In Pursuit of Profit
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Having clean books lays a foundation for smart decision-making and sound strategic planning. It is also crucial when applying for financing, pitching to investors, and keeping partners informed. A company that does not represent themselves truthfully with their financial data, even if it is an accidental misrepresentation, can miss out on growth opportunities or be faced with fines or penalties as a result.
But what happens when the books fall into disarray despite your best efforts to keep them accurate and close them in a timely manner?
When your books get messy or your accounting records are incomplete, it is better to stop and fix them sooner rather than later. The longer you leave errors, mistakes, or misrepresentations, the worse they will get. These types of inaccuracies can linger across reporting periods, affecting cash flow management and strategic business decision-making. In fact, when it comes to cleaning up your accounting records, our team explains,
Remember, it is always better to get help right away once a problem has been discovered. Waiting only allows issues to compound, requiring more drastic measures to fix the problems later. This is an especially salient point because, depending on the nature of the problem, it may take a considerable amount of time to fix. Delaying assistance only puts the business further behind as problems continue to mount while help is on the way.
If you think you may need an accounting clean up, the time to do it is now!
Leaning on the Right Personnel
In the wake of the Great Resignation, we have seen messier books than usual. This is not unusual! During instances of high employee turnover, the books get muddled as they are passed between employees. Sometimes less financially savvy employees are tasked with keeping the books as a stopgap until a new bookkeeper or accountant can be hired. In other instances, owners or managers may be asked to keep the books indefinitely in lieu of looking for a new bookkeeper or accountant. However, their effectiveness in doing so is hampered by the need to handle other more pressing leadership duties as well.
Our team reminds business owners that leaning on the right personnel is crucial when fixing bookkeeping problems because,
Tasking internal employees to clean up the books can create more substantial issues down the line if problems are exacerbated by well-intending employees. The reality is that many small-to-medium sized businesses do not have the personnel needed to fix complicated financial issues. Many bookkeepers and internal accountants are siloed from all the information they need to do their jobs properly, and in most small businesses, the main employee(s) handling the books do not have a financial background at all. This is typically why problems arise in the first place, which is why it is illogical to ask the fire setter to put out the fire. However, this is nothing to be ashamed of – messy books commonly arise from knowledge gaps. While a business owner, partner, or top employee may be great at their main day-to-day tasks, they may also just simply lack the financial acumen to be solely responsible for the books.
This is why specialized financial personnel are going to be best equipped to do the job. If you do not want to hire an in-house bookkeeper or accountant, you can always outsource financial duties to an accounting company.
A Checklist to Clean Up Accounting Books
The consequences of messy books are very real and include things like not having cash available when you need it to pay vendors or buy inventory, stagnant business growth, thwarted business funding attempts, and even financial penalties. Any of these can spell failure.
If you need help cleaning up your books in QuickBooks, click here for more detailed information: Cleaning Up QuickBooks Transactions
Keeping Books in Order
Much like a messy home, the best way to clean up books is a two-step approach:
Sure, cleaning up your books is great, but if you just go right back to the same lax procedures and casual approaches that made them a mess the first time, you will simply end up in the same place again a few months or a year down the road. The goal is to get your books clean and keep them clean.
If you are looking for bookkeeping cleanup services, please reach out to us! We have a team of experienced accountants that know how to clean up messy bookkeeping records, so you have more time to run your business.