If your bookkeeping is unorganized and inaccurate, that can result in severe consequences such as an audit, bankruptcy, halting of services, or the permanent closure of your company.
Mistakes such as miscategorizing expenses or not recording the payroll checks properly can lead to sloppy financial statements. This can lead to more mistakes, which can affect your business in the long term.
Avoid these issues by paying attention to these 3 signs of poor bookkeeping.
1. Cash Flow Issues
If you are not accurately tracking your expenses and accounts payable, you will experience problems with cash flow. You may be unable to make payments on time, incur late or overdraft fees, and have other cash flow issues that hinder business growth.
2. Not Knowing Your Business’ Financial Health
It is impossible to know your company’s financial health without accurate numbers. It is critical to have a detailed accounting of the operating costs of each department, the revenue your company brings in and from where, and the operational costs per dollar of income.
Outdated, sloppy, and imprecise bookkeeping reports prevent business owners and company leadership from accurately understanding the business’s financial health.
3. Cannot Make Strategic Pricing Decisions
If your business is not accurately tracking your employees’ time or company expenses, you cannot fully understand your costs or profit margins. Not having a clear picture of these essential expenses can prevent business owners from developing a pricing strategy that optimizes profits. Having poor pricing models eventually leads to cash flow complications.
The importance of bookkeeping cannot be overlooked! If you are concerned about your business’ bookkeeping practices, get in touch with Assemblage LLC.