Six ways SMBs can better organize their financials

By Tim Harrington, SVP, Business Banking

Six important strategies and tools SMBs can use to become better organized.

Some observers call it the “90 Percent Challenge.” The phrase refers to estimates that 90 percent of American small businesses lack organized, structured financials, according to Chris Myers, co-founder and CEO of business app BodeTree, which automates small business accounting and financial processes.

That’s a concern. Only through access to organized, accurate sales, profit and expense numbers can businesses keep a handle on how they are faring.

Part of the problem lies in the outdated manual systems with which many businesses have long had to grapple. However, there is good news on the horizon. Many ever-evolving tech tools are helping small businesses transform financial clutter into financial organization, and do it quickly.

Streamline with software

Small business financial software, such as QuickBooks™ from Intuit, can help businesses improve organization of their finances.

Simple-to-use accounting software also allows businesses to track earned income, log expenses and grab a quick overview of their financial standing at a glance. Other functions include sending and receiving payments, dealing with online transactions, payroll record-keeping and overseeing business accounting.

Track all transactions

Bookkeeping, or tracking every one of your company’s transactions, is a crucial step in gaining better-organized financials. When money enters or exits your business, it needs to be recorded. Divide your business transactions into categories under the terms revenues, expenses, cash, inventory, payroll and liabilities. These categories can be further subdivided if necessary. Expenses could be separated into overhead, cost of goods sold and advertising. Paying attention to transaction-by-transaction bookkeeping will allow your business to benefit from more accurate accounting as well.

Two apps out there – one from Apple and one from Android – are TaxNote and Xero respectively. TaxNote accepts daily entry of expenses and revenues and handles the double-entry bookkeeping for small business owners. The Xero app lets SMB owners view bank accounts, PayPal accounts, credit card accounts, outstanding invoices and more. There are many, many more tech tools at your disposal, and some are best suited to specific industries. The bottom-line: Ask around, and find the one that best fits your needs to get the most from your investment.

Set daily, weekly and monthly tasks

Set aside time to complete your business’ financial organizational tasks. For instance, you could start each work day by monitoring your cash position. That could include cash on hand, as well as receivables expected to be paid to you in the next business week.

On a weekly basis, use your small business accounting software to bill customers, receive customers’ payments and pay vendors. Each week, you should also be documenting and filing receipts, reviewing unpaid bills from vendors, preparing and sending invoices and projecting expected cash flow. And month-by-month, balance your business checkbook, monitor both current and overdue invoices, check inventory levels, and review month-end balance sheet against earlier ones. Another way to get a sense of how your business is doing is to benchmark your performance relative to competitors on a monthly basis.

Here are a few examples. Kashoo Cloud Accounting & Bookkeeping for iPhone and iPad is an app that lets users record and manage expenses, access financial reports and create and send invoices in real time. InDinero provides a complete picture of how much small business owners are spending and where, while also automatically providing analyses and forecasts of financials. Freshbooks lets small company owners manage their expenses, cash flow and general finances at home or on the road.

‘Neat’-en your finances

Products from Neat, such as Neat Receipts Portable Scanner and Software and NeatConnect Wi-Fi Scanner and Software, enable small businesses to get better organized by sending their data into the cloud. The technology in Neat scanners allows the devices to recognize any item as a receipt, contact or document and pull out essential data, like vendor, location or purchase, date and price. The data then can be imported into reports and third-party applications.

Leverage business organization apps

Mobile apps like Expensify, Gusto and others help make organizing finances a bit easier. Usable on any phone, Expensify lets you link your business credit or debit card to an Expensify account, ensuring your travel charges are imported directly into an expense report. Alternatively, taking photos of receipts on your phone allows Expensify to instantly pull important data from those receipts. Expense reports can be created in several minutes. Also operable on iPhones, Androids and other mobile devices, the Gusto app, formerly called ZenPayroll, streamlines the payroll process for small business owners by automatically calculating all relevant income taxes. Gusto users can leverage the app to access pay-stub archives, as well as state and federal payroll taxes.

Organize your taxes

Even if you are using a CPA to handle your federal and state taxes, it still makes sense to provide him or her with the most organized financials you can produce. Getting organized will also speed tax preparation and reduce errors. Many business owners use Quicken or QuickBooks to track their company’s income, expenses and deductions as well as store images of receipts. An envelope system can be used to separately store paper copies of all pertinent records. Getting organized can make tax time easier for everyone.

No matter which tools you choose, the steps you take to organize your business’ financials could pay off handsomely in productivity gains for your enterprise.