It’s so much more than just a compliance task.
“Rubbish” may be a strong word to use, but we so often see entrepreneurs restricting their own business’s growth by limiting their bookkeeping to basic record-keeping. While this fulfils compliance purposes for Revenue, it doesn’t even scratch the surface of the powerful insights you could gain access to by taking a more thorough approach to bookkeeping.
Proper bookkeeping is more than lists and record-keeping.
Many business owners diligently list sales invoices and keep payment records in Excel or Sheets. While it’s good to keep records, organising your financial information this way is not bookkeeping. It simply doesn’t dive deep enough to provide valuable information you can use to guide growth-generating decisions.
Let’s say you record a list of payments and invoices in a spreadsheet and send this to your accountant once a year. They review it, tell you how you’ve done for that time period, and you’re off to work away for the next year. Historical date that’s useful for tax compliance purposes. But rubbish to see how your business is doing now.
For the next 12 months, the only way you can see how your business is doing is by the amount of cash in the bank. It doesn’t factor in payments you’re yet to receive or how much you owe. It leaves a lot of guesswork and you’re left to base major decisions on a cash figure that might not be accurate.
Expert bookkeeping lets you see your financial health at any time.
When done correctly, bookkeeping provides a financial snapshot of your business at any moment. It gives a precise, up-to-date overview of how much money you’ve got in the bank, how much you’re owed from your customers, and how much you owe your suppliers.
You can use this information to forecast, predict your cash flow, and create budgets. This then informs key decisions like hiring new team members or deciding the viability of expanding to a new location. In short, it gives your business a far stronger chance of sustained growth.
Don’t use Excel for bookkeeping.
The introduction of digital accounting software in the last decade has totally transformed how business owners interpret and use their financial data. Avoid using Excel or Sheets; they’re time-consuming, prone to human error, and don’t provide an accurate snapshot of your business’s financial health.
That’s why we recommend using Xero.
The Cloud-based digital accounting software goes far beyond basic record-keeping:
- It’s specifically designed for small business owners.
- It makes it easy to maintain up-to-date books.
- It integrates with your bank account to automatically pull in the right data.
- It always reflects your most up-to-date financial information.
Doing your bookkeeping on Xero also provides the comfort of knowing your compliance requirements with Revenue and the Companies Registration Office are up-to-date. You’ll be able to do your VAT returns, payroll and RCT on time as you’ll already have access to all the information you need. If Revenue comes back and asks you a question, you’ll have the proper backup to support what you’ve filed.
Great bookkeeping tells the story around the numbers.
A few months ago we started doing bookkeeping for a new client who, before coming to us, had only had basic bookkeeping done for record-keeping purposes. This style of bookkeeping didn’t yield any actionable data, so he was basing decisions on the amount of cash in the bank.
Fast-forward to proper bookkeeping, and the client suddenly had a clear picture of how his business was actually doing. It provided much-needed context behind the numbers.
If the client made a loss last month, his books showed why this was. Instead of feeling disheartened about it, he could now see it was because he had yet to invoice customers for various pieces of work. He knew he could expect incoming cash which changed the way he made strategic decisions.
Thorough bookkeeping transformed the perspective he had of his business, giving him a new understanding of his profitability, and informing the steps he had to take to improve cash flow.
It’s time to harness the power of your financial data.
Proper bookkeeping is the foundation of any business’s success. At Comerford Foley, our comprehensive bookkeeping process ensures you’re getting actionable data you can use to inform strategic decisions. To start unlocking your numbers’ full potential, find out what your bookkeeping would look like with us.
Interested in getting away from rubbish bookkeeping? If so, Start here