7 Essential Steps to Streamline Your Small Business Bookkeeping
You must be disciplined in managing the financials of your business. Financial stability or assuredness gives you the confidence to make decisions, grab opportunities, and grow your business. Hiring an experienced bookkeeper or a firm rendering bookkeeping services for small business can help you achieve it.
Bookkeeping is manual and a time-consuming task. It means painstaking filing of financial documents and recording of transactions using accounting software. However, it is a crucial activity that ensures your compliance with the local rules.
Bookkeeping assists you in updating your books and building a reliable database of financial records. You or your accountant can access and analyse this digitised data anytime.
In the hands of expert accountants from bookkeeping services for small businesses, this data can yield deep financial insights that you can use to improve the effectiveness of your business decisions. You can actually use them to grow your business.
Steps to Improve Your Bookkeeping Process
There is a huge demand for bookkeeping services for small business. Many business owners believe that outsourcing bookkeeping services trumps in-house bookkeeping. It gives them more mental space to grow their business. It also saves them time enough to give their best to achieve their business goals and objectives.
These bookkeeping services follow the best practices. Their bookkeepers improve or optimise their client’s dated processes and procedures. They assist you in updating your bookkeeping process and make it more effective.
Regular bookkeeping enables the smooth running of a business by helping you manage your finances efficiently. Here are key steps to streamline the small business bookkeeping process itself.
1 Become Familiar with the Bookkeeping Basics
If you intend to bookkeeping for your business, you will be better off by knowing basic bookkeeping concepts and terms. You should also know the various bookkeeping systems that are in use.
It will put you in a commanding position and enable you to streamline your business’ bookkeeping process. One of the latest accounting software will also allow you to automate your bookkeeping tasks.
Alternatively, you can hire an experienced firm providing bookkeeping services for small business. Many owners take this option instead of doing their bookkeeping in-house. It not only reduces your workload drastically and sets you free, but it will also move this administrative task out of your workplace.
2 Install a Reliable Accounting System
Your provider can install a dependable accounting system for you. It helps you classify and record your transactions as per the Singapore Financial Reporting Standards (SFRS). It makes tracking and accessing your financial records easy in the future.
You can use a traditional paper filing system, Excel sheets, or accounting software to record your business’s financial transactions. The following is a list of items that you will need to monitor your business records:
- Income through sales, interest, rent, etc
- Expenses including, operating cost, cost of goods sold, etc
- Corporate bank account statements
- Credit card statements
- Business loans and debts
3 Use Accounting Software to Automate Bookkeeping
The experts working at your bookkeeping services firm can help you automate bookkeeping tasks by implementing accounting software correctly. Then, they will use your financial information, such as income, assets, expenses, and liabilities, to set up the software.
They ensure that it is working correctly for your daily use. Today, many providers grant you access to their software or provide you with a mobile app. Either way, you get to access your financial data.
4 Bill and Invoice Management
Efficient bills and invoice management help you stay on top of your cash flow. However, it means having a reliable system to track and pay your suppliers and prepare and send invoices to your customers for the services or goods rendered.
A dependable system will help you avoid getting fined or penalised. It may even allow you to leverage discounts and save you small percentage of money on your payments.
Sending invoices to your customers does not mean they all pay you on time. Some will need reminding about their dues or fines for late payments.
Your accounting software can be of great help in taking care of your account payables and receivables. The software can generate account payables and receivables ageing reports for your consumption and in taking proper steps.
5 Monitoring Income/Expenses to Track Cash Flow
Bookkeepers, employed by bookkeeping services for small businesses, regularly update your books of accounts with the business’ earnings and expenses.
You can use the digitised data using accounting software to compare your earnings or expenses over a period and understand your financial health. To monitor your income/expenses, you need to focus on:
- Transaction date
- Transaction amount
- Transaction type: income or expense
- Transaction category
- Method of payment: cash, check, credit card, etc
- Business angle behind the transaction
Tracking of cash flow reveals how the money is moving in and out of your business. If your business expenses are more than your income, you must take drastic steps to remedy the situation. You must stop overspending money and eliminate your unproductive expenses.
6 Know Your Profit and Losses
All the time you must know whether or not you are in profit. Keep an eye on the financial metrics such as Gross Profit Margin, Operating Profit Margin, and Net Profit Margin.
- Gross Profit Margin = Revenue – Cost of Goods Sold/Total Revenue; a higher value of gross margin indicates profit and vice-versa
- Operating Profit Margin = Operating Income/Revenue; a higher value of operating margin shows profit and vice-versa
- Net Profit Margin = Revenue – Cost/Revenue, a higher value of net profit margin shows profit and vice-versa
7 Additional Financial Reports
Well prepared financial reports give you a snapshot of your company’s financial performance, status, and cash flow. This is why traditional financial statements like balance sheets, cash flow statements, and income statements are still used for understanding profitability, liquidity, and solvency.
You may also need to refer to other reports, such as budget variance reports, sales and revenue analysis, KPI reports, and debt coverage ratios, to truly understand your company’s financial health. All the insights you get from these reports help you in improving your financial management.
You have to be on your toes to execute business bookkeeping efficiently. It gives the basis to your business accounting. If you mess with it, it is going to affect your profits.
Many owners trust this crucial task to professionals like us offering bookkeeping services for small businesses. Contact us at +65-6536 0036 or email us at info@sbsgroup.com.sg to get answers to your bookkeeping-related questions.
Also Read: How to Streamline Bookkeeping Processes for Efficiency in Singapore
