Pop quiz! Who is the most critical team member for accurately recording your business financials?
The answer? Your Bookkeeper is the person who records day to day transactions, and if he/she is not doing them correctly you won’t have accurate numbers going into your accounting system.
The Bookkeeper is responsible for following the money into the business (Accounts Receivable), and for following it out of the business (Accounts Payable). Unfortunately, it is also the person whose function is often given the least amount of attention. This should not be the case since all financial reports are based on the accuracy of the Bookkeeper’s activities.
Often business owners take for granted this important task and try to either do it themselves or have a spouse or family member do it. However, if they do not have training in bookkeeping and accounting processes, such as preparing a bank reconciliation, credit card reconciliations and loan reconciliations on a monthly basis, the financials they are looking at most likely will lack the integrity that would come from good bookkeeping practices.
How Do You Know if Your Financials are Accurate?
Always follow the money! Be sure your Bookkeeper is doing monthly bank reconciliations for:
- All Bank Statements
- All Credit Card Statements
- All Loan Statements
- All Lines of Credit Statements
Your numbers have to have integrity before you can use them to make good business decisions. If you are a CEO and are looking at your Profit and Loss report, but the bookkeeping has not been done correctly, you may as well make decisions from your gut.
Dirty Little Secret of Cash Flow
My secret is that the Bookkeeper is the “Keeper” of the cash flow!
This is one of the most important subject matter experts you need on your team to help you “follow the money in and out of your business.” It’s not expensive to outsource your bookkeeping on a monthly basis and I highly recommend that a business owner doesn’t try and save money by doing the bookkeeping themselves or having a spouse do it.
Cash flow consultants, like me, take a deep dive into your books and strategize ways to maximize profit, offset debt and keep your cash flowing. Following a review of your financials, I provide you with the tools and education needed to feel totally empowered while making informed business decisions regarding your company’s cash flow.
Embezzlement, Theft & Fraud
These are all unfortunate circumstances that can happen by not having good bookkeeping processes in place.
The good news is that with a couple of simple bookkeeping checks and balances, you can protect your money. For example, if business owners don’t reconcile the bank statements, they must sign all of their own checks. In addition, owner’s should look at bank statements each month to get a sense of what money is being spent on. Looking at your online bank account should not give you peace of mind.