Bookkeeping isn’t scary until you find yourself months behind on your books. When it happens to you, catch-up bookkeeping can feel like horror, especially if you have lost receipts, reconciliation discrepancies, or a visit from the Canada Revenue Agency.
Sit back as our fearless leader Omar tells a spooky tale of a time we found a client being haunted by almost a year’s worth of unmanaged bookkeeping.
It was a dark and stormy night when I received a call from a mysterious stranger. He sounded upset. A year ago, he had started his dream business—a trendy fusion restaurant, inspired by his passion for great food and design. His business was a success, but his focus on providing great service and meals left little time for bookkeeping.
He’d lost most of his receipts, and those that he did have were kept in a haphazard pile. His bank statements were unreconciled, and peppered with unmatched transactions. It took some hard work to pull him out of the grave he’d dug for himself, but together we managed to weather the storm.
Today, we’re proud to say that we swept all the cobwebs out of his financial records, and his desk is no longer a graveyard for misplaced receipts. We designed a receipt tracking system that makes it easy for him to snap a photo of his receipts and store them in the cloud. His restaurant’s file is now any accountant’s dream.
Are you being haunted by a pile of receipts or unreconciled bank statements? Here are some tips for getting caught up on your bookkeeping.
How to Handle Catch-Up Bookkeeping
Call in the Professionals
Catch-up bookkeeping, also known as clean-up bookkeeping, is not for the faint of heart. We always recommend that you call in the experts for a professional ghostbusting. But if you’re eager to get started on your own, you can follow these tips to get the ball rolling.
Clear the Cobwebs
First, you’ll want to get in control of your invoicing and accounts receivable. This is the best place to start because it leads to cash in the door, which is the lifeblood of your company.
Review your accounts receivable records and ensure that you’ve sent all of your client invoices. If you have good customers that are just slow at paying, give them a call and ask them for payment. If you have any outstanding bad debt, now is the time to prepare to do a bad debt writeoff.
Next, review your accounts payable and ensure you have a good grasp on what you owe your suppliers.
Your suppliers probably have not forgotten that you owe them money, so you might be getting phone calls and emails asking to be paid. If you have invoices that you have received but have not paid for, make sure that they get logged in the accounting system to give you an accurate accounts payable listing.
Manage Your Receipts and Documents Using Technology
If you have a huge stack of receipts and invoices waiting to be entered into your accounting system, Receipt Bank will be your best friend. Download Receipt Bank's mobile app and get started on snapping your receipts. Once you're done snapping your receipts and invoices, Receipt Bank will extract the key details from your documents and categorize them according to your chart of accounts. For any digital invoices, you can also forward them to your unique Receipt Bank email address and you can let Receipt Bank do the rest.
Consider Business Expenses
You’ll want to collect all of your receipts for the business expenses that you’ve made out of your own pocket. Tracking expenses that you pay for personally is very important. New business owners often do this to get the business off the ground when the business is not generating much, or any, cash.
These expenses represent a tax deduction to the business and get tracked in a shareholder loan account representing a liability of the business to you. In the future, this money can be pulled out of the business tax-free!
Reconcile Your Accounts
Finally, you’ll need to completely reconcile the bank accounts and credit card accounts. Get all of your bank transactions uploaded into the accounting system and go through one-by-one and code your transactions to financial statement accounts.
Cleaning up your books will provide you with greater visibility on your profitability and financial reporting. You can also get a better handle on your cash flow because you will gain an accurate picture of what cash you can expect to collect and what expenses need to be paid for.
Build Your New Bookkeeping System
Once you’re all caught up, it’s time to build a more robust plan for your day-to-day bookkeeping moving forward. Anyone who has survived a catch-up bookkeeping horror story won’t like to live it again. Creating a cloud-based accounting process allows you to gain full visibility of your finances and reduces the time required for maintaining your books.
At Enkel, we provide small business owners with catch-up bookkeeping and ongoing cloud-based bookkeeping services. We look at all aspects of your business plan and goals to create a bookkeeping process that works for you. The ideal bookkeeping system is one that fits within your life and schedule. Chat with us today to learn more!