46. How to see gaps in your bookkeeping
July 26, 2019
This episode is brought to you by my bookkeeping strategy sessions. When it comes to your bookkeeping, you’re probably in one of three areas. Doing it yourself, outsourcing some or all of your bookkeeping to a professional or understanding what the reports mean and making better business decisions from that information. Each of these stages comes with different struggles and questions. I can help with all three. Bring your questions, and I’ll bring some solutions. To book one of these sessions, email me at firstname.lastname@example.org. Now, on with the show.
How to see gaps in your bookkeeping.
What are gaps? No, this isn’t Generally Accepted Accounting Principles. G – a – p – s. A break between to objects.
One of the things that drives me crazy is when I read these articles that are 50 ways to work from home and they tell you that bookkeeping is one of them. While I don’t disagree that bookkeeping is a great work from home option, often times people who have no experience with accounting, quickbooks, or just finance jump into this and have no earthly idea what they’re doing.
They think that because they’re good at couponing they’d be good at this. No joke. Someone once told me that their friend is great with coupons so she would make a good accountant.
For a long time in the accounting industry, there has been a gap between an accountant handing someone their financial statements and the business owner knowing what to do with the information.
Managers will thank you for their report and then quietly shove it into their drawer when they just briefly glance over it because what the heck are they supposed to do with it?
If you are doing your bookkeeping yourself, you are probably wondering what to do with the information and what accountants mean when they say ‘know your numbers’ and ‘use your numbers.’
Here are a few gaps that you can look for in your bookkeeping and how to fill those gaps.
- Not knowing what to do each month. Do you have written processes and procedures? SOP (standard operating procedures) are a lifesaver for me because I don’t have to think too much about what has to be done. The gap here is this – if you are always doing things differently, you need consistency. If you are creating some invoices in excel, some in dubsado, some in quickbooks and never putting them all into your accounting system to keep up with who owes you what then there is a gap and a problem. You need to streamline those things to always know who owes you money. Knowing what to do each month is so important. Having those processes written out is crucial, especially if you’re planning on outsourcing that in the future. All you need to do is open a word document and create bullet points for what you do each month for your bookkeeping.
- Running short on cash. If you are always scrambling for cash at the end of the week or month, then there is a gap. I want you to look at your expenses and see just how much is going out and who you’re paying it to. It may be that you don’t need some of those things and you can cancel it or you can look at your invoices and make them due sooner than what you have now. Either way, you want to close the gap on not having enough money when you need it. I’ll also suggest building up an emergency fund and a cushion in your bank account, but if you’re struggling, let’s get that taken care of first.
- Understanding the difference between reports. You’ve heard me talk about the profit and loss and the balance sheet before. If you still aren’t sure what those mean, then that’s a gap! You need to know the basic difference and where to look to find information. Go back to episode 43: How to read reports in your podcast app and listen through that episode. I give a deep dive on both reports.
- Realistic expectations. Do you have a big goal for your business this year? I am one to set big, lofty goals for myself, even if I know I can’t reach them. If you’re setting big goals, let’s say making 100k in your business this year and last year you made 2k and have no plan on how to get to 100k, then there is a gap. I want you to be looking at your revenue and what makes it spike? What makes it go down? What are you doing with your marketing that makes your revenue go up? If you aren’t setting those realistic (and a few stretch) goals, then you’re going to get discouraged and burnt out over never doing ‘enough’ when in reality you may be growing, just not as fast as you would like to be.
- Getting help. If you are like most business owners, you are probably ready to outsource the mundane bookkeeping tasks. This is often one of the very first things that business owners will outsource since it can be a pain to learn. If you’ve already outsourced and have no idea what your bookkeeper is doing, there is a gap there. You should have a checklist of things that they are doing and both of you should be verifying that all the work is being completed. If you’re not sure what they’re doing, there is a gap. Ultimately, you are responsible for making sure that all bills are paid and that everything is taken care of in your business. You can’t blame your bookkeeper for your poor management skills. If you need help filling this gap of knowing what they are doing, should be doing and expectations for both of you, I’d love to explore this in a strategy session with you.
Knowing what to do each month, running short on cash, understanding the different reports, realistic expectations and getting help are 5 areas that I see business owners struggle to bridge the gap between what’s happening right now and what should be happening.
These 5 areas can be resolved and don’t have to always be a stressful aspect of your business.
I’d be honored to work with you. To get started, email me at email@example.com with the problem you’re having and we can discuss the best way to get to a solution.
If you are ready to use your numbers to help your business, please subscribe so you will be notified when the episode drops.
I would love to connect with you. You can find me on Instagram @lydia.miller.mba and always by email firstname.lastname@example.org.
So until next time, go, make it happen.