Financial records are the backbone of any business. They give business owners with accurate insights about their company’s performance, help formulate business-related decisions, and ensure compliance with tax regulations. However, keeping track of every money that comes in and goes out may be overwhelming, even more so if you’re a small business owner.
The good news? There are helpful strategies to streamline your financial records and make them more manageable. Here’s how you can cut through the financial mess and simplify your financial records.
Consider Embracing Digital Bookkeeping
The days of stuffing receipts into boxes or scribbling transactions in ledgers are now long gone. Digital bookkeeping has modified the way companies control their finances, regardless of their size. By shifting your financial records to a digital platform, you’ll surely save time, minimize mishaps, and have easier access to your financial information.
When choosing a digital bookkeeping solution for your bookkeeping tasks, find a user friendly accounting software that aligns with your business needs. Look for features like automatic bank feeds, which import your financial transactions directly from your bank account.
For those only starting out with a tight budget, knowing how to do bookkeeping in Excel can be a good start. Although it needs more manual data entry compared to specialized software, Excel provides versatility and may be an excellent way to learn and understand the basics of digital bookkeeping.
As you grow, you’ll find that more robust digital platforms offer additional perks. Many include mobile apps (receipt scanner app) that let you snap photos of receipts on the go. Plus, cloud-based solutions give you the freedom to access your financial information from anywhere, at any time.
Generate A Chart Of Accounts
The chart of accounts is like the spine of your financial records. It’s a list of all the categories you use to monitor income, expenses, assets, and liabilities. Getting this right will make it easier to categorize transactions and generate meaningful financial reports.
So, keep it simple. Begin with broad categories and add subcategories only when needed. For instance, instead of having separate categories for every office supply, you may have a single ‘Office Supplies’ category. Regularly review your chart of accounts to ensure it still matches your business needs. As your business develops or changes, you will have to add, remove, or consolidate categories.
Build A System For Managing Receipts
Receipts are vital for tracking expenses and tax preparation, but they may quickly become chaotic when you don’t have a system in place. Here’s a simple approach to help you handle your business receipts:
- Digitally capture your receipts as soon as you get them.
- Use a consistent naming convention for receipt files.
- Store receipts in a cloud-based system, organized by month or quarter.
Many accounting software options have receipt management features, which allow you to directly attach digital receipts to transactions. This makes it quicker and easier to find supporting documentation when you need it.
Automate Where Needed
Automation can be a highly valuable tool to streamline your financial record-keeping. So, find opportunities to set up recurring transactions, automatic bill payments, and scheduled reports. You may find many digital tools or accounting software platforms that offer automation features to help save your time of manual work every month.
For example, you may set up rules to automatically categorize certain transactions based on the vendor or amount. Or you can schedule monthly financial reports to be automatically generated and emailed to you. The less time you spend on routine tasks, the more time you have to analyze your business finances and make informed financial decisions.
Have A Document Management System
Financial records may also include contracts, invoices, tax documents, bank statements, and other important paperwork. A document management system helps you organize, store, and bring out these documents efficiently.
To do so, consider using a cloud-based storage solution with strong security features. Organize your documents in a logical folder structure and use consistent file naming conventions to make file searching easier.
Some document management systems even provide Optical Character Recognition technology, which makes the content of your documents searchable. Just ensure you back up your digital documents frequently and save copies of crucial papers in a secure, offsite location.
Simplify Your Invoicing Process
Invoicing is an important part of your financial record-keeping, but it doesn’t need to be time-consuming. To enhance this process, consider using an invoicing software that flawlessly integrates with your current accounting system. This will enable swift creation of professional invoices and automation of payment and expense tracking.
Furthermore, set up invoice templates with your business information and payment terms in advance to save time on repetitive tasks. Many invoicing tools also allow you to set up recurring invoices for your regular clients, send automatic payment reminders, and accept online payments. Evidently, refining your invoicing process will help your company get paid faster and have a clearer picture of your accounts receivable at any given time.
Review And Analyze Your Financial Strategy Often
Your company constantly evolves, which means your financial processes must keep up. So, schedule regular reviews of your financial systems and procedures. Are there factors slowing you down? Perhaps there are new financial control tools that can make your life easier? Areas where you’re spending too much time on manual financial tasks?
If something isn’t working, don’t hesitate to make changes. What’s essential is that you have an effective and accurate system that gives you the financial insights you need to run your company well.
Parting Thoughts
Simplifying your business’s financial records is a continuous process, but the payoff is worth it. With clearer, more organized small business finances, you’ll have everything you need to make smart business moves, save time on administrative tasks, and focus on your company’s financial health.
