Bookkeeping is a necessary process that ensures that a company’s financial records are on track. It involves the recording of all financial transactions, including purchases, sales, and payment by a company or an individual. Bookkeeping plays a crucial role in reducing the risk of mismanaging funds and helping a business make informed decisions. After all, when you have a systematic record of your company’s financial health, everything is easy to plan.
Unfortunately, bookkeeping is not as easy as it seems, especially for small businesses that don’t have dedicated departments to maintain accurate bookkeeping records. In this post, we will talk about some bookkeeping challenges often faced by small businesses.
- Complicated Invoicing & Payment Collection Method
It is one of the biggest bookkeeping challenges faced by a lot of startups. If you’re not sending invoices to your clients regularly, you can’t expect to have a proper cash flow. It’s advisable to automate your invoicing process. You may consider implementing automatic email reminders so that your customers pay without any delay.
- Inaccurate Financial Reports
Inaccurate financial records can become big trouble for your business in the long run. Your business operations can go into a mess if you don’t keep your financial reports up to date. Remember, good financial records not only minimise errors but also put a positive impact on the overall value of your company.
- Overlooking Minor Expenses
A lot of startups and small businesses make this mistake. They often pay for minor expenses out of their pockets and do not keep a record of it. While it makes your business appear sturdy in terms of cash flow, you don’t get a real picture of your business’s financial status.
- Cash Flow Problems
A lot of businesses complain about cash flow issues. It usually happens when you use the same bank account for personal and business finances. Mixing business and personal finances not only lead to a twisted clutter but also you end up withdrawing money for your personal expenses that sometimes cause cash flow problems in a business.
By separating your corporate and personal bank accounts from the first day, you can free yourself from a lot of issues in the long run.
- Payroll Management Issues
If you think payroll management is related to the employee’s wages only, you’re mistaken. Payroll management is a broad process that also involves tax liabilities, incentives, superannuation, and more. If you don’t manage your payroll accurately, you may get penalised by local authorities as well. S,o don’t make this mistake, seek help from a professional who can help you manage your payrolls.
It is not easy to keep track of all the receipts and maintain them systematically. Fortunately, you can overcome this bookkeeping challenge by investing in accounting software that allows you to manage all your paperwork and accounting data in the cloud.
You can take a picture of each receipt and invoice and store it on a cloud platform. Look for an accounting firm that automates bookkeeping services using cloud technology like Xero so that you can access your financial data on a real-time basis.
Xero is a renowned online accounting software that enables you to
- Save your entire financial data in the cloud.
- Do real-time financial reporting.
- Serve more clients in less time.
- Easy collaboration with other staff members.
So these are some of the significant bookkeeping challenges faced by small businesses. If you’re struggling with any of these challenges, it’s better that you work with a reputable accounting firm that provides you with robust bookkeeping solutions without breaking your bank.