The Importance of Constant Bookkeeping
I recently had two clients fold their businesses. One of them had been a client of mine since the very inception of my business back in 2009. The common problem, shared by both of these clients, is that although I maintained their books on a monthly or quarterly basis (based on the client preferences), the clients always failed to actually review their financial reports. They both thought they were making profits based on their gross margins, which they kept solely in their heads. One client sold wares through Amazon and the other was a service-based business (but heavily capitalized). Unfortunately, what both clients failed to realize was all the overhead/administrative expenses (below their gross margin line) were crushing their bottom line. They were not even reviewing and comparing to historical numbers and looking at trends. They both just kept going deeper into debt, figuring they had a good business product/service formula for making a profit. But that bottom line was saying they were spending too heavily on items such as: meals, loan interest and advertising.
At AccuraBooks, we make recommendations to all clients as to the frequency of their bookkeeping maintenance. This is normally a monthly maintenance; however, some are daily, weekly or even quarterly. AccuraBooks never advises for bookkeeping maintenance to go anywhere beyond a quarterly maintenance.
Regular and consistent bookkeeping is integral to running a profitable business. The information produced by the bookkeeping system is crucial to making informed business decisions. Bookkeeping reports can raise flags and point to areas that need immediate attention, as well as highlight areas that are quite successful. Business owners must recognize the importance of and learn to harness the power of the bookkeeping system in helping them successfully run their businesses.
Take the time to sit down with your bookkeeper and ask them to show you what the reports are revealing about your business. Ask the bookkeeper to spell out what it is you need to be seeing and where your focus needs to be. The only bad questions are the ones you don’t ask.
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