Effects of Failing to Close your Business’ Books
The year is coming to an end and you realized that you did not keep a close eye on your business’ bookkeeping and you are about to fail in closing your business’ books. As you are all over the place trying and struggling to prepare for the year-end book closure, you ask yourself; what exactly might be the effects of failing to close your business’ books?
Well, there are several things that will be directly affected if you fail to close your books properly at the end of the year. We have listed them down for you!:
1. Blind on Numbers
If you fail to properly keep an eye on your books and also fail to close them properly, you won’t know your numbers. Numbers are vital in order for you to know what drives your business, how much it has earned, and how much it costs to operate. Neglecting your books mean that you won’t have a clear understanding of your business’s financial health. You also won’t have an accurate view of your business’ Key Performance Indicators (KPIs). KPIs are important for your business. It lets you set strategic goals, makes data-driven decisions to move toward your goals, and ultimately achieve your goals s that you can start setting new ones.
2. Cash Flow Troubles
Since you’ve neglected your books, you will undoubtedly run into cash flow troubles. Whether its experiencing slow debt collection, seasonal sales fluctuations, or incurring too many overdrafts on your accounts.
Having your receivables and payables accurately tracked will give you a clear picture of your company’s cash flow at any given time. This will even improve your ability to predict cash flow problems before they occur.
3. No Strategy
Strategy is an essential factor for any business operation to be successful.
As the business owner, you must have a vision for the future of your business and a plan or operating framework that will help you get there. Whether you’re trying to set goals for the next year, quarter, month, or year, an inadequate business strategy will hold you back. Not only does a badly kept bookkeeping prevent you from achieving your goals, it can also make it difficult to set goals, track benchmarks, and measure progress.
4. You’ll Miss Tax Deadlines
Headache is an understatement if you’re describing Tax Time with badly kept bookkeeping.
If your records aren’t consistently updated on a regular basis when tax time approaches, your business will inevitably have a huge pile of unsorted receipts that you have to dive into. As a result, what could’ve been a simple job turns into a towering task of nearly impossible proportion that will require a great deal of employee labor hours as well as your hours. Ultimately, you risk missing your filing deadlines, making mistakes on your tax documents, incurring tax penalties, and triggering IRS audits.
5. High risk of Internal Fraud
Placing a messy bookkeeping protocol in place puts your company at risk of suffering losses due to internal fraud.
Without smart protocols and sound processes in place to enable adequate separation of duties and proper checks and balances, your small business risks enormous loss due to internal fraud schemes.
No matter how highly you regard your employees, all small businesses are vulnerable to internal fraud. Implementing proper checks and balances, separation of duties, and enlisting the help and oversight of external bookkeeping professionals can help you avoid this costly small business problem
What’s the Solution?
Getting an entire in-house staff of bookkeeping experts costs enough to sink a small business. Additionally, working in an environment with little opportunity for upward progress is not the ideal employment situation for a team of expert bookkeepers. Despite these challenges, there’s still hope for small and medium-sized businesses to create expertly designed and efficiently operating bookkeeping processes for their business.
The solution: outsourced bookkeeping service providers. Let the professionals do it for you!
With an outsourced solution, your business can access the knowledge and experience of well-seasoned finance professionals while paying an affordable price for only the services you truly need. You’ll have someone to help you optimize your system and processes while helping you interpret your timely and accurate financial reports.
As a benefit, you’ll be able to set actionable goals and create an operating framework designed to orient your entire business around achieving those goals. You’ll avoid the pitfalls associated with operating with a dismal bookkeeping system. You’ll also be able to leverage every asset your business has to continuously inch toward success!
Ditch the fear of experiencing the problems enumerated above! Get in touch with us today and let our experienced experts help you!