4 Benefits of Bookkeeping for Your Business

Bookkeeping is about more than just keeping track of your invoices and expenses. When you maintain
detailed records of everywhere your income comes from and everywhere your expenses go, it gives you
incredible insight into what’s working for your business and what isn’t working so well. Knowledge is
power, but not everyone knows how to take advantage of the knowledge a solid bookkeeping system
can provide, so let’s take a look at some of the ways a strong bookkeeping system can help you build a
strong business.

1) Better Cash Flow Management
Bookkeeping for your business can help you keep track of which bills have been paid and which ones are
overdue, and as useful as that is, bookkeeping is so much more than that. It can also help you create a
budget for your business so you know which marketing efforts you can afford, and which ones might
have to wait until you have more money coming in.

2) Make Better Business Decisions
As I mentioned in the intro, knowledge is power, and a solid bookkeeping system can arm you with the
knowledge you need to make more powerful decisions for your business. It can help you identify the
most lucrative activities for your business, as well as the most expensive. When you know where most of
your money is coming from, you can focus more of your efforts there.
The same goes for your expenses. What activities are costing your company the most money? Compare
the results to where your money is coming from, and you might be able to identify expensive efforts
that aren’t getting the results you need for your business.

3) Better Luck When Applying for a Loan
If you’re trying to apply for a business loan (or you think you might need a business loan at some point
in the future), keeping strong bookkeeping records for your business will improve your ability to get the
loan. Banks want to see that yours is a healthy and profitable business, and if you can prove it to them in
cold, hard numbers, you’ll be more likely to get the loan you need.

4) Protection from Fraud and Embezzlement
No one likes to think about their employees stealing from them, but it happens. The good news is that, if
you keep good records of all your income and expenses (and reconcile them with your bank records),
it’ll be much easier to spot fraud if it does happen, which means you’ll be able to put a stop to it before
they can do too much damage. For example, if you see payments being made to a consultant you’ve
never heard of, it’ll show up in your bookkeeping records, allowing you to follow up. Alternatively, if
money is disappearing from your bank account, but there’s no record of it in your expenses, you’ll need
to find out where that money went.

While filling out invoices and entering expenses is certainly an important part of bookkeeping for your business, there’s more to it than simple data entry. When done right, bookkeeping can help you make better decisions for your business and protect it from all kinds of financial disasters, but that requires analyzing the data, and that’s not everyone’s strong suit. Whether you need help with the data entry or data analysis side of your bookkeeping (or both) consider hiring a bookkeeping doctor to take care of it while you focus on doing what you do best.