The virtuous circle of good bookkeeping
Bookkeeping is a bedrock activity for all organisations that have financial transactions.
Running your own business is a juggling act and some of the balls that must be kept in the air are financial. It’s possible, though not desirable, to pay less attention to the financial side of your business for a while and concentrate on sales and operations. But sooner or later you need to get the finance side working properly and keep it working properly as your business grows.
This blog is based on our work with a manufacturing business which has sales of around £750k. The MD got in touch because he knew he needed to get the company’s bookkeeping and accounting in better shape. He was wasting time and missing out on profit:
- Because the bookkeeping was being done poorly it took him too long to get simple things like invoicing done. Time he couldn’t spend on growing sales.
- More time was lost each quarter pulling together data for VAT returns.
- He didn’t know how profitable his individual products were and therefore couldn’t make informed changes to improve profitability.
- He couldn’t seek investment because he had no numbers to show to potential investors.
And the solution?
Use bookkeeping software in your business
The solution lay in using an accounting software package for the bookkeeping. It happens that it was cloud-based but that’s incidental. The point is that good bookkeeping software can, at the touch of a button, deal with:
Very quickly our MD felt on top of his business. Sales invoices were going effortlessly out of the door and getting paid sooner. Prices could be reviewed and margins increased. The VAT return and related reports were produced in minutes rather than days.
And it all took less time which was invaluable!
There’s lots of noise in the accounting / bookkeeping world about cloud applications and it often obscures the fundamental point which is that it’s vital to have good bookkeeping taking place day-in, day-out using bespoke software (not spreadsheets) and using the results to grow your profits and your businesses.
Sales | Margins | Profit | Cashflow
PS If you’re using QuickBooks or thinking of using or changing to QuickBooks – check out our QuickBooks Online training – your business is the classroom!