Have you ever wondered why some businesses fail? It can be due to poor financial health, which is known to be a major contributor to small business failures.
If your bookkeeper is not performing the tasks efficiently, inefficiency can impact your financial health. In the digital era, small business owners have the option to make bookkeeping task easier through automation. If you need to check an updated financial report, automation will make information available in real time.
Why should a small business owner automate?
Manual tasks are time-consuming and repetitive. They also demand greater workforce and skilled manpower. However, even trained manpower does not guarantee an error-free report. Automation helps your business put things in proper perspective. The process is capable of correcting bookkeeping mistakes, which are committed repeatedly due to constant human interaction. Automation helps you to avoid these 5 mistakes:
1. Failing to track expenses regularly
Every business transaction must be recorded for a good reason: your business is dependent on your cash flow. Whether you are tracking sales or expenses, it is important that every transaction made is recorded. If you miss tracking your expenses diligently, you may end up covering expenses using your own funds.
2. Do-it-yourself bookkeeping
For a business that is just starting up, hiring a trained and experienced bookkeeper will only incur higher costs. However, a bookkeeper who is equipped with knowledge in using automated tools can ensure that your books are updated and your expenses tracked.
3. Not reconciling accounts
Business owners cannot afford to miss this task because it is a critical step in every bookkeeping process. A small bookkeeping error can snowball into larger mistakes if your bookkeeper does not pay heed to this process. Automation reconciles business books with card and bank accounts so you will know if there are discrepancies on the report.
4. Committing fraud
A business can lose vast amounts of money due to fraud. Fraudulent activities can be deterred if human interaction is reduced. Automation has a huge impact on the profitability of your business because it reduces dependency on manpower. As a result, you are also reducing the chances of committing fraud. Automation can easily spot discrepancies or incorrect details on your financial report.
5. Losing track of cash flow
Whether you want to invest or grow your business, the decision you make will depend on your cash flow. Every business should manage cash flow because it is also utilised for paying monthly expenses. A profitable business may not be considered successful without a steady flow of cash. Automated bookkeeping provides updated records of balance and withdrawn funds so you will have an overview of your cash flow.