Many people would probably agree with the statement that their bookkeeping is useless. It is simply something that has to be done. A chore in your business. A necessary evil. A time suck. And it’s done purely to keep the tax department happy. But there is so much potential that is overlooked in that perspective.
Admittedly, I spend a lot of time saying you should get your finances up to date, you should prioritise your bookkeeping and doing so benefits your business. But there are occasions when I might agree that your bookkeeping is useless. Well almost useless because I’d never say it’s 100% pointless.
1. Timing
Honestly do your bookkeeping so long after the transactions happened makes your bookkeeping almost useless. This is the classic example of only dealing with finances when your tax is due. Sometimes that is almost 15-22 months later.
If you are processing transactions from July 2020 in October 2021 they probably aren’t that relevant to your business decisions. Worse still if you are processing transactions from July 2020 with your tax accountant in May 2022!
Yet we also expect ourselves to remember what they were. And spend so much of our efforts catching up we miss out on the benefits of being able to use that information to make our businesses better.
2. Set and forget
There are so many ways to streamline and automate your bookkeeping that you may have taken it TOO far. If you aren’t reviewing your transactions you are missing the opportunity to well review them, are they helping or hindering your business, are you receiving value for money, do you even still need that subscription?
I see this when softwares reduce everything to ‘done for you’ and one-click acceptances. Yes, it makes bookkeeping super fast BUT you need to make sure you are using the information and data if you want to grow your business.
3. You never look at reports
The point of bookkeeping really is to help business owners manage their businesses, it just so happens that exact same information is used for taxes. We seem to have reversed these purposes and so many business owners ONLY keep records for taxes.
Looking at your reports give you objective information on performance. Unlike the subjective opinions we form without hard facts. We are so quick to judge on recency bias that if the last week of the month is poor we think the whole month was a write-off.
Looking at data from the whole month can help us to see that actually the start of the month was really busy and overall it’s a good month. Or remind us the whole month was poor and we can start to ask questions to improve our business. Is that a trend for April? Is that tied to a particular cause? Were you active in promoting and marketing in March and April and the slow month is a result? Were you caught up in a client project that was paid in March or will be paid in June? Remember curiosity will help you more than judgment.
So how are you going to make your bookkeeping useFUL?
Let’s turn these ‘what not to do’s’ into ways we can see the usefulness of bookkeeping and good financial habits.
- Do it in a timely manner – within the month is great
- Review your transactions – do they still suit your business?
- Look at the reports – what are they telling you about your business.
Managing your money and finances is how you stop worrying about them. Ignoring them just leaves unanswered questions in your brain. Have I got enough to get me through the week? You don’t stop thinking about them by ignoring them. It’s always there just under the surface. Because the requirement for money doesn’t go away by not thinking about money.
There are no magic tricks at play here, at some point you just need to get started.
If overwhelm is holding you back, or you simply don’t know how to get started catching up then join my next free training.
On Wednesday 12th May I will guide you to creating a quick and easy plan to keep your finances up to date (and get them up to date if you are behind). In under 40 minutes, we’ll bust some finance myths and you’ll create with a solid plan to get it done in less than one hour a week. Register here to join live at 11am and for the recording.
Watch the Video
Pin for Later
