Knowing and understanding your business finances is vital in ensuring your business runs smoothly and ultimately grows.
When I was running my chain of bookshops, I learnt an extremely valuable lesson. Cashing up and adding the totals to the spreadsheets only took a few minutes every day, but it helped me stay abreast of my sales across every bookshop. I would then compare these numbers with the previous week, month and year, which really helped with my cash flow as well as pushing the venture forward. If you don't feel comfortable doing this yourself, look into professional bookkeeping York services.
In addition, I made sure that invoices were sent out on time and late payments were handled before sending out more supplies. Just these few steps in addition to proper bank reconciliation were enough to run the bookshops the right way.
I like working with numbers and so, doing my own accounting and bookkeeping was not challenging. However, this is not the same for most business owners out there. Chances are that when you started your business, your focus was elsewhere and keeping precise records was the least of your concerns.
So, Why Is Bookkeeping Important?
As with most other aspects of running a business, including marketing, customer relations, sales and technology, proper bookkeeping is vital in running a business in a smooth manner.
You can always learn all the aspects of good bookkeeping, but when you're juggling other things, it can be time-consuming and does not always make sense. In most cases, it makes sense to outsource bookkeeping. When factoring in the costs of outsourcing bookkeeping, it's imperative to consider the value it's likely to bring you and your business. Freeing up more time to focus on other important aspects of your business, and the peace of mind knowing someone is keeping an eye on your company's finances are some of the best parts about outsourcing.
Lately, bookkeeping has become incredibly automated and the choice of reports is so extensive that you can easily understand the financial position of your company. However, are you making the most of your financial reports? Can you tell the difference between a Profit and Loss Report and Balance Sheet or Statement of Financial Position and how they can tell your financial stand at any point in time? Do you comprehend how the value of your business assets can reduce over time?
The list is extensive and can be overwhelming to some. However, when you stay on top of your finances, you can avoid hefty fines for late tax submissions and help your cash flow by gaining access to accounts that are up to date. This is an extremely important point. Most business owners have the habit of leaving their accounts to be done once a year. However, regardless of the size of the business, finances need to be checked more often than that. You can do this yourself, but it is often best to leave the job to a bookkeeper or accountant as they are experienced and less prone to errors. Keeping an eye on your finances and accounts helps you monitor a wide array of indicators about the state of your businesses from profit margins to the expected turnover, thus helping you better plan for cash flow.
So, do you know your business numbers? If not, I hope this read has shed some light on its importance.