It's easy to put off accounting tasks when you're a small business owner; so many other items on your to-do list seem more pressing. But, attending to these tasks daily helps you find and fix issues such as cash shortages and inventory discrepancies in a timely manner, while it's still relatively easy to track down who was involved and what happened. If you only tackle your accounting tasks monthly, you might not discover such issues for weeks, when it's more difficult to figure out.
As your receipts, sales orders, bills and financial statements pile up, you're missing out on the insights that up-to-date accounting gives you about the financial health of your business. In a blog entry for Bench, an online bookkeeping company, Brice Warnes writes, "When you look at your books, you want to know they reflect reality. If your bank account and your books don't match up, you could end up spending money you don't really have – or holding on to the money you could be investing in your business."
Here are nine accounting tasks you should do every day. If you have top accounting software, it can automate basic accounting tasks, making it easier to keep your financials up to date.
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1. Refresh your financial data.
Ideally, your accounting software automatically does this for you each day, syncing your bank and credit card feeds and the sales data from your POS system into your accounting software. If it doesn't, you'll need to do this manually. This gives you an up-to-date look at your accounts, showing you the money moving in and out of your business.
2. If your business accepts cash, reconcile it against receipts.
Doing this at the end of each day helps you discover cash shortages or overages in a timely manner, so you can figure out where the money went and identify errors or theft.
3. Review and reconcile transactions.
If your accounting software is connected to your bank and synced daily, there's no need to wait for your monthly bank statement. Many accounting applications simplify reconciliation by suggesting matches, so all you have to do is review and approve them. Spending a little time on this task each day is easy and eliminates a grueling month-end chore. It's also a good time to review pending transactions for any errors or abnormalities that may be cause for concern, so you can investigate potential issues promptly.
4. Record payments you receive; deposit cash and checks.
If you receive paper checks and cash payments, deposit them daily to keep your cash flow healthy and your business account records up-to-date. If most of your accounts receivable are electronic payments and you have just a few paper checks, see if your bank accepts mobile deposits and what the daily, weekly and monthly limits are, as this can save you trips to the bank.
5. Record and categorize expenses.
Many accounting software have apps that you can use to report expenses and upload receipts, so it's easy to take care of them immediately – just snap a picture of the receipt and jot a note about what it was for – rather than sort through a stack of receipts at the end of the month and try to remember what each one is, and if it's a billable expense, which job or project it belongs to. [Looking for accounting software? Our sister site Business.com has reviewed the best business accounting software.]
6. Record inventory you receive.
Entering inventory into your system the same day you receive it keeps your system up-to-date, giving you a more accurate look at your stock. If you don't do this, your staff may lose sales, telling customers you're out of stock when in fact, an item just hasn't been entered into the system yet. Or, if your staff knows items are in stock and sell them, invoicing may be delayed if your system isn't set up to allow negative inventory counts. Check out our full reviews on the best inventory management software.
7. Invoice your clients.
Billing clients in a timely manner helps them pay you on time. The products or services you provided are still fresh in their minds and if there's any discrepancy with the bill, it's easier to talk about it now rather than a month or more after the fact. The longer you wait to bill your client, the longer it will take to get paid.
In a Forbes article, John Rampton, founder of online payments company Due, says, "We've actually found that when you invoice the same day that the job is completed (as opposed to waiting two-plus weeks for your billing cycle) you are almost 1.5 [times] more likely to get paid."
8. Pay vendors, or at least schedule bills to be paid.
When you receive bills, review them for errors and look at the terms. If your vendors offer early payment discounts, schedule the payments to take advantage of them. Otherwise, set payment reminders so you can pay your bills on time and avoid late fees.
9. Back up your data.
If you're not using cloud-based accounting software that automatically backs up your data, back up your financial data manually every day. Doing so gives you peace of mind that you won't lose your data if you have a hardware failure, file corruption or some other issue.
One advantage of manually backing up your data is that it also allows you to revert to an earlier backup if you deleted something you shouldn't have or discover errors that would be easier to fix by going back to yesterday's saved version and reentering data rather than making significant adjustments. Automatic backups don't allow you to revert to a previous version, but they do take care of this daily task for you.