Accurate account management is essential for any business. If you don’t have your bookkeeping tasks in order, you may be miscalculating your expenses, missing out on tax filing and also spending more money than you ideally should.
The following are some basic bookkeeping essentials that all SME businesses should know about:
1. Nail the Cash in, Cash Out Principle
This is one of the simplest strategies that you can adopt on a day-to-day level.
- Record everything – from your incoming revenue, expenses to outstanding dues and receipts.
- Add details – what you sold, who you sold it to, how much it went for, when did you receive the payment and if there was any sales tax collected.
- Similarly, for all expenses, record the cash spent on utilities, rent, employee payroll, taxes and all other business expenses with the date and name.
- Separating the tax amount from your incoming cash flow is very important as it may confuse you later on.
- Do all of this on a daily, weekly and monthly basis to be at the top of your game!
2. Maintain an Accurate Inventory
Every business has an inventory, with not just cash but also merchandise, equipment and supplies to boot.
- Keep track of your inventory records – this will help you see how much cash and supplies you have and also detect early on if anything is running short or has been misplaced or stolen.
- Keep record of dates when you purchased or sold things, prices, customer information and so on.
- Also, analyse your inventory. What items are selling faster? What services are not so popular? Keeping an eye on your accounts can also give you an insight on how to market the right products or services effectively.
3. Keep Track of Your Cash Flow
As a growing SME business, always keep a consistent track of your daily, weekly and monthly cash flow. Your business and personal accounts should be separate and you should check every month that your business transaction entries are accurate and well accounted for.
4. Payroll Management
How many employees will you be able to afford? Would you have enough cash to pay all the salaries in time? What would be the schedule for increments and bonuses (if any)? How will you track leaves and deductions? These are all questions that you need to decide in advance as they have a profound effect on your cash flow and books.
5. Outstanding Dues Alert!
In the rush of things, a lot of your arrears may get ignored and invoices may go unpaid. Always keep a check on your accounts payable and receivable – anything you owe or anything your customers owe you. Doing so on a regular basis will ensure a steady and accurate cash flow.
6. Invest in quality bookkeeping software
Manual bookkeeping can get complicated and stressful in just a few months, and will come to haunt you like anything when the tax season draws near. Our suggestion is to invest in good quality bookkeeping software like Xero.
Give us a call now at 01274 965356 to learn how you can streamline your bookkeeping responsibilities and keep a check on your cash flow and accounts like a boss!