Whether you are outsourcing your bookkeeping or doing your own books in-house, as the leader in your organization you need to know your financial information is reliable. Understanding "best practices" and incorporating them into your own business processes will help you get data you can trust, so you can make the decisions that are best for your business.
Here are some tips to help you stay on top of the books:
1. Get or stay involved! Knowing what the system is and how it works helps keep you, the director of this show, in the know. A broad understanding of the way the books work will help you to make informed decisions regarding processes, and to understand the capabilities and limitations of the data. If you need education ask questions, do some research, or take a class. Finances are not everyone’s favorite topic – but it is vital to the success of your organization! And in particular, if you are a board member for a non-profit, it is part of your fiduciary responsibility to each donor.
2. Make the most of the data. The information that is being entered into your bookkeeping system is used fulfill state and federal requirements (taxes,) but what else are you using the data for? Make the data work for you. Set up reports to help you zero in on areas that help you manage your organization.
3. Have your processes documented. Focus on the how as well as the what. We know that processes are often undergoing change as the way we do business changes, but it is important to document this as a protection for your organization. Updating this periodically is an opportunity to review and make adjustments as circumstances change.
4. Never have your bookkeeper as a signer on your account. Naturally, access to accounts is helpful, but there must be checks and balances and this is a big one. Have your bookkeeper manage the entry and classification of transactions, but allow for having another person to authorize the bill payments or payroll deposits.
5. Make sure you see the bank statement each month. Are you familiar with all the activity you see? All deposits, transfers and checks written?
6. Check in with your tax professional mid-year or 3rd quarter in addition to tax time. Your tax professional needs to know what is going on with your business so that if you need it, you have time to implement their recommendations to save tax dollars.
7. Cross-train your staff. Plan for the unexpected! It is not unheard of to find yourself in a compromised position due to illness or sudden changes. Remember, this is a team – make sure you have some backup.
8. Set a regular time to meet and review your financials. Reviewing sales, projecting cash flow, estimating upcoming expenses and liability payments are some of the things you should be reviewing on a regular basis. This could be weekly, monthly, or something else, depending on your organization’s need. If it is a date with yourself, your in-house support or if you outsource the work, consistency creates a window of time where you know these items will be addressed and allows you to get on with your other tasks.
9. Create systems to help your organization’s efficiency. Something as simple as coding your transactions when they are approved relieves so much verbal communication – sometimes words can be misinterpreted, but a number is definitive. Any effort made to streamline this work makes it more reliable and lets you get to other parts of business that need your attention.
10. Provide your staff and yourself with support. Invest in the time to explore how this part of your business can provide valuable information. Invest in documentation and processes to support and assist your mission. Invest in your staff to provide training to help them do the best job they can.