6 signs you need to upgrade your business bookkeeping

Here you are again, burning the midnight oil to reconcile your bank statements. Are you spending more time crunching numbers than enjoying the fruits of your labour? It might be time to upgrade your business bookkeeping system.

As your business grows, your original accounting system won’t make sense anymore. Keeping a general ledger in a spreadsheet is too basic for a growing enterprise. Are you getting in the weeds trying to do your own bookkeeping? You may be able to save time and money by upgrading to a new bookkeeping system.

Do these sound familiar? It’s time to upgrade your bookkeeping

There are some common red flags that signal your business’ bookkeeping is not up to scratch. Some common themes include: wasted time, wasted money, and lack of compliance. If any of these scenarios sound familiar: you may need to overhaul your bookkeeping system.

You spend more time on bookkeeping than your business

If your DIY bookkeeping system is taking up all your time, who is running your business? Too many business owners waste hours entering transactions and finding accounting errors. This is all time that could be spent winning new business or inventing new marketing ideas.

It’s also important to acknowledge the differences between an accountant vs. bookkeeper. If your in-house accountant or finance lead is also doing daily bookkeeping, ask whether that is the best use of their time, and who is responsible for each task.

You’re always behind on your business bookkeeping

You just can’t seem to get ahead in your bookkeeping anymore. As a business grows, its financial records get more complex. If catch-up bookkeeping is your only form of bookkeeping, there is a problem. The health of your business will suffer if you can’t get an accurate snapshot of your accounts payable and accounts receivable when you need it.

When you try to do your own books as an expanding organisation, mistakes become more likely. You are dealing with more transactions, and the shortcuts that worked when you were small may not apply anymore. Larger businesses often need to switch from single-entry bookkeeping to double-entry bookkeeping and make other structural changes to stay current.

You have reached the limits of your current software

Entry-level accounting software plans have their limits. Many cap the number of people you can pay through payroll, and some limit features such as multi-currency, projects or reporting across several entities. If you keep working around your system with spreadsheets, check your plan against what you need.

The fix isn’t always new software. Often a higher plan, a few well-chosen add-ons, or a cleaner chart of accounts and process is enough. If you do need to move, plan the switch before you hit a hard limit, so you aren’t scrambling to transfer your data mid-year. Start with how to compare accounting packages and set one up.

Your business’s tax seasons are always chaotic

Does the end of the financial year throw you into chaos? Tax time can mean dealing with income tax for your business, capital gains tax, PAYG withholding, GST and payroll tax reconciliations, tax deductions and more, with fringe benefits tax on its own 31 March year. Plus, staying compliant is the only way to avoid certain government penalties.

Despite the complexities, lodging your taxes doesn’t have to be a nightmare. If every year end turns into a scramble to find records, your bookkeeping isn’t keeping up through the year.

Your cash flow is unpredictable

A good business bookkeeping system helps you strategise. You should be able to estimate peak seasons, low seasons, and estimate overhead costs. Another sign that it’s time to upgrade your bookkeeping is that you can’t forecast your cash flow. While there could always be other things at play as well, inconsistent record keeping makes it more difficult to predict when customers will pay and when your bills fall due.

You can never get hold of your bookkeeper

Your financial records should not be a mystery. Do you struggle to contact your bookkeeper when you have a question about a bank statement, or you need a balance sheet? This is a sure sign that you’ve outgrown the person or service that you currently work with. You should always have your own access to your accounting software and records, and a named person responsible for your books who answers your questions in good time.

Have you outgrown your business bookkeeping system? Whether you are trying to do it all yourself or you just have a bookkeeper who can’t keep up with your growth, it’s wise to bring in reinforcements. Visory runs the finance function for growing businesses: bookkeeping, payroll, accounts payable and receivable, with a dedicated team and its AI, Delphi, overseen by that team. Book a discovery call to see if we can help. See outsourced bookkeeping services.