There is no point in arguing about it–no one is perfect Even large corporations still make accounting errors. But with the emergence of new and advanced technology, some accounting and bookkeeping errors should have reduced, if not removed, completely.
Today, we take a dive into three such accounting and bookkeeping mistakes that often develop in small businesses. While these errors are popular for small businesses, in large corporations you are also likely to find them.
So, whether you’re running a small or big business–that’s for you, of course. That said, let’s just jump in!
Omissions or Misstatements
When you treat a lot of customers, it is possible that one or two transactions may slip through the cracks once in a while. You can misspell a customer name, fail to charge any products in the invoice, or neglect to include valid contact information.
If they go unaddressed for a while, all these failure and errors build up to a crisis.
Think of your business information as vital parts of a vehicle; if you forget a jack today, a seat belt tomorrow, and headlights next week, you’re bound to get into some serious trouble with the traffic officers or you might risk your life and those of other road users.
If you don’t review your data to make sure you don’t forget, misinterpret or withhold any information that’s important to your sales, accounting or customer support departments, you’re likely to miss out on opportunities or fail in business at the worst.
As a business owner, you want to make sure that all the data that is important to you, your clients, vendors, staff or any other stakeholder is found in your account books and business information. No matter the mistake, before they eventually get out of control, take it upon yourself to make it good.
Lack of Documentation Procedures
This is popular for companies that have expanded rapidly. If you were used to a turnover of less than $100k last year, you would probably be overwhelmed if you weren’t expecting sales for $400k.
When that happens, processes tend to be ignored… Delivery notes are lost, invoices are not properly filed reconciliations begin to take place late and before you know it, the entire business is in a mess!
Listen–setting up a clear set of procedures and controls is one of the best ways to keep your company healthy. Whether or not profits are made, make sure your team follows the defined processes.
If a purchase order has to be accepted by three authority centers before a purchase is made, do just that; unless there is a real reason not to obey a process such as the person in charge’s absence, you should not sacrifice your way of doing business just because things seem to be moving fast.
If a need occurs, consider adjusting the processes affected to match evolving market conditions such as growth, productivity, etc.
Not Seeking Professional Support
Let’s face it–even accountants who start their own companies, hire accountants and bookkeepers, right? Why do you know? Because you may not be able to do everything on your own.
And since we’re here, you also need to realize that seeking help at the later stages of a crisis might be costly. In other words, try to solve problems early on or involve an expert before things get out of hand entirely.
Accountants and bookkeepers will charge you a tidy sum depending on how many hours they spend doing your job. Today, a typical bookkeeper would charge you $150 an hour; take that and multiply it by a month’s worth of work.
Try hiring a professional bookkeeper or accountant as soon as you realize things aren’t 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
Comment below, what other common mistakes in bookkeeping have you come across as a small business?
