The rescue job: why you need to tidy your accounts before you start monthly bookkeeping

How tidy are you as a business owner? Is your desk a mass of invoices, trade brochures and discarded coffee cups? Or is your workspace a sleek, clean affair where everything’s at precise right angles?

Well, whichever category you fall into, there’s one thing in your business life that absolutely, definitely MUST be tidy – and that’s your accounts and bookkeeping!

You may have invested in a move to cloud accounting, but if your Xero accounts are a mess then this can really hold back the additional services your business adviser can bring to the table.

Don’t worry though: if your accounts are in a jumble then there is a way to remove the mess and perform a bookkeeping rescue job.

 

A tidy approach to your bookkeeping

At Fresh Financials, Xero online accounting is the foundation for all our bookkeeping and financial services. But in all the time we’ve been a Xero practice, we’ve never taken on a client that has a completely tidy set of Xero accounts. However precise the company’s bookkeeper has been, there are always a few rogue figures or allocations that need our expert attention.

No-one’s perfect, and we don’t expect a busy finance admin person to achieve bookkeeping nirvana every time (that’s our job, after all). But if your books aren’t correct, and your processes aren’t consistent, we can’t deliver all the other wonderful reports, management accounts and future forecasting that relies on your Xero data.

In a nutshell, if you put garbage in, you get garbage out.

 

Start with a financial health check

So the first thing we do when taking on a new client is to run a health check on your accounts and start pinpointing where things are tidy, and where there’s a slight mess that’s in need of attention.

This health check can happen at any point, but it’s invaluable to do this at the start of the engagement so you’re starting with the most effective set of accounts from the get-go. We’ll go through your Xero accounts with a fine-tooth comb and give you a full and honest overview of the state of your books.

If there are issues, we’ll correct them and will make sure that everything is neat, tidy and sat in the right balance. And that’s crucial when we start introducing you to the huge ecosystem of Xero Add-ons and the different solutions that can be plugged into your standard Xero system – without a set of clean data, you just won’t get the full benefit.

 

Set your expectations clearly from the start

It’s incredibly important that you have a great working relationship with your bookkeeper. You need to understand each other and agree on how you’ll work together. But there’s also a certain lack of understanding among business owners around how much you can question and challenge the professional you’ve employed to manage your books.

If you feel that your bookkeeper isn’t recording your data and transactions in the correct manner for your business then you need to call them out on it. Ultimately, you know your industry and business best, so you need to talk with your bookkeeper and set the right expectations around how you’ll work together, which numbers you most need reporting on and who’s responsible for each of the bookkeeping tasks.

Simple things like making sure your bank balance agrees at a set date each month will have a knock-on effect. It puts a process in place and sets a standard that you both have to stick to – and that’s great for keeping your books tidy and efficient.

Like anything in life, if you don’t start off on firm foundations at some point the whole structure will start tumbling down around your ears. So it’s best to take the time at the start of the engagement to be clear about your expectations, processes and responsibilities. That way, things won’t come back to bite you on the bum halfway through a year – or worse still on a fixed job when a year-end has already been run.

 

Learn the basics of accounting

Xero does give you a simple, easy-to-use interface for managing your books. But there’s a misconception that using a cloud system also makes it easier for business owners to understanding the technical elements and rules of accounting.

However easy your software’s user interface is, you still need to know the basics of double-entry bookkeeping to use an accounting package correctly. Yes, the systems are brilliant and will save you time in the long run, but you need to invest a little time in educating yourself about the accounting basics.

With a better understanding of the fundamentals, you can work more closely with us to make sure things like your chart of accounts make sense, your coding is effective and your accounts are set up in a way that works effectively for the business.

The bottom line (no bookkeeping pun intended) is that you, as the business owner, need to understand enough about accounting to be confident in your numbers. When you log in to Xero at 7pm on a Sunday night, you need complete confidence that your profit and loss report is up to date, correct and makes sense to you.

 

Invest in a tidy set of accounts – and reap the rewards

Whatever state your Xero accounts are in, there’s real worth in taking the time to get your books clean, tidy and delivering the numbers you need as a business owner.

Investing time in building a set of Xero accounts that are correct and meaningful will save you a whole lot of time and money in the long run.

  • Running your books will be faster more efficient – meaning we spend less time sorting out issues further down the line, and removing any additional fees that would be charged for sorting out these problems.
  • You get a view of your finances that’s real-time, up-to-date and giving you the insights you need when making big decisions about the future.
  • As your adviser, we can use your Xero data to highlight any potential overspending or missed opportunities, and help you to reduce your tax spend and increase profits.

 

Get in touch with us to arrange a health check for your books – and start seeing how a tidy set of accounts = a profitable, efficient business.