We’re excited today to kick off our first article in a series of articles on how to structure your Finance & Accounting function correctly.
This week, we start with a key piece to your Finance & Accounting…
maybe even the most common task…Bookkeeping.
Bookkeeping is act of “keeping” your “books” clean.
By keeping your books, we mostly mean classifying transactions, and booking correct “entries”.
“Entries” are pretty much manual adjustments that you make to your financial statements to reflect what’s happening.
The general idea is that every business has expenses…
bookkeeping is the act of classifying those expenses to the correct category (GL code)…
but that’s just one part of bookkeeping.
The truth is, there is a LOT more to it…
but before you can get started, you need to have an accounting software
Accounting software is…kinda what it sounds like.
Software, to manage your accounting.
And in many ways…Accounting = Bookkeeping.’
I mean…think about it. It’s call “Accounting”…
Like being Accountable for the management of financial data.
Like Bookkeeping.
The key with an accounting software is this:
Stop using excel
Unless you have verrrry minimal activity, paying the monthly fee for an accounting software is almost always worth it.
The key here is that with an accounting software, you can:
Easily sync transactions to financial institutions
Set up rules to classify transactions
Run reports for almost any activity
The most common of them is Quickbooks Online…though for larger companies, you may have something much more powerful, like Netsuite or SAP.
A last word about bookkeeping…
the entire purpose…is to produce financial reports for you.
How much are you making (profit & loss)
How much cash you have (balance sheet)
Where you are spending cash (cash flows)
The bookkeeping processes is the glue that gets this information together.
Bookkeeping is the foundation of any financial reporting…
and it’s common to produce financial reporting every month (hence the term “Month End” Close).
Now that you know the importance of bookkeeping..
it’s time to invest in the right bookkeeping function so that you can run your business at easy…
getting the insights that you need FAST.
But before we get into that…
we need to visit our next Finance & Accounting function…
Accounts Payable.