Necessities and Automations in Bookkeeping Systems
My name is Jocelyn Ruston. I am the Owner and Operator of Cover Your Assets Books and Taxes in Sexsmith, AB. Today i wanted to talk a little about bookkeeping systems, integration, and automation. Small business owners typically don’t like bookkeeping. They spend a lot of time monthly doing bookkeeping tasks that can be automated (with supervision) to some extent. With this rundown of having an effective bookkeeping setup, I hope to help alleviate some of those tasks and stress. As a bookkeeper, I've seen a lot of different sets of bookkeeping; the good, the bad, and the terrible. A bad bookkeeping system and setup loses all value. The business, the team, and the owner give up on the books as a lost cause. It becomes a frustration for everyone. The books can be bad, but It's little things that compound and make for terrible bad bookkeeping. Most of the time when I look into a set of books the general conclusion is that they are not set up appropriately. Most business owners can figure out how to link up their bank accounts but then they don't know what to do from there. Most people get frustrated with their bookkeeping system. If it isn't set up to give them valuable information, or if it is, they don't know where to find it. You need to make sure your bookkeeping software can you the information you need. There are many software choices to consider for bookkeeping, and one of them will give you what you want. Bookkeeping System Setup Chart of accounts - The setup of your chart of accounts is one of the most important aspects of your bookkeeping system. I always tell clients to make their COA as simple as possible. You can change or modify your COA at a later date; when you want more detail and data. Dext Prepare by Receiptbank or Hubdocs - These two programs save a lot of time. Both programs allow you to upload receipts directly to some accounting software. It will scan the receipt, upload and match the receipt to where it belongs in your bookkeeping system and attach it to the transaction. Since this is technology you are dealing with you still need to double-check for accuracy. But overall they are great to integrate into your bookkeeping Grande Prairie to assist you. Online Payment Acceptance- I recommend accepting digital payments. Stripe, QBO Payments, and even Paypal all connect to QuickBooks and Xero. Money you think you are saving by avoiding fees; are lost due to processing time, non-payment, and bounced check fees. I also recommend Online payments as this typically speeds up the timeframe in which you are paid. Online payment acceptance also helps in maintaining healthy cash flow for your business. Payroll integration - Payroll is another area where you can have a big impact on your bookkeeping system. For my Canadian clients, I recommend Wagepoint. If you are outside of Canada, it is hard to beat Gusto. They have a great interface with QBO and Xero to help automate the payroll entries at least in part.You may be asking why I haven't recommended QuickBooks Payroll. To be honest I find it creates more problems in the bookkeeping services Grande Prairie than it solves. Systems that pay your bills (Bill Pay) - There are tons of bill pay systems out there that will link to your bookkeeping system. I prefer to use Xero or Quickbooks Online bill pay features. QuickBooks receipts and Bill.com will do the same and further automate your bookkeeping system. The same or similar programs are for Xero as well. Bookkeeping Automation- Everyone is hooked on automating their bookkeeping and believe me I buy it. Just remember that automation can make mistakes. Yes, you would like to automate your books to the maximum amount possible. It can get very dangerous and get out of control without the right oversight. It can get out of hand fast once you trust the software an excessive amount. We have all seen the issues that bank feeds can cause. Most of the issues we see in bank feeds are people adding transactions where QBO or Xero thinks it should go. This can lead to misreporting your income and giving you false data that you are using to make decisions. Any automation that you add to your bookkeeping should be approved by a QBO or Xero advisor regularly. Bookkeeping Updated On A Regular Basis- The next key element of any good bookkeeping system is that it gets updated on a regular basis. But how often should I be updating my bookkeeping Grande Prairie? Honestly, this question has many answers. It all comes down to what your current business goals are. If you are using the right bookkeeping system and automation, it shouldn't take more than a few minutes a day. If this is the case I would recommend daily bookkeeping. At the very least weekly bookkeeping. Updating your books shouldn't take more than a couple of minutes a day with the proper automation. The more updated your books are, the more current information your books will give you. Knowing what is currently in your bank account, and knowing the financial health of your business is crucial. It is difficult to make good decisions with bad data. Reconciling Accounts to Statements- The biggest mistake I see in bookkeeping is not reconciling your accounts to your statements. But if you are adding everything through bank feeds why do you even have to reconcile? Because reconciling to a statement is the ONLY way to prove you have accounted for everything. Whether it is all coded properly to the correct accounts is a different story. How many of you code items to "uncategorized asset"? why would any account start with uncategorized? The second biggest problem is transactions not being coded properly. You have no idea how often I find books with transactions coded to the uncategorized assets. NO, STOP THAT! The best thing you'll do for your bookkeeping system is to reconcile it to the monthly statements. This applies to bank accounts, credit cards, loans, and lines of credit.
Your Business and It's Financial Health-
Your bookkeeping services Grande Prairie should give you valuable insight into the future of your business. By forecasting your future business financials through current and historical data. You should also have clear insight into the financial health of your business. What value does this give me? In my opinion, it is the right way to run your business. You will learn a lot by building an accurate financial forecast. This will help you to make great business decisions.
Comparing your actual results with your expected results, you are going become much more business savvy. I don't understand how any business can operate without budgeting and forecasting. I couldn't run a business not knowing where my business was going and how it was performing.
Forecasting can help you both identify potential problems and opportunities for your business. Rather than running your business on a gut instinct, you will be running it on cold hard data.
But What Can Forecasting Do For You?
When you get really busy and overwhelmed in your business what's your knee-jerk reaction? I need to hire someone. Right?
But do you look into it and break it down and analyze it? Can I afford it? Is that a decent decision or a terrible one? What would the person do? What would that cost? Where would that cash come from?
Forecasting validates your gut instinct and paves the way for an executable plan.
Your bookkeeping should be giving you reports and information, that you can use to make business decisions. You should be reviewing your financial performance on monthly basis at minimum. This will help you make informed business decisions such as:
- Investing in advertising to promote services.
- Investing in business growth or expansion.
- Negotiations with vendors to get better pricing, or adjust your prices to make the business more profitable.
- The need to hire or fire staff.
In order to have a healthy business you need to have a setup that works for you and not against you. On top of a proper setup you should be reviewing your financial statements on a regular basis, in order to make healthy business decisions.
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