“Good accounting is the foundation of any successful business.” – Russel Simmons
One of the biggest tenets of good accounting is timely bookkeeping. Timely recording of accounting entries is crucial for the financial health and success of any business. It not only provides accurate financial information for decision-making, and enables as business to comply with tax and regulatory requirements, but also provides a real-time mirror on the business’s financial position, helps improve cash flow, and facilitates business growth.
Yet, despite its many advantages, many businesses falter on maintaining up-to-date bookkeeping records.
Bookkeeping backlogs can arise due to various reasons
One of the biggest reasons a business fails in timely bookkeeping tasks is business growth. As a business grows, all its resources are concentrated on meeting client requirements, achieving production schedules, ensuring timely dispatch of goods / delivery of services. Making real-time accounting entries takes a backseat in all this growth frenzy.
In addition, shortage of resources, inadequate bookkeeping software, incomplete and inaccurate records, adequate infrastructure support and inordinate systems downtime are some of the other reasons why businesses fail in timely bookkeeping.
Bookkeeping backlog is common, but avoidable
In a situation where a business entrepreneur or a company’s accounting department fails to maintain regular bookkeeping tasks, the delay in recording financial transactions and updating accounting records invariably leads to partial view of the business’s financial health.
It also results in delayed payments to vendors thereby impacting procurement, supply-chain and production, delayed or missed collections from debtors thus adversely affecting the business’s financial position.
In the long run it also has the potential to result in inaccurate financial reporting, missed tax deadlines, and can negatively impact a company’s financial health.
How to Avoid Bookkeeping Backlogs – Best Practices
If you are an entrepreneur, or the head of an accounts team, your first step will be to take stock of the backlog situation, make a detailed investigation on the root causes leading to the backlog, and take corrective action:
- Create a bookkeeping schedule. Chart out a manual outlining every bookkeeping task, assign them their respective schedules marking monthly, quarterly and yearly timelines. This will give you a one-glance view of the requirements, and will help you plan your calendar
- Make a list of dependencies. A number of times, recording certain entries are dependent on approvals, or confirmations. It is vital to make a list of all such dependencies against every bookkeeping task, assign responsibilities in your team for the completion of the dependencies within a scheduled time, so that timely posting of entries are not adversely impacted
- Review at periodic intervals. The biggest control of ensuring timely bookkeeping is a review of the procedure and ensuring the timelines are met as per the schedule. Ensure that you have assigned your bookkeeping team to regularly review the business’s financial records. They should be able to confirm the accuracy and posting of the entries. With this, you can protect your business’s financial health by identifying errors or omissions before they have a ripple effect
- Build a reporting schedule. This will enable you to further check on your business’s financial health and will help in re-emphasizing the bookkeeping controls and checks
- Invest in good bookkeeping software. New-age bookkeeping software not only help with the basics of entry recording, but also automate certain regular processes including invoice entry, bank reconciliations, cash flow statements etc. This reduces chances of errors of omission or commission
- Recruit qualified accountants. Qualified and experienced accountants ensure timely bookkeeping, and reporting, and also provide valuable financial insights that can help the management in taking business decisions
- Outsource bookkeeping. With bookkeeping outsourcing, you can do away with the need to maintain a full-fledged in-house accounting department in your office. Outsourcing is especially beneficial for growing businesses that do not have the time and resource to manage bookkeeping tasks in-house
Outsource bookkeeping to Cogneesol
Cogneesol is one of the leading business process outsourcing companies that provide a range of services to companies, medium and large, across the globe. One of our flagship offerings is our bookkeeping services. Our bookkeeping outsourcing services include:
- Setting up chart of accounts
- Ledger maintenance
- Support for recording payables and receivables
- Periodic bank account reconciliation
- Cash flow management
- Financial reporting and analysis
- Management reporting
We have invested in both people and state-of-the-art technologies to offer best-in-class bookkeeping services to our clients. Our team of qualified accountants work for clients spread across many countries. They, therefore, have exposure to country-specific accounting and taxation regulations, and practices. Furthermore, owing to our robust learning and development programs, the teams are experts at every accounting software, and can work on the latest technology.
One of our greatest value propositions is how we partner with clients and become a part of their team. Our sole goal is to ensure client success. We map their strategic goals, prioritize their needs, and work with them to provide the best solutions at the most competitive rates.
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