5 Ways Bookkeeping Can Hurt Your Business

5 Ways Bookkeeping Can Hurt Your Business

The only time bookkeeping gets major attention is when something goes wrong. As stressful as it may seem, bookkeeping is an integral part of your business. Habitually ignoring invoicing, record-keeping and other bookkeeping-related tasks can hurt your business. Costly disaster occurs when you do not pay regular attention to your business. There are five ways bad bookkeeping can hurt your business. 

1. Losing Receipts For Small Transactions

Although keeping receipts may not seem like an essential bookkeeping task, you can meticulously track your expenses by keeping receipts even for small transactions. If you generate financial reports, it will be easier to track transactions and find out where your money went when your receipts are intact. 

2. Not Keeping An Accurate Financial Report

If your business is doing well, you may find it redundant to review your financial report. However, there are sudden changes in the business industry that can take a toll on your business. Due to the lack of knowledge, it is already too late to discover that your business is going haywire. Even if you are on the right track, you still need to be on top of everything by making sure that the financial aspect of your business is up to date. 

3. Failing To Categorise Expenses

You might think that your expenses are one and the same regardless where you are spending them on. This is one mistake that can ruin your business especially when the time comes that you need to generate your financial report. Your bookkeepers should make it a point to update your records by categorising your expenses. This way, you will be able to know how you are spending your money. 

4. Treating All Expenses As Immediate Expenses

Your office supply expenses should not be necessarily booked as immediate expenses. You should know the difference if you want to avoid ruining your business. You should be aware of the items you are spending your money on. 

5. Ignoring Books Reconciliation

Bank reconciliation is one of the most ignored tasks that have a negative impact on your business. Fraudulent activities go unnoticed because of leaving confidential data open. The only to check irregularities and discrepancies is when you reconcile books every month. 

While these bookkeeping tasks may seem minor to small business owners, ignoring them can have a serious effect on your business. Since your cash flow is the lifeblood of your business, it is  imperative to keep track of your expenses. 

Tamara Deterding

Written by : Tamara Deterding