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Automation Helps Business Owners Avoid These Bookkeeping Mistakes

Many small businesses fail because of poor financial health, linked to inefficiency in bookkeeping and accounting.

For small businesses to thrive, budgets must be tightly rationed and this will only take place if bookkeepers are keen on monitoring the financial activity of your business. You might have already heard of modern bookkeeping, which involves automation. Some small business owners still shy away from the idea of automating bookkeeping tasks because it has been thought to be intended for large companies only.

Automation is for everyone. It reduces manual tasks and minimises dependency on skilled manpower. Embracing automation helps you avoid these bookkeeping mistakes:

1. Delayed account reconciliation

Reconciling your books with the bank must be done on a regular basis and in a timely manner. Delayed account reconciliation can become a prelude to larger bookkeeping mistakes. Automation enables you to reconcile accounts easily and highlight discrepancies before bigger problems arise.

2. Failure to track expenses diligently

Your cash flow is the lifeblood of your business. Every transaction must be tracked regularly so you will know how much you are earning and spending. Automation ensures all expenses are tracked.

3. Fraud

Human interaction increases the chances of committing fraud and this is what automation is capable of reducing. Since losses due to fraud can create a huge impact on the profitability of your business, automation will reduce the dependency of your business on human beings and the opportunity to commit fraud will also be reduced.

4. Inappropriate deductions

Not deducting sales tax from a sale is a mistake bookkeeping professionals often commit. This is a costly mistake because not deducting sales tax will display a higher amount of sales.

5. DIY bookkeeping

Another reason automation is critical to business processes is when you prefer to perform bookkeeping task yourself instead of hiring a professional bookkeeper to do it for you. Automation can assist you in ensuring that all of your business expenses are tracked and books are updated regularly.

6. Losing track of the money withdrawn

Businesses maintain a petty cash reserve in preparation for minor expenses. However, you can easily lose track of the money you withdrawn from this reserve, thinking that it will not really affect your cash flow. Running a business means keeping track of cash flowing in and out of your business. If you consider automated bookkeeping, you can easily keep track of these expenses and update your records regularly.

Tamara Deterding

Written by : Tamara Deterding

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