Cash flow is the number one issue affecting small to medium businesses right now. The Australian Securities and Investment Commission reports that poor cash flow is cited as a factor in 40% of business failures. Yet, 60% of small-business owners feel they are not very knowledgeable about accounting and finance. And many find bookkeeping difficult, overwhelming, hard to prioritise or just plain tedious.

Whether you don’t know what to do, or don’t like doing it, it’s essential that, as a business owners, you keep on top of your books. Doing this helps you to understand and manage your cash flow and keep your accounts up to date. And that puts you at less of a risk for cashflow difficulties and, ultimately, business failure.

But doing your books doesn’t have to be hard, overwhelming or even tedious. Here are five tips for easy business bookkeeping that can help you understand your cash flow and keep your business in the black.

5 Tips for Easy Business Bookkeeping

TIP 1: Schedule it in 20-minute bursts.

Many business owners put off doing their bookkeeping. Often it’s for very legitimate reasons, like a lack of time while they service their own clients. Or because it just seems confronting and overwhelming.

But the more you delay in doing your books, the more the work snowballs. And then it truly can become overwhelming (and, frankly, unbearable).

Instead, set yourself 20-minute targets. Input transactions a couple of times a week (you can even do it while you’re waiting for dinner to cook, or watching Netflix) and stick with that schedule. When you’re working consistently in short bursts you can actively manage and track your finances, including cash flow, in very little time. And it prevents that work from building up.

TIP 2: Review your reports monthly.

Reviewing your reports is part of good bookkeeping. But it’s sometimes hard to get to it. Schedule in a time once a month to take a quick look at those reports. Look for anomalies like uncategorised expenses or bank accounts that are in the negative on your balance sheet.

You’ll also want to ensure that put in all of your expenses and that your bank statement and accounting records match. And check your net profit and your cash flow statements so you can see both how much profit you made in the month, and your liquidity position.

TIP 3: Keep your business and personal finances separate.

Keeping your business and personal finances completely separate halves the amount of work that you need to do. Instead of rifling through all your accounts and pulling out the business related transactions or expenses, all the information will be contained in separate files.

If you use any budgeting or accounting software, ensure that you have one for your personal and one for your business finances as well. And maintain separate bank accounts. These steps will make your business expenses and income easier to track and your profit and loss and cashflow, easier to manage.

TIP 4: Invest in an accounting program.

Accounting software has come along in leaps and bounds. In fact, every year there are new systems. Because there are so many options now, that means that there will be a system that does the things you need at a price point you can afford.

Accounting software makes it easy to quote for work (so increase your sales) and send out invoices (so increase your cashflow management). It also makes it easy to catalogue your receipts, enter incoming payments, reconcile your accounts and generate reports. And most systems are accessible via an app on your mobile. So now you can do your books no matter where you are.

TIP 5: Hire a specialist.

When it comes to your books, the most important thing is to just get the work done. If it just isn’t working any other way, if you simply can’t find the time to do it, there are many excellent bookkeepers here in Australia, and many at quite affordable rates.

The information that you can get from your books is invaluable to understanding and managing your finances (including cashflow) and keeping your business up and running. Ignoring it, won’t make it go away. But it could end up in disaster for your business.

For more easy business bookkeeping tips, get in touch. We’re here to help.