But with the emergence of new and improved technologies, certain accounting and bookkeeping mistakes ought to have significantly reduced, if not eliminated.
Today, we take a dive into three such bookkeeping and accounting mistakes that often occur in small businesses. While these mistakes are common with small-scale businesses, you’re also likely to find them in large corporations.
So, whether you’re running a small or large business – this is certainly for you. That said, let’s jump right in!
Omissions or Misstatements
If you handle a lot of clients, one or two transactions are likely to slip through the cracks every once in a while. You can misspell a customer name, fail to bill all invoice items, or forget to include valid contact information.
All these errors of omission and misstatement build up to a crisis if they go unaddressed for a while.
Think of your business information as vital parts of a vehicle; if today you’re missing a jack, tomorrow a seat belt, and the next week headlights, you’re bound to get into some serious trouble with the traffic officers or you could endanger your life and those of other road users.
If you don’t countercheck your data to make sure that you don’t forget, misstate or omit any information that is important to your sales, accounting or customer support teams, you’re likely to miss out on opportunities or at the very worst, fail in business.
As a business owner, you want to make sure that your books of accounts and the general business information contain all the data that is important to you, your customers, suppliers, employees or any other stakeholders. No matter the mistake, take it upon yourself to make it good before they ultimately get out of hand.
Lack of Documentation Procedures
This is common with businesses that have started to experience unexpected growth. If last year you were used to a turnover of less than $100k, you’d definitely be overwhelmed if you didn’t plan for $400k in revenue.
When that happens, procedures start being overlooked…
Delivery notes are misplaced, invoices are not filed properly, reconciliations start to occur late and before you know it, the whole business is in a mess!
Listen – establishing a clear set of procedures and controls is one of the surest ways of maintaining sanity in your business. Whether profits are being realized or not, make sure that your team complies with the set processes.
If a purchase order needs to be approved by three centers of authorities before a purchase is made, do just that; unless there is a genuine cause for not following a procedure such as the absence of the person in charge, you shouldn’t compromise on your way of doing business just because things seem to be moving fast.
Should there be a need, consider adjusting the affected processes to suit the changing business dynamics such as growth, efficiency and so on.
Not Seeking Professional Help
Let’s face it – even accountants who start their own businesses employ accountants and bookkeepers, right? Know why? Because you can’t possibly do it all on your own.
And since we’re here, you also need to understand that it might be expensive to seek help at later stages of a problem. In other words, try to fix issues at an early stage or involve an expert before things totally get out of hand.
Accountants and bookkeepers will charge you a tidy sum depending on the number of hours they’ll spend doing your work. Today, an average bookkeeper will charge you $150/hr.; take that and multiply by a month’s worth of work and you’ll certainly be shaking your bank account dry.
Consider engaging a qualified bookkeeper or accountant as soon as you realize things are not right or better yet, even before things start to go south; this way, you’ll save yourself the interruption time as well as consultancy money.
What other common bookkeeping mistakes have you encountered as a small business?