Boosting Profitability: Streamlining Your Business Processes with Effective Bookkeeping
Do you work hard all year long, only to find out at the end of the year that you have no profit? Or maybe your Profit and Loss statement shows a profit, but you have no money in the bank? Where did the $ go?
Profitability is the lifeblood of any business. It’s like the fuel that keeps your entrepreneurial engine running smoothly. You see, it’s not just about making money; it’s about making more than you spend. And that’s where efficient day-to-day processes come into play.
Stop, step back, and look at your bookkeeping processes. You need daily operations in place now so that you know what exactly is going on in your business each month or week. Just imagine your business as a well-oiled machine.
Each day, it hums along, with all its cogs and gears working seamlessly together. But here’s the kicker – those cogs and gears represent your daily operations, from sales and customer service to inventory management and marketing. When these processes run efficiently, your business becomes leaner, meaner, and more profitable.
Now, here’s the secret sauce: effective bookkeeping. Think of it as the control panel of your business machine. It helps you keep track of every dollar coming in and going out, ensuring your financial data is accurate and up-to-date. With clear insights into your financial health, you can make informed decisions, identify cost-saving opportunities, and maximize your profitability.
So, if you want your business to thrive, there is no better way to do it than by fine-tuning those day-to-day processes and embracing the power of effective bookkeeping. You can do it! You “need” to do it if you want to have a profitable business with no surprises or confusion at the end of your fiscal year.
Streamlining Your Business Processes
One of the key elements to effective bookkeeping is ensuring that you understand how your business operates. It’s like peering under the hood of a well-tuned machine, where the magic of efficiency and growth begins.
By keenly observing your daily operations, you can spot areas where resources are squandered, time is lost, and productivity is compromised. It also allows you to map out your day-to-day operations, which is similar to creating a detailed roadmap for a long journey. It’s about breaking down complex processes into manageable steps.
Doing so gives you a holistic view of how your business functions. This clarity not only helps in identifying redundancies but also in optimizing workflows for maximum efficiency. It’s like untangling a web of wires to ensure everything is connected seamlessly.
Basically, bookkeeping is tracking “every” financial transaction related to a business (purchase/sale/payments in/out). It’s not for the faint of heart, but it also isn’t impossible. You just need to have clear and organized procedures for you and your employees to follow. Below are some of those processes to begin with:
1. Sales and Sales Receipts
Sales and receipts are the core of any business because they represent the primary source of revenue. These records demonstrate a company’s ability to generate income and provide critical insights into customer behaviour, product performance, and financial health.
For Retail POS (Point of Sale) Systems
Point of Sale (POS) systems are invaluable tools for businesses, especially when tracking sales and sales receipts. These systems are essentially the nerve center of retail operations, combining hardware and software to facilitate transactions and record critical sales data.
They provide real-time insights into daily sales activities, helping businesses analyze sales trends and manage inventory effectively. But to maintain their accuracy, business owners need to ensure a coherent system for:
– Entering sales and credits into the POS system
– Applying payments to a customer
– Using a payment processor for Debit, Visa, or Mastercard basis
For Customer Payment Services
Having an organized and consistent system for conducting customer payment services is paramount for many reasons. Not only does it reduce the likelihood of errors, which can lead to discrepancies and customer dissatisfaction, but it also ensures compliance with tax regulations and financial audits.
It also fosters trust and professionalism, especially since customers are likelier to do business with an organization that handles payments smoothly and provides clear, orderly receipts and invoices. To make that happen, business owners should implement clear instructions for:
– Creating sales invoices in the accounting program and sending them to customers
– Collecting and recording payments for customers
– How and when customer payment e-transfers are recorded in the accounting software
– Use of Rotessa or Plooto to collect customer payments
In the same manner, entrepreneurs also need to conduct cohesive measures to determine:
– What information needs to be recorded on a manual deposit slip
– What to do with each deposit slip after the deposit has been made
2. Purchases, Expenses, and Payments
Implementing clear and organized procedures for your business’s purchases, expenses, and payments is vital for financial stability and growth. It enables you to make informed decisions that lead to timely settlements, better vendor relationships, and potentially unlocking discount opportunities. And because maintaining efficiency in these aspects affects your business’s long-term success, you should enforce a system for determining:
– What e-mail address to use for receiving vendor bills and statements?
– What happens to the receipt for each purchase made by the company debit card?
– What needs to happen when a purchase is made personally and needs to be reimbursed?
– Where do physical receipts go? (ie. gas receipts, utility bills that come in the mail)
– When do expenses need to be entered into the accounting software?
– What are the steps for paying accounts payable?
– How and when are payments made by e-transfer recorded into the accounting software?
– What information needs to be noted for each purchase (i.e., type of expense or job code for contractors)
– How to use Dext to collect your expense receipts?
– How to use Plooto or Telpay to pay your bills?
Payroll is the financial heartbeat of a business, ensuring employees are compensated accurately and on time while also playing a crucial role in compliance, budgeting, and financial management. In line with that, ensuring it is systematized and recorded helps businesses comply with labour laws and tax regulations, promotes transparency, and simplifies budgeting and financial planning. Here are two things you need to be clear about to ensure each pay period runs smoothly:
– How and when do employees provide their hours worked each week?
– How and when are hours or pay details provided to your payroll department, payroll provider, or bookkeeper?
As mentioned, effective bookkeeping is the key to ensuring a standardized and compelling day-to-day record of everything that goes on in your business. But that can only be possible if everything a bookkeeper needs is provided completely, accurately, and timely. Here’s a few things you need to be mindful of:
– When does your bookkeeper need to be provided with all expenses?
– When does your bookkeeper need to provide monthly or weekly reports?
– What reports does your bookkeeper need to provide?
And, of course, above all these mentioned processes, the most important factor is you, the business owner. You also need to set procedures for yourself so you won’t be the bottleneck in your company’s workflow. To help you become more aware of your actions, a few things you need to remember are as follows:
– Send each e-mail you receive related to a business transaction to wherever it needs to go (right away!). Don’t wait until someone asks you for it.
– Provide e-transfer details to your bookkeeper as soon as you send an e-transfer payment.
– Delegate as much as possible to your staff members.
– Give supplier logins to your accounting team as soon as you create them.
You can also turn to some of the apps we recommend and “love” to use as part of your daily bookkeeping procedures, like:
– DEXT – to collect expense receipts
– Plooto or Telpay – to pay bills electronically
– Rotessa – to collect $ from customers
The Bottom Line
Streamlining and enhancing your day-to-day processes is like giving your business a turbocharger – it propels profitability to new heights. With efficiency comes cost savings because it allows you to trim the fat or those unnecessary steps, redundant tasks, and time-consuming processes.
This newfound efficiency means you’re spending less to get things done. Whether it’s cutting down on manual labour or reducing wasted resources, the result is lower operational costs. And lower costs directly translate into higher profits.
But it’s not just about saving money; it’s also about making more. Streamlined processes mean quicker response times, smoother workflows, and happier customers. Happy customers are likelier to return for repeat business and recommend you to others. Increased customer satisfaction leads to increased sales, bolstering your revenue and, you guessed it, your profitability.
With all these procedures in place, your bookkeeping team will be able to provide you with accurate and timely reports – weekly or monthly – so that you don’t need to wait until the end of the year to know the overall outcome or financial situation of your business. So, in a nutshell, streamlining and improving your day-to-day processes isn’t just a smart move; it’s the turbocharged boost your business needs to rev up profitability and stay ahead in the race.
At eGO Bookkeeping, we excel in tailoring these procedures to fit your unique business needs. Our expertise lies in crafting custom solutions that make sense for you, ensuring your operations run like a well-oiled machine. Schedule a call with us today for more details about our services!