Nearly every small business owner that I have worked with has made the comment “now I can sleep tonight” after they were confident their business finances were in order.  It isn’t just worrying about how upcoming bills will be paid or what happens when payroll comes around next week.  Their main concern is the not knowing.  Incomplete or incorrect bookkeeping records can cause a lot of panic, sometimes unnecessarily.

5 tips to sleep well (and know your finances are in order):

1. Monitor your cash flow. This seems obvious but when I say monitor, what I really mean is write it down.  This could be a report generated out of Quickbooks or whichever bookkeeping software you use. It could be a spreadsheet or simple a scratch piece of paper that lists your anticipated income vs. expenses.  Writing it down forces you to really think about upcoming bills and what checks should be arriving.  This exercise in turn helps you to evaluate your accounts receivable.  If you are waiting on a check from a client and haven’t yet received it, maybe it’s a good time contact them for a status update.
 

2. Determine your largest expense. Your largest expense is the one that keeps you up at night the most and you need to be aware when it hits your account each month.  Most commonly this would be payroll or rent.   Using payroll as an example, if you pay your employees on the 1st and the 15th, then those are the key dates to focus your cash flow efforts around.
 

3. Create a budget. Again, as with the cash flow it can be simple or elaborate, but the main point here is to write it down. Hold yourself accountable to it. Quickbooks allows you to create a budget based on historical data.  You can also run a Budget vs.  Actuals report to see if you are on target.

4. Reconcile bank and credit card accounts monthly. This is the time to catch errors and allows you to start fresh each month with the knowledge that last month was accurate.  When I am evaluating a client’s bookkeeping records I look at the Reconciliation Reports before anything else.  I want to see if, and when, the last one was completed.  Knowing for certain that your money- in/money- out is correct is essential to the accuracy of any of your financial reporting.
 

5. Know when to get professional help. Keep in mind that if maintaining your bookkeeping is taking too much time away from running your business or generating new business, it might not be your best use of resources.  A few hours of consulting time from a professional can be well worth it in the long run.

Best of luck and sleep well!