Maintaining meticulous financial records is an absolute must for all small and large business owners. Financial books that are well-organized, up-to-date, and accurate are required for managers to clearly and easily view their business’s financial status. However, for many small business owners, that’s often easier said than done.
Small business owners usually wear multiple hats in the workplace. Seemingly non-urgent financial tasks, such as filing invoices or understanding eligible tax breaks, are often pushed to the wayside. Over time, simple bookkeeping tasks that remain incomplete can lead to inaccurate and confusing financial records, which can be harmful to a successful business.
Occasional minor bookkeeping slips don’t have become overwhelming business catastrophes. And spring is the perfect time for small businesses to address those nagging concerns. We’re sharing seven robust spring cleaning tips small business owners can use to spruce up their financial records.
Financial Records Spring Clean Tip #1: Get Accounts Payable Up to Date
Lingering unpaid bills in a business’s accounts payable folder can be very damaging. Outstanding unpaid invoices can seriously impact an operation’s viability, reputation and profitability. When looking to improve the health of a small business’s financial books, we recommend starting with items and tasks connected to their payable accounts.
Ways to Improve the Accounts Payable Process
- Use an online accounting software program.
- Switch to a paperless bookkeeping system.
- Pay bills early.
- Automate vendor payments.
Financial Records Spring Clean Tip #2: Review Accounts Receivable
Just as being on top of paying bills is essential to keep a business running smoothly, so is getting paid. Receivable accounts that are continually late or fall into arrears can disrupt a business’s profitability and efficiency.
When reviewing your accounts receivables, consider the following ideas to increase the turnover rate:
- Ensure invoices are accurate and timely.
- Always include payment terms.
- Automate reminders to clients with outstanding invoices.
- Automate the payment process by having a pre-authorized payment agreement
Financial Records Spring Clean Tip #3: Assess Current Bookkeeping Software
The right bookkeeping software program can be beneficial for small business owners, especially those without prior bookkeeping experience. However, if a software program doesn’t match the users skillset, needs, or experience level, it can lead to disastrous-looking financial records.
Signs indicating a bookkeeping software program is incompatible with a small business’s needs can include:
- Poor user experience
- Difficulty locating and tracking documents
- Unable to connect to other essential business software tools.
If your small business can relate to any of the above issues, read our recent blog article for help selecting a bookkeeping software for your team.
Financial Records Spring Clean Tip #4: Review Profit Margins
Small business owners should review profit margins as part of a financial record spring clean-up. While pristine financial records aren’t likely to increase sales or customer conversion rates, they can provide a clear picture of where a business can optimize efficiency.
For example, when seeking better control over personal spending and debt, many people track every purchase and expense over a defined time frame. At the end of the tracking period, a spending habit review is conducted. Upon reviewing that data, many are surprised to see how much they spent versus how much they thought they paid, which is often more than expected.
Small businesses can suffer from similar inaccuracies if financial records aren’t being strictly monitored. If profit margins have decreased, it’s a good idea to take a deeper look at how a business is running its books.
Financial Records Spring Clean Tip #5: Review Time Spent on Bookkeeping Tasks
Managing the books of any business, small or large, is a big undertaking. Regardless of a person’s training, qualifications or experience, running a business’s financial records takes time, care and consideration. And, when small business owners are unable to devote the time needed to completing bookkeeping tasks, the health of their financial records may be at risk.
When a small business owner’s time and knowledge are in short supply for accurate bookkeeping, the best solution is to outsource those tasks. Certified Professional Bookkeepers with experience in small business bookkeeping are a great resource to consider.
Financial Records Spring Clean Tip #6: Check Your Payroll System
In 2016, the Canadian federal government made headlines when implementing a new payroll system, Phoenix. Upon roll-out of the payroll program, glitches and errors occurred that resulted in thousands of Canadian’s being paid incorrectly or entirely unpaid.
Fortunately, that’s not the “norm” in professional payroll operations.
An optimized payroll system should be relatively easy and seamless for small business owners. However, if problems with payroll operations are a regular occurrence, it’s time to review what is going on and consider options for improvement.
Seeking advice and support from payroll professionals is a smart option to creating and maintaining a smooth payroll operation.
Financial Records Spring Clean Tip #7: Understand Your Tax Obligations
Springtime is tax time in Canada! So, when dusting off the cobwebs during a financial spring-clean, take some time to understand current small business tax obligations. Taxes change regularly, and it’s up to business owners to learn what tax rules and requirements apply.
In 2021, taxes for small businesses are unlike any year we’ve seen. Stimulus packages, tax implications, and emergency wage benefits rolled out in response to the COVID19 pandemic add new layers to the tax filing process. To understand your small business’s tax obligations, talk with one of our bookkeeping experts.
Want More Small Business Financial or Bookkeeping Tips?
At Source Online Bookkeeping, we specialize in small business bookkeeping. Our goal is to help each of our clients improve their operating processes and optimize their bottom line. We also strive to create unique, strong relationships with our clients to understand their needs and bookkeeping priorities better. For more helpful small business bookkeeping tips, be sure to check out our blog.