Every action that a small business owner takes can have a negative or positive impact on the business.
While the financial health of your business may not be the only aspect you need to keep a watchful eye on, most business owners owe their success to proper management of cash. Without a doubt, many small businesses watch their company crumble down because of poor financial health. This is because budgets and resources are not handled properly. Automation takes away the burden of manual tasks. It shortens the time required to finish a bookkeeping task and lessens human interaction so fraud can be minimised if not completely avoided. There are also some bookkeeping mistakes that automation can magically addressed.
1. Do-it-yourself bookkeeping
Yes, DIY bookkeeping can do more harm than good. Initially, small business owners consider the idea of not hiring a bookkeeper beneficial because they have spared themselves from incurring higher costs, but in the long run, a business owner will realise that not having a bookkeeper can snowball into more serious problems especially when it comes to filing tax returns. Aside from the increased chances of committing mistakes, it may take hours or even days before you can correct the mess on your financial report. Automation solutions will ensure that you effectively track your expenses and update your books.
2. Not reconciling accounts
The effects of not reconciling accounts are often underestimated, but it is considered to be a critical step in every bookkeeping process. It helps you to determine if there are discrepancies on your accounts and it easily addresses bookkeeping or accounting mistakes. To some, account reconciliation is deemed as a less important task that can be completed later. Automation will ensure that business books are reconciled with bank and card accounts regularly.
3. Not recording expenses
Every financial transaction taking place in your business is important. It allows you to track how you are spending or generating money. Even small expenses should be regularly recorded because once they accumulate, they can balloon to bigger expenses. Ever wondered why you do not have enough cash for growing your business? Not tracking your expenses diligently might be the culprit. Automation resolves issues with your expenses as it ensures all expenses are monitored. This way, you will know whether or not you have enough money to cover expenses or to expand your business.
4. Not maintaining cash for minor expenses
You can easily lose track of the money you spend from your petty cash reserve if you do not manage it wisely. Even if they are just minor expenses, tracking the funds you have withdrawn will help you determine how much you are spending. Automated bookkeeping updates records of withdrawn funds and balances the remaining petty cash reserves.