Unorganized bookkeeping can lead to the downfall of a business, making it critical to keep the finances in order. Failing to pay an invoice or to collect a payment can chip away at the company’s livelihood. When you are unable to pay the bills, you can face a negative reputation about the dependability of your company, loss of employment, and even eviction. If you find yourself frantically searching for old documents and bank statements, it is time to hire a professional. All About Businesses offers clean-up and catch-up bookkeeping services and is here to provide a checklist so you can keep your accounts in order.
1. Identify The Problems
This may seem like an obvious answer, but the best way to help your finances is to identify the root of the problem. Not only does this allow for a solution, but it can help you learn from your mistakes, preventing them from happening again.
Common Bookkeeping Mistakes
- Cash miscalculations
- Fees or penalties
- Negative cash balances
- Inconsistencies in vendor & customer invoices
- Unauthorized withdrawals
- Inaccurate asset valuation
- Non-updated inventory level statements
- Unaccounted for interest rates
2. Prevent Further Damage
Now that the source of the problems has been discovered, the next best step is to assess the damage and ensure no other mistakes are present. At this time, it is usually in your best interest to contact a professional accountant who can plan for the future and ensure your current accounts are monitored closely to prevent any other problems.
3. Gather All Documents
Compile your billing receipts, expense reports, bank statements, and payroll accounts. Once all documents are present, begin working on sorting out the billing. Make copies of all your receipts and invoices and keep them in a digital file that is always accessible when you are away from the office. A bookkeeper will help you set this up.
4. Establish A Clean System Moving Forward
With the help of a bookkeeper, you can set up a detailed plan for your accounts in the future. Learning from mistakes and setting them right can help you begin planning for a more efficient and clean accounting system. Using either QuickBooks or a spreadsheet, record your transactions and costs. Start with the past and work to the present.
5. Reconcile Your Accounts
Reconcile your cash and credit accounts to ensure they line up with current transaction reports. If payments are needed, make them immediately and record the cost. Prices can change over time, and you may have failed to record the amounts. If prices do not match your transactions, correct them by recording the new amounts or discussing any concerns with the vendors or your bank.
6. Create New Reports
Once you have a clear idea of the new costs and balances of the company, produce new report sheets. These will help you stay on top of your accounts payable and receivable by monitoring the monthly business expenses. In doing this, you can project the revenue of your business, adjust inventory levels, and plan for future investments. These reports can also give you credibility in the case of you potentially selling your company or opening other locations.