In my experience, many business owners feel stressed when it comes to keeping up with their books. Maybe you can relate. You worry about missing something, overreacting to the wrong numbers, or wasting hours trying to sort it all out.
But it doesn’t need to be something you dread doing (or put off until the last minute).
With a few consistent habits, you can reduce your anxiety around bookkeeping and get a clear picture of your company’s financial state.
In this post, I’d like to share some of the bookkeeping habits I recommend to my clients.
Reconcile & Review Your Books Monthly
If you want to be on top of your business finances, make sure you reconcile your books. Reconciling not only makes sure your numbers are accurate–it catches duplicate entries, errors, or missed transactions.
That’s why I typically recommend business leaders reconcile and review their books monthly. This helps you make sure small issues don’t turn into big problems.
Start with Profitability
It’s easy to feel anxious if you’re not sure if you’re profitable. The quickest way to see if you’re making money is by looking at your profit and loss (P&L) statement. Once you reconcile your accounts, pull a P&L statement for both the current month and the year-to-date. That simple view shows if you’ve made money and if you’re on track to hit your goals.
Don’t Stop at the P&L
Your P&L tells part of your financial story, but it’s not enough. You also need to look at your:
- Balance sheet to see your liabilities and assets
- Cash flow statement to know if you’re actually cash positive
- AR aging report to track whether your customers are paying you on time
Together, these reports give you the full picture of your business’s financial health.
Keep It Quick
If you spend hours reviewing your books, you’re likely to feel anxious doing it. You can speed up the time it takes by working with a professional accountant.
For instance, when I sit down to review my clients’ books, it can take as little as 15-30 minutes, because I do a lot of the work ahead of time taking notes on anything that stands out. And by that, I mean variances, which are numbers that are out of line with prior months.
Watch for Variances & Look at the Trends
If you want to feel less anxious and more on top of your finances, watch for any variances. When I look for variances, I break out the P&L by periods and look at the trends.
Trends are important. You want the trend to be your friend. The key is to look at each month side by side and notice trends. And if you see a significant variance from one month to another, that’s a red flag.
So, for instance, if payroll usually runs $20,000 and suddenly drops to $15,000, that needs to be verified. The same goes for expenses that suddenly spike. Large swings are always worth a second look.
Even if a variance shows that something is down significantly, you want to look at that. It could mean that the price reduction last month isn’t due to you spending less–you just forgot to record a payment.
Know When to Get Help
If you’re thinking, “Even with these tips, I still won’t have the bandwidth to keep up with my books,” then it’s probably time to bring in a professional. Too many business owners fall into the trap of letting things slide until they’re behind and are scrambling to catch up.
If that’s you, click the Schedule a Consultation button with me, and let’s talk.
I can keep your books clean and updated so you can focus on growing your business.
Bottom Line
If you want to feel less anxious about your books, then:
- Reconcile every account
- Review the P&L, balance sheet, cash flow, and AR aging reports
- Watch for variances and trends
- Stick to a monthly rhythm
And if you don’t have the bandwidth to do this, let’s talk. Click the Schedule a Consultation button to set up a meeting with me.
