Review. Review. Review. I’m going to assume you’ve hired someone to do your books, either in house, or virtually. I’m also going to assume they regularly check in with you on questions and important things like outstanding A/R or A/P. But how well do you know your numbers? Not “in your head,” not “I know how much is in my bank,” not “by gut feeling.” How often do you actually review your books, line by line?
The importance of regular review is immeasurable. No matter how well you know your numbers in your head, there are always details you will underestimate, minimize, or simply forget. We are not machines, and we can’t always know everything with all certainty (as much as we’d like to think so.) The advantage of having financial software is that every transaction needs to tie out, and if you’re reviewing it, you will have accurate data.
With your bookkeeper, pull some month to month comparison reports and see what jumps out at you. Follow the trail and find inconsistencies, missing transactions, or transactions that need to be modified to better account for what actually occurred (no pun intended.)
Most importantly: Do this on a regular schedule. Go to your calendar right now and block out the time you need for the next 12 months.
This will help you to remember where your money is going, and force you to make conscious decisions. You will see how your day to day interactions actually affect your bottom line.
If your only accomplishment is reinforcing a lot of what you already know, it is still worthwhile, because you will become more mindful of your financial transactions. Knowledge is power. Regular review gives you the power you need to successfully negotiate your next client or vendor interaction.