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  If there’s an aspect of business that most small business owners dread, it’s financial record keeping. For a lot of people, plowing through entries and balancing the books is both boring and tedious. They would do without it if they could.
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Yet, businesses need to track and document their finances. They also have to do this neatly and without errors. These records are often a good summary of the health of an enterprise. Without them, businesses could remain unaware of serious cash flow issues that may threaten their very existence. Perhaps you know how important it is to have proper financial records, but you’re wary of the processes involved in maintaining them. How do you simplify the whole thing, so that it’s easier to handle?

Steps To Simplifying Your Business’s Financial Record Keeping Process

Here are six things you can do to make your financial record-keeping less cumbersome.

Record Everything

Document every business transaction as it happens. Don’t wait until the end of the day or week to put them in your books. Procrastinating may cause potential entries to pile up. This in turn makes sorting and recording harder. Under this sort of circumstance, you are likely to make mistakes with your record keeping. By capturing your day-to-day receipts and expenses, you minimize possible errors and make the periodic financial statements easier to prepare.

Crosscheck Your Information Regularly

Even if you’re doing immediate entries, there’s still a chance that you’ll misreport (or fail to report) something. Your computations could be wrong too. You can take care of this with regular, scheduled checks on your financial records. Ensure that entries are correctly designated, figures add up, and balances are accurate. This examination can be done weekly, or at any frequency that you find suitable.

Keep All Relevant Receipts

Have receipts for every payment your business makes. Arrange and store them in files, according to a specific schema that you’ll remember. This makes it easy to retrieve them whenever you have to confirm the accuracy of your financial records.
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Even if the payments aren’t for products and services received by your business, you should document them so that they can be referenced in the future. Do this for donations, contributions, and other outflows unattached to products.

Work With Secure Accounting And Payroll Software

There are many enterprise accounting and payroll solutions you can choose from. This software allows you to record and track your finances and produce financial statements fairly easily. They also save you time, guarantee increased accuracy, and enable quicker data retrieval. What’s more, if you’re using a cloud-based tool, you can access your records from wherever you are. Members of your team can also input information and make adjustments regardless of their location. Just be sure that your software is set to comply with existing regulations around financial record keeping and reporting.

Have A Dedicated Bank Account For Business

Even if you’re an informal solopreneur, you should keep your personal and business finances separate. This makes it easier to account for business revenues and expenditures. A major step in this direction is to have a dedicated bank account for your business. Funds coming into your enterprise should go there; expenses made by the business should be deducted from that account. The account statements generated for such a bank account will be useful cross-references for your financial records.

Use Reminders

Sometimes you’ll forget the due dates for financial obligations (e.g. paying for supplies and utilities, or filing tax returns). This may make your record-keeping a bit more complicated, especially if you have to rework things at the last minute. You can save yourself from this stress by setting reminders for these things.

Final Words

It’s hard to overestimate the importance of maintaining proper financial records. They give you great insight into the state of your business and reveal its strong and weak points. If you use them the right way, you’ll enable your enterprise to receive credit and realize sustained growth. Featured Image Source: Shutterstock
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This article was first published on 3rd May 2021

ikenna-nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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