Securing a quality loan doesn’t have to be a long, drawn-out nightmare. You can take steps now to make qualifying for top-notch financing a breeze, and one of those critical steps is bookkeeping.
Minutes now spent getting your books in order could save you hours later when you’re searching for loans. Not only that, but reliable financial records (made possible by diligent bookkeeping) will help you identify how much financing you need, what you can afford, and when you need it.
You know what they say: a few bookkeeping minutes a day will keep the financing headaches away. Okay, nobody actually says that, but that doesn’t mean it’s not true. We’re not saying you need to become a prolific bookkeeper or CPA—you wear enough hats already. We’re just saying that a few healthy accounting habits can make a huge difference in your business finances. Adopt these simple bookkeeping habits now, and it’ll pay dividends in the long run—literally.
Use Bookkeeping Software
First and foremost, you need to find a reliable tool to help you manage your finances. Bookkeeping software, like Sunrise, can help you seamlessly track expenses, categorize income, invoice clients, produce financial reports, and much more. Don’t waste your day with spreadsheets and manual entries—your time is more valuable than that.
Sure, when you’re just starting, it might be tempting to keep things simple, but soon you’re going to need a more robust solution. Receipts in a Manila folder and transactions recorded in a notebook will only get you so far, especially when it comes time for end-of-month reconciliations or tax season. Adopt bookkeeping software early on and save yourself the trouble. Plenty of solutions are available to help you manage every aspect of your small business’s finances, and most are free or low-cost—so there’s really no reason not to use them.
Cloud bookkeeping software will give you consistent real-time financial data—no need to wait for end-of-the-month reconciliations. Plus, you’ll always have the up-to-date financial reports that lenders and investors need to evaluate your business. Not only does this make application time easy, but it arms you with powerful financial information to make smarter business decisions.
Keep Personal Finances Separate
Don’t mix your personal expenses with your business expenses. Right from the get-go, open a separate bank account for your business and apply for a business credit card. Separate accounts will make sifting through and organizing your expenses a cakewalk. You won’t have to dig through countless transactions trying to remember if that charge on your credit card was for printer ink or ice cream.
Separating your accounts will speed up the day-to-day and month-to-month bookkeeping processes. And come tax season, you’ll be able to hand your transactions and financial reports over to your account with no hassle. One less thing for you to worry about.
Study Your Financial Reports
Your financial statements aren’t just for lenders and accountants. Profit and loss, balance sheet, and cash flow statements contain priceless information about your business—there’s a reason they’re the first items banks and investors look at when analyzing your business.
Use these financial reports to manage your entire financial strategy: budget, track, adjust, repeat. Review your previous income and expense history to create cash flow forecasts. Then, track your monthly financial progress against your plan. At the end of the month, compare your projections against your actuals—use those numbers to zero-in on more accurate forecasts in the future. Repeat the process again and again.
Staying on top of your finances will help you make wiser business decisions, and these decisions will ultimately help you qualify for bigger, better loans. Bookkeeping for the win.
Delegate Your Bookkeeping to a Professional
Strapped for time? Before you hand over your bookkeeping responsibilities to the summer intern, consider the implications. Your bookkeeper is recording transactions, handling accounts receivables and payables, sending invoices, paying taxes, and delivering financial reports—this is important stuff! If you’re not going to do the bookkeeping yourself, hire a professional bookkeeper.
You don’t need to hire a full-time or even a part-time employee to manage your books. There are plenty of freelance bookkeepers and bookkeeping firms—and some software solutions, like us, offer professional bookkeeping services. While it’s an added monthly expense, remember that a professional will save you time and money in the long run. Experienced bookkeepers will help you avoid legal issues, fines, and fees. Plus, they’ll guarantee your reports are in tip-top shape when you apply for financing.
Start Better Bookkeeping Habits Today
Don’t wait to get your finances in order. You don’t need to completely rearrange your work life to incorporate bookkeeping best practices. These habits are quick and easy. Take it one step at a time. Remember: a few bookkeeping minutes a day will keep the financing headaches away. Start diligent bookkeeping today, and you’ll have no problem qualifying for financing in the future.