Your Weekly Accounting must Do's and Don'ts

Having strong accounting systems and accurate financial records is extremely important for business success, especially for small-to-medium businesses (SMBs), and both should be maintained on a weekly basis. A business can sink or float depending on how well it can accurately maintain its records and effectively manage its cash flow, and SMBs are very susceptible to sinking if they have poor business accounting practices.

Even though SMBs rely so heavily on cash flow management, it is not uncommon for SMB owners to have an inadequate understanding of the finances or business accounting practices themselves. They often believe that accounting is better suited for larger companies with more assets, so they run their business as they would their own personal finances. However, no matter the size of your business, having good business accounting practices is imperative for maintaining smooth operations and reducing the risk of errors that could potentially cost you the business.

Here are a few key tips to ensure that you are on top of everything.

Your weekly DO's

Maintain a cash flow spreadsheet and update it weekly, using a bookkeeping/accounting software that meets the needs of your business. When it comes to software, there are many choices on the market, each with its own advantages and disadvantages. Some may offer free or low-cost packages to assist SMBs or include cloud computing capabilities. However, if you choose to manage your cash flow, having the right software is key to doing so effectively.

Related: Why Managing Cash Flow is Key to Business Success

Outsource your payroll and payroll reporting to a payroll service provider who has the capacity and expertise to keep up with the myriad of state and federal reporting that is inherent with payroll. Payroll management is an essential business accounting function and one that can quickly become complex as your business continues to grow. A professional accounting firm will usually have a dedicated division of payroll management specialists, who can alleviate the pressure of SMBs who struggle to complete payroll tasks in-house.

Related: Why it's time to Outsource Payroll

Keep two sets of records and compare them to check that all figures are correct, consistent, and complete. This practice is called a ‘reconciliation’. SMBs often only reconcile their accounts once a month when they receive their bank statements. While this may seem logical, that means that there is a 30-plus day gap between checks. So much can happen in that time! If you can, you should reconcile all of your accounts weekly to keep on top of your cash flow and identify and act on any issues immediately.

Review the system you have for paying your vendors. Having a solid system in place will help you keep on top of your debts, as well as establish a good reputation and credit history for your business. Each vendor’s payment requirements will differ, so you need to make sure that you’re on top of this and note when payments are due. Some vendors may bill monthly while others may require payment on receipt. If you only make your payments once a month, you could end up paying things late. Paying your bills weekly, or at least reviewing your debt on a weekly basis, can help avoid any late payments and any other issues that can arise without a proper debt management system.

Make sure that your customer receipts are recorded as soon as possible — preferably daily, but weekly may also be enough. You do not want your customers receiving late notices for bills they have already paid. That’s a guaranteed way to make them unhappy!

Other transactions, including automatic debits, bank fees and interest payments, and common transactions, will also need to be recorded weekly. Proper management of tasks like these prevents everything from building up over the month and becoming overwhelming when issues are too far gone to resolve.

Your weekly DONT's

Don’t let your basic accounting tasks pile up. Not dealing you’re your accounting issues on a weekly or even daily basis is like piling up the stock in the warehouse and then trying to find the one item you need a month later. ‘Water wears away a stone’ and habitually tackling your business accounting tasks regularly will allow your financials to flow more smoothly, and give you more energy to work on the business instead of in it.

Don’t try to do it on the cheap with a low-cost service provider. Go for quality over quantity every time, and select a provider who can offer the business accounting expertise you need now, and as your business grows.

Related: The Benefits of Outsourcing Your Payroll to an Experienced Accounting Firm

Don’t manually manage significant amounts of work – it can lead to human error. You don’t get awarded ‘hero status’ for trying to manage everything yourself. There is a wealth of automated systems for business accounting tasks on the internet, and most of them offer effective accounting tools at a minimal cost. In addition, trust your staff and delegate wherever and whenever you can. If your business accounting needs become too much for your in-house team, consider engaging a professional accounting firm to provide expert advice and support.

Related: The Pros and Cons of In-House vs. Outsourced Accounting

Don’t pay invoices without matching them to a purchase order. This should be done daily, but certainly not less often than once a week. The more often you check, the less you will be skewing the books with accumulating debts.

Don’t forget to seek advice from a professional business accountant or lawyer on important financial matters. Small business owners are not expected to be experts on the financial, accounting or legal aspects of their business, which is why there are professionals like accountants, bankers and lawyers you can call on. Money spent wisely on a good professional accounting firm or law firm will be one of the best investments a business can make.

Staying on top of your accounting is extremely important. So many common and painful issues can be avoided by doing tasks weekly rather than monthly or even more sporadically.

Related: Why Bad Financial Record Keeping Means Bad Business

Have you noticed our #FridayExpertTips... here's one that relates to #Accounting

"Always keep your records up-to-date. Businesses with up-to-date accounting records are far better at making informed, educated decisions based on real, current facts." 

Azure Group have a specialist Business Accounting team, who manages the outsourced accounting function for a myriad of businesses.  Our team consists of highly talented and experienced accountants led by senior finance executives who each have substantial commercial backgrounds and have worked with various sizes of businesses across a wide range of industries. Get in touch if you need help.

Related: How to transition from in-house Accounting to outsourced Accounting?

This blog was originally posted on Apr 8, 2021 and was revamped on Apr 21, 2023.