The importance of bookkeeping and budget management

We understand bookkeeping can feel like a time-consuming and mundane process at times. However, the business benefits of structured books heavily outweigh these minor drawbacks by helping you to get ahead of the competition.  

Here are just some of the ways good bookkeeping will help your business: 

• Easier to prepare for what’s ahead 
• Up-to-date financial information allows for timely, smart business decisions 
• Provides financial clarity to help you understand your true cash flow 
• Improves accuracy in reports for HMRC and/or Companies House

A sure-fire way to keep your books up-to-date is to work with a professional. At Old Mill, our Small Business team can take the strain and free up some of your precious time consumed by bookkeeping whilst also preventing potential errors in your reporting – get in touch.

Other useful methods to help with quality bookkeeping include: 

1. Reconciling your transactions regularly. Depending on the scale of your business, this can vary, but consistent comparisons help to keep on top of your incomings and outgoings. 
2. Keeping digital copies of receipts/invoices. Useful software programmes such as Dext can be synced with your books so you can scan receipts/invoices directly into your bookkeeping system. This saves valuable time, which could be spent working on other ways to help your business grow. 
3. Using a dedicated business bank account. This simple yet effective strategy separates your professional and personal finances, making reconciliation and recording much simpler. 
4. Making a record of what you’re owed by customers, and what you owe to your suppliers. This ensures your records are accurate, supports cash flow management, and helps you to keep on top of business obligations. 

Although it may sound obvious, creating and keeping a budget enables you to look to both the distant and near future, setting and adapting goals for your business based on performance. Without a budget, you’re more likely to overspend and run into cash flow issues, resulting in slowed or stunted business growth.

If you decide to work with us, we’ll provide you with tailored advice based on your needs, goals, and current financial situation.

Old Mill’s fundamental components of a good budget are:

• Real data. Use current and accurate financial information — not optimistic guesses — to ensure your budget reflects reality. 
• Accounting for seasonal trends. Recognise that many businesses experience fluctuations throughout the year. Factor in busy and quiet periods to avoid unexpected lulls and spikes. 
• Flexibility. Room for unexpected changes such as market shifts, emergencies, or new opportunities is essential. A rigid budget can limit your ability to adapt. 
• Track and compare. Compare actual performance against projections and adjust as your business evolves to stay on track. 
• Regular reviews. A budget isn’t set in stone, it should evolve with your business. Monthly or quarterly reviews ensure your budget stays relevant and effective. 

Good bookkeeping creates accurate records. Without this, a budget is no more than just a guess. Bookkeeping provides you with the accurate data to create a productive budget so you can feel confident that you’re setting your new business on the path to success.

Regularly updated books can be compared to your budget, enabling you to see how your actual expenses and income are faring compared to what you budgeted for. This also means you can adapt and update your budget as your business grows – a great way to stay one step ahead. If you’re serious about growth, you could look even further into the future by keeping your receivables and payables up-to-date, enabling you to track your expected income and expenses.