Some of the bookkeeping mistakes that could affect your business
Some of the bookkeeping mistakes that could affect your businessAug. 19, 2020
Contributor: Carlos Nkosie
Maybe you never considered that bad bookkeeping can destroy your business, but you have to consider that it may affect the decision making and it can have a bad effect on your company.
If you don’t understand your finances or you lack the financial education and knowledge, your business may fail within a few years. But a few simple procedures may help you do a proper bookkeeping. Also, you can work with a professional bookkeeper to avoid all the problems and be sure to have your finance in good hands.
Professional bookkeepers have years of experience in working with a variety of small businesses, so you can take advantage on their experience in the advantage of your own small business.
Most small business owners think that bookkeeping is just another expense for their business, and there is a common misconception that says you may save some money by doing your own bookkeeping. Hiring inexperienced bookkeepers to do the work is also considered a cost saving practice, but the potential damage done to your business is not understood properly in this case. Also, some small business owners may have their relatives or spouse doing the bookkeeping, also minimising the importance of the bookkeeper’s experience.
As a small business owner, you have to understand that some bookkeeping mistakes can have devastating effects on your cash flow; by the time you realise that the hard way, it may be too late and even more expensive to fix.
Many of the bookkeeping problems and errors are due to the lack of adequate systems and procedures for financial bookkeeping. With these systems, you can have the advantage of seeing exactly what is happening to your businesses cash flow. You can see which customers owe you money, which bills have remained unpaid, and how much money you actually owe your suppliers.
If a business fails, usually no one thinks that it’s the bookkeepers fault; there is always another reason, such as a cash flow problem, being unable to pay your bills, etc. But if the bookkeeping is made correctly and if the bookkeeper has the proper experience to give good advices to the business owner, these situations mentioned above may have never took place and the business may still go on.
The bookkeepers that don’t have enough experience may not fully understand the importance of financial management in any business, especially if it’s a small business, and they may not understand the necessity to keep accurate accounting records.
Even a small mistake, made because of the lack of experience, can prove to be very be costly for a small business, and saving costs by not hiring a bookkeeper or hiring an inexperienced one can lead to major damage. If you work with a professional bookkeeper and you focus on how to keep good financial records, you may never have to discover that bad bookkeeping can destroy your business.