Bookkeeping can be confusing and frustrating, especially if it isn’t your area of expertise. But as a business owner, constantly and consistently updating your bookkeeping is vital to the success of your company. And by constant and consistent, we don’t mean every couple of months! In fact, we highly recommend that business owners update their books at least weekly to stay on top of things.

Weekly! Isn’t that too much? I already dread doing the bookkeeping every month or so!

We get it. Sometimes bookkeeping seems to get in the way of you running your business.

But did you know that businesses that generate and study their financial reports weekly have a success rate of  95%+?

(Source: SBA.gov Financial Discipline Slide 3;  link inactive as of Aug 2022 but can be accessed through an archive here.)

Here are five reasons why staying on top of your bookkeeping is important for your business:

Need help with your bookkeeping? Send us a message and we’d love to help!

1. It helps you be aware of your financial standing

Do you have a positive or negative cash flow? Are you generating any income? Is your profit margin increasing or is it decreasing?

The answers to these questions help paint a picture of how your business is doing, but you can’t answer these questions accurately if you don’t keep your books up-to-date.

When you’re able to analyze your financial reports regularly, you know exactly how your business is doing which would then help you make better and smarter business decisions.

2. It helps you keep track of your expenses

Have you ever reviewed your transactions and realized you’ve been paying for a subscription or service that you no longer need? Yeah, it happens!

Imagine if you didn’t notice that until months after you’ve finished using the subscription or service? That’s money you could have spent elsewhere!

While that type of scenario is normal (after all, it’s easy to set up subscriptions and just forget about them), they can easily be avoided if you often update your bookkeeping.

Or what about this scenario…

You sign up for a particular service that costs $100. For what you get, the amount seems worth it! But then you update your books and see that because you use the service weekly, you’re actually paying $400 a month! That definitely puts things in a different perspective!

Keeping your books up-to-date gives you a big picture of how much you’re spending. An expense might not seem much when you’re looking at it as a one-off charge, but if you add it up, it might actually be over your budget!

3. It helps you prevent or stop fraud

Fraud is a real threat that can happen to any business. If you’re not careful and you haven’t been staying on top of your books, it could be happening without you knowing! But if you constantly review your financial transactions, it’ll be easier to catch anything suspicious with your finances.

4. It helps you catch and correct errors in real time

Vendors and banks aren’t perfect. Vendors can accidentally make duplicate charges, forget a discount or banks can even process the wrong amounts! It happens, but if you don’t catch them in time, you might be stuck having to pay the bill! Much like the previous reason, if your books are up to date, you’ll be able to catch transactional errors right away and correct them before it’s too late.

5. It prevents you from doing a big catch-up project ahead of an important deadline

Have you ever planned to apply for a small business loan and find yourself scrambling to update your bookkeeping before the loan runs out? Or have you realized too late that tax season is coming up and you haven’t finished your bookkeeping for the year? Or maybe you have an audit coming up and you’re way behind on your books?

These stressful situations can be avoided if you’re on top of your bookkeeping. Wouldn’t you want to do it while your memory is still fresh to recall certain transactions or scenarios? Not to mention that if you do choose to cram your bookkeeping before a deadline, you’re more likely to miss something or commit errors!