One of the keys to effective financial management is to have efficient bookkeeping. By this I mean that data is entered quickly, correctly the first time, and consistently. Efficient bookkeeping contributes to success for two reasons. First, accurate reports are issued, and this means making informed decisions based on accurate information. Second, spending time fixing errors means takes away from time being spent analyzing the numbers.
Here are five key ways to make bookkeeping efficient in your business:
Set up workflow at the very beginning and stick with it (“crockpot systems”—throw it in the pot and check on it every hour, also see The Emyth Revisited). So figure out the process for each type of transaction (bill payments, credit card review, payroll entry, customer deposits, etc.), outline it for posterity / future reference, and then make sure it is consistently followed.
The goal of bookkeeping is accurate entry as fast as possible, so make sure that they type quickly and accurately.
Have a healthy reliance on automation. This is also a “set it up and check on it” workflow. Be careful setting it up, because an incorrect setup will lead to future problems, potentially significant.
Have a good filing system. This streamlines in two ways. It speeds up the filing end because the bookkeeper doesn’t need to be thinking about how and where to file. It speeds up retrieval because everyone knows where to find documents. See my filing guide.
Hire tough, manage easy
(with a hat tip to the book of the same title)
Hire the right bookkeeper! I recommend hiring on skills, work ethic, and personality. Skills: do they understand basic accounting principles, understand basic business law as it applies to them, communicate well, type fast, understand how to process paperwork. Work ethic: do they show up on time, enter accurately and quickly, make sure that their inbox is empty at the end of the day. Personality: are they pleasant to work with, and (especially) can they persistently follow up with others without creating conflict.
Remember that the big picture goal of bookkeeping and accounting is to provide accurate financial reports that give management information to make informed growth decisions. This is truly where the value of bookkeeping is. So implement these five efficiencies in your bookkeeping function, and watch as things get better and better as you focus on reports, not bookkeeping.