Keep your business accountable with proper accounting software

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Let me get this straight–your account balance, that is

Have you ever said, “Let me get this straight—” and continued on? Whatever comes next usually isn’t great. It could be, “Let me get this straight. The dog broke mom’s vase, not you?” or “Let me get this straight… you want me to pay a tax in a city I don’t live in?” Well, let me get something straight with you–keeping your accounting straight is something you need to make sure you’re doing. You might be surprised at how many small businesses just, kinda, wing it!

They might know where their income is coming from, and even the specific amount, but they often forget the other side. When it comes to estimating how much a business spends, they are far more likelier to underestimate how much supplies, tools, and resources cost– and overestimate how much they are bringing in.  When I was six years old, my parents opened a checking account in my name. It had $25 dollars in it and -naturally- I felt very rich, until my parents started deducting from my allowance! I got 3 bucks a week when I was 6, and my 8-year-old sister got $5. My parents now told me half that had to go in the bank, and I had to keep track of it. So I, in very messy letters, filled out each week in my brown little savings ledger how much I put in. I’d add it all up, over and over again, trying to figure out exactly to the penny how much I had in there. When summer came around, my parents let me withdraw half of it to spend on vacation, and I knew down to the cent how much I was taking out!

It’s pretty easy as adults to lose the type of enthusiasm for budgeting that I had for my tiny savings account.  But if you don’t know where your money is coming from and where your money is going, you might forget that there’s a check stuck between the computer monitor and a glass of pens sitting on your desk. Before you know it, it’s months old!

Accounting isn’t just about those lost checks

It’s not just about income though. I started helping a backflow business with his books several years ago. I sat down to enter in bills and invoices and was shocked for a moment at the amount they had listed in their Quickbooks account. Then I realized that they hadn’t entered ANY of their bills in Quickbooks—Ever.  Not once. They created invoices for backflow customers and entered in paid checks, but that was it. There was not a single reconciliation between their software and their bank account. Although the business was using an accounting software, it certainly wasn’t being done correctly!  Not only was the business not recording expenses, they never followed up with past-due accounts. I pulled the report for accounts overdue of more than 90 days. Over a period of four years there were $11,000 in unpaid checks to them. Not 110 dollars. Not 1,100 dollars.  $11,000 in outstanding bills. What I cringed about most was that these customers were still having their backflow devices tested, year-in and year-out, and invoices were sent to them each year, with no follow-up at all.

So, I tried to start fresh, as best as I could. I sent 60-day notices to the customers who hadn’t paid yet, and started entering in bills the company paid. When I sat down with the owner, I showed him some bills I wasn’t sure of–and he said he’d ordered the same supplies twice in a single month because he couldn’t find a bill date for it, and assumed he had forgotten to confirm the order. When an office and business is disorganized, it’s easy to forget what you have and haven’t done. Accounting isn’t just money in-money out. It’s about seeing how your business improves year after year, and making adjustments as you go. It’s about following up with unpaid invoices so that your business continues to thrive. It’s about finding those stray orders you placed two weeks ago.

Hire a bookkeeper 

If this all seems a little tedious to you, hire someone else to do it. Don’t say you’ll “deal with it” after your busy summer. Billing a customer in September for work done in May is unnerving to the customer, and should be embarrassing for you. Find a good bookkeeper for a day each week, and you’ll more than pay for their wages from the time you save yourself, and the money they “find” your business.

“But I’m just old-fashioned. I want to do it by hand…” Really? Why? Accounting software isn’t a flash in a pan, and there are several options available. I’m partial to Intuit Quickbooks desktop-maybe because it’s what I’m most familiar with and it’s incredibly easy to learn. It’s spendier than the online option, but it’s encompassing and cohesive, and links easily with other payment systems like Square and Stripe–which may be ways for your customers to pay you. (C3’s customer portal, for example, uses Stripe as their payment processing. It’s easily integrated into Quickbooks Desktop version.)   It’s the most popular option because it’s good at what it does, and it also has been around the longest–but if you want to try something else, there’s a comprehensive list here. Keep in mind the things that your business needs to keep track of, and choose one that you know you’ll use–not one because it’s free or everyone else is using it.

Ultimately, keeping things straight is a motto that can be used for many aspects of a business. I’ve talked about how to measure growth in your business before–be it more customers, or less time spent testing each backflow–and this is one way to measure that growth. Keep your accounts up-to-date and you’ll be better prepared for hiring a new tech, or keeping things running smoothly in slower months. Find the enthusiasm for budgeting that I had for keeping my savings straight when I was six instead of just assuming things are running well. Who knows! You might find eleven-thousand dollars you didn’t even know you were missing!

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