How Better Bookkeeping Can Improve the Performance of Your Business
You’re a small business owner in Calgary, and one day you realize that your business is underperforming. You don’t know why, so you can’t fix the problem. Just a year ago, your business was performing incredibly. But you didn’t know why then either, so you couldn’t maintain the momentum. The issue with both of these scenarios is a lack of information, and it’s a problem that can be easily remedied. How?
Through better bookkeeping.
That’s right. How many times have you heard someone say to “follow the money”? As the owner of a small business bookkeeping firm, I can tell you that business owners lacking a sound sense of their company’s financials will soon find themselves struggling to make business decisions, big or small, because they just don’t have the information they need about how their company is performing.
A top-notch bookkeeper can help you to:
Know what you’re spending
Many business owners, like yourself, lack a strong sense of the day-to-day, week-to-week workings of their company, and because they’re not paying close attention, things can slip their notice (like that software subscription you’re still paying for but not using). A bookkeeper can help you to identify your regular and recurring expenses, assess the necessity of these, and then trim the fat so that you’re not wasting valuable funds that could be useful elsewhere.
RESULT: Stop spending money on things you don’t need and spend more money on the activities, tools, and talent that will grow your business.
Understand where your profit is coming from
Whether your business engages in product sales or project work, you need to know what is and is not turning a profit. Which items are selling? Which projects are losing money? If you don’t understand the relative profitability of your activities, it’s extremely difficult to make sound business decisions about what products or projects are worthwhile. A bookkeeper can assist you with sales and project costing and help you break this down.
RESULT: Confidently accept or decline projects, continue or end product lines, and plan future activities with the knowledge of what has and has not worked in the past.
Control your cash flow
The basics of cash flow are pretty simple. Cash flow is the balance between cash coming in to and going out of your business. If you have more outflow than inflow, you have a problem, and this means your business can be caught off guard by unexpected costs, a slowdown in profits, or large one-off expenses. A bookkeeper can give you cash flow projections of current and future cash flow and help you to manage or adapt these to meet your future goals and needs.
RESULT: Know exactly how much money you need to cover your monthly costs and how much you have left over to invest in the growth of your small business.
Get paid on time
Invoicing is a pain. I know. It doesn’t matter if you’re in Calgary, Alberta, or London, England. I’m willing to bet it’s your least favourite task. But delaying an invoice, or worse, failing to send it at all, has serious repercussions for your business—namely, you don’t get paid! Timely payments are key for cash flow. A bookkeeper can help manage your accounts receivable (AR) and accounts payable (AP) to ensure invoices are sent on time and payments received.
RESULT: Improve the consistency of your cash flow and ensure that all potential profits are achieved without the hassle of sending or chasing up invoices.
Be in good standing with the CRA
Landing on the wrong side of the CRA is an enormous headache, and that’s putting it mildly. Though year-end tax filings are the task of an accountant, there’s plenty that small business bookkeepers can do to help ensure compliance with CRA regulations, such as managing existing tax obligations, tracking regular filing deadlines, recording potential liabilities, and handling GST, PST, payroll, and other interactions with the CRA.
RESULT: Owe less at the end of each year and stay clear of tax debt while knowing that, should you owe more than expected, you’ve got the cash flow to cover it.
Through these actions and more, a talented small business bookkeeper can give you the daily insights and financial knowledge you need in order to improve the performance of your business and take it to the next level.