeping do to your business?

  1. Let’s start with cash flow. Sure, we know what’s in our bank account. But what if we don’t know how much our customers owe us? Or what we owe suppliers? Are we really sure we can meet payroll this week? A reliable set of books lets us instantly see our cash flow position, and that means we can avoid painful surprises such as cutting employee hours or going into our own pockets to pay suppliers.
  2. There are two ways to get our taxes done. One is to dump a mixed-up pile of invoices, receipts, bank statements and payroll records on our accountant’s desk. The accountant slowly pieces it together and calls frequently with questions. It’s time consuming, expensive, and we may end up paying more taxes because we don’t track all deductible expenses. The alternative – we email a set of files to the accountant and he or she quickly completes the filing. We’ll probably end up paying less in taxes. An added benefit – a good set of books will turn a sales or income tax audit from a weeks-long scavenger hunt to a simple, well-organized report.
  3. What happens when we try to get a loan? It’s pretty simple – if our books are a mess, the only way a bank will lend us money is if we personally guarantee it, or worse, take out a mortgage. Banks like to see quarterly financial reports and a reliable system in place to create those reports. What that can mean for us is a larger credit line and better terms.
  4. Here’s the ultimate bad bookkeeping nightmare – a dishonest employee takes advantage of the situation and starts siphoning-off cash or inventory. It does happen, and as long as our books aren’t reconciled to our cash balances, we’re vulnerable. Some say a dishonest person can always find a way around even the best accounting system, but that’s not an excuse to leave the doors wide open and the cash register unlocked.

Yes, getting your bookkeeping organized is an effort, but the good news is that through a bookkeeping service like us, we can take on the task for you! More important, a reliable set of books lets you focus on the really important things that make your businesses successful. Convinced that keeping GOOD books are the way to go? Contact Accounting by the Books today!