How Financial Forecasting Helps Get Your Bookkeeping Done

Photo by Kyle Glenn on Unsplash

How do you feel about bookkeeping? Do you wish you didn’t have to do it? It takes so much time and is often bothersome to a business owner. Back when I had young children at home and before the invention of bank feeds to help automate bookkeeping, I was always behind. I felt terrible about myself; the weight of undone bookkeeping would drain my energy.

One of the things I love about having a regular practice of Financial Forecasting is it incentivizes me to keep my bookkeeping up-to-date. Using the data to build my business is more exciting than preparing my numbers for taxes.

Can you relate to the stress of being behind on your bookkeeping? If you can, I want to let you know that one of the exciting benefits of my group program, The Financial Forecasting Experience, is that it will incentivize you to get up-to-date with your bookkeeping.

We know that bookkeeping is a necessary part of having a business, so I put together some information that might help you get over the hurdle of getting it done if you don’t have this area of your company handled. If this is you, I promise that you are not alone. Nor is it anything to be ashamed of.

Let’s start with the definition of what bookkeeping is:

Bookkeeping is the PRACTICE of recording all of a business’s financial transactions in a SYSTEMATIC way and in chronological order, which MUST be done for all businesses.

Now, let’s break that definition down:

The definition says bookkeeping MUST be done for all businesses.

Doing your bookkeeping is not optional for a few reasons:

It is required by law. Each year, you must file a tax return and be able to back up the numbers on your tax return with your financial records.

It sets your company up for success. A CEO who runs a strong company does bookkeeping on a timely basis to clearly understand what is happening financially. Many business owners run their businesses based on their cash balances, which does not provide the insight that looking at your numbers in an organized way on a regular basis will do for you.

Bookkeeping provides the data to create a Financial Forecast. Past data combined with what a business owner predicts will happen in the future is used to create a picture of what we think will most likely occur over the next 90 days. This information helps a business owner know what needs to be done to meet financial goals.

Do you see how important doing your bookkeeping is? I hope the above breakdown has increased your desire to create and maintain a bookkeeping system for your business!

Let’s talk about another part of the definition of bookkeeping - the PRACTICE of recording all financial transactions of your business.

Since bookkeeping must be done, and it might not be your strong suit or anything you even desire to do, I recommend transforming this practice into something that includes:

Pleasure for you

Reverence around taking care of your business in this way

Setting aside time to take care of your bookkeeping

Viewing the system you chose as a sacred container for your business growth

Taking care of your business in this way with love is an important part of building a company that takes care of you.

The Nuts and Bolts of Bookkeeping:

Here are some considerations to get you started if you don’t have a system in place:

Decide on your bookkeeping system - here are the options:

Excel spreadsheet – use it if you don’t have a ton of activity and are comfortable with Excel.

A computerized system like QuickBooks Online or Xero – use if you have more activity, are comfortable with computer software, and can afford a monthly subscription of about $50.

Pen & Paper or a Dome book – use if you hate computers and love pen and paper.

Outsourcing it to a bookkeeper or bookkeeping company – use if you know you will not do your bookkeeping on your own, don’t know how to do it, or if it is not an area of expertise for you.

Set yourself up for success by using separate bank and credit card accounts for your business.

All money collected from customers and paid out for business expenses should be captured in the system you choose, including names, dates, and amounts, organized in meaningful categories.

All the individual transactions recorded in your system should be able to be matched up to documents like receipts, invoices, and statements.

Document the system – Who does what, when.

Commit to a schedule or hire a bookkeeper who will keep to a schedule.

Add accountability to ensure the bookkeeping doesn’t get behind.

Once your bookkeeping is done and up-to-date, you will have some good numbers to create a financial forecast! That is where you go from dreaded bookkeeping to empowering planning and creation.

No matter where you are on the spectrum of bookkeeping doneness, you can get started with Financial Forecasting. Joining the Financial Forecasting Experience will help you get and keep your bookkeeping up-to-date.

Click here if you would like to be the first to know when the next round of the Financial Forecasting Experience goes live.

Here is what one of my clients says about their experience with Financial Forecasting:

“Financial Forecasting has completely changed my perspective of my finances in my business. Before Financial Forecasting, I was scared to even look at my numbers. I wasn’t making as much money as I wanted, and I was embarrassed to talk with anyone about it! Through Forecasting, I find places where money is coming in and brainstorm ways to increase those revenue points. I look at my expenses and trim out what is non-essential. Most importantly, Carol creates a safe place for me to look at my business finances without judgment. I credit much of my growth as a business owner doing Financial Forecasting, and my business has doubled in revenue every year!”

Morgan Gist MacDonald, Founder/CEO of Paper Raven Books

Love,

Carol