As a small business owner, it’s very likely to get overwhelmed by too many tasks at a time. When you have to tick off every item on your list in a day, accounting tasks may get neglected. But, to ensure the smooth running of your business, you should give these tasks priority. Because, even though these may not seem very important at first and delaying them till the end of the month may not seem like a big deal, they indeed are very crucial for the survival and profitability of your business. By performing these accounting tasks on daily basis, you can fix issues like cash or inventory shortages, payment and receipt of invoices, tax issues, etc. Moreover, it also becomes easier to find who was involved and why such situation occurred in the first place so that, you can save your business from such troubles in the future.
Another important thing that small business owners fail to realize is how they are losing the insight of the business, when they don’t perform the accounting tasks in timely manner. As sales receipts, payment invoices, bank statements, quotations, customer and vendor queries, etc. start to pile up on your desk, you lose focus on the bigger picture, i.e. the financial health and growth of your business.
In a blog post for Bench, Bryce Warnes writes, “When you look at your books, you want to know they reflect reality. If your bank account and your books don’t match up, you could end up spending money you don’t really have – or holding on to the money you could be investing in your business.”
Here are the 8 Accounting tasks that you should perform every day to keep your business updated:
1. Refresh your Data
Usually, the accounting software automatically syncs the sales data, bank and card feeds into your accounting system daily. However, you have to do this manually each day if your system doesn’t have this option. This provides you with the up-to-date information about your cash flows so you can a better look at your accounts.
2. Reconcile Cash against Receipts
If your business accepts cash, you should reconcile it daily against the receipts to avoid cash discrepancies. In this way, you can find out any cash shortages or excess cash. It will also help you to track where the cash is coming from and where it is going. So that, not only you can identify any theft but also take action in timely manner.
3. Reconcile Bank Transactions
Most businesses reconcile bank transactions with their ledger on monthly basis. However, as a small business owner it is ideal for you to reconcile transactions each day. Most accounting software assist you by providing matches against check numbers and dates but they aren’t always accurate. That’s why human judgment is necessary. By reconciling your bank accounts daily, it becomes easy for you to identify any errors or abnormalities and resolve the issue promptly instead of waiting till the end of the month and it also helps in making your balance sheet.
4. Deposit Cash and Checks. Record Payments
It is always a good idea to deposit cash or checks in the bank at the end of the day. You don’t need extra cash sitting around in your office. Not only there is a greater risk of theft but you can also lose the track of the cash or checks you received. However, your business should prefer electronic receipts because there is less paperwork and it will save you some trips to the bank.
Likewise, you should prefer electronic payments over the cash or checks. See if your vendor is okay with it and talk to your bank to see your monthly or daily limit. Whether its check, cash or e-transfer, record every payment you make in a day to keep your cash flow healthy.
5. Record Expenses & Divide them into Categories
To have a better track of your expenses, you should record them every day as they occur. You don’t want to be buried in receipts at the end of month trying to remember what each expense is and how much you paid for it. Most accounting software have option to record expense with a snap of receipt and a note to describe the expense for reference purposes. It makes your work so much easier and shorter.
You should also categorize all your expenses. For instance, it could be an administrative expense or a marketing expense. In this way, you know how much budget you should allocate to a particular head of expense.
6. Record Inventory
To keep your system updated and have an accurate count, you must record inventory that you receive and sell every day. If you don’t do it, you won’t be able to keep up with the customers’ orders. You may lose sales because of shortage of stock because your system was not up-to-date. On the other hand, you may order extra inventory even though there was plenty of stock available in your warehouse.
7. Bill your Clients
Timely invoicing your clients will save you from cash flow difficulties. Because, the product or service you just sold to your client is still fresh in their mind. And if there is any error in invoicing, it will be easier to communicate rather than waiting till the end of the month. Because it will only result in further delays and the chances of you getting paid on time will be lower.
8. Pay Vendors
Paying vendors in time not only keeps your cash flows in healthy condition but it is also essential in building a good business relationship with them. As you receive invoices for payment, review them for any change of terms or errors. If your vendor allows any early payment discounts, try to avail them. Moreover, set a reminder for payment of bills you won’t be able to process that day to avoid late payment fee.