How to save 10+ hours a week with efficient Bookkeeping practices?

Many business owners don’t start companies to do bookkeeping. But without good bookkeeping, most businesses fail quickly. A SCORE study shows 82% of business failures happen because of poor cash flow management.

Let’s look at bookkeeping basics for small businesses and how to do it well. We’ll cover what bookkeeping is, why it matters, Efficient bookkeeping practices and simple steps to follow.

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What is bookkeeping?

Bookkeeping is collecting, sorting, and recording money information. This creates reports that help owners make better money choices.

Bookkeeping records past money activities to help with future business decisions.

The six-step efficient bookkeeping practices process

Here’s a simple six-step process for small business bookkeeping:

1. Gather source documents

Source documents are the original records of money exchanges. These include bills, orders, and receipts. They show the date, who bought, who sold, how much it cost, and what was sold.

Most people use bank statements instead of paper copies. Bank or card statements have the needed details to prove a transaction happened.

Cash transactions don’t show up on bank statements. If you use cash, keep the receipt or write down what it was for.

Tip: Use cards for all payments. This lets you or your bookkeeper use bank statements, making this step much easier.

2. Categorise transactions

Sorting transactions into groups is vital. The five main groups are: assets, liabilities, equity, revenue, and expenses. These can be split into smaller groups like inventory under assets.

First, work out which group a transaction belongs to. Cash is an asset. Future payments like wages or loans are liabilities. Equity grows with sales and owner money put in, and shrinks with money taken out and costs.

Selling products or services creates revenue. The cost to make that revenue is an expense.

According to a National Federation of Independent Business survey, 40% of small business owners find sorting transactions hard.

Use software like QuickBooks to help organise and sort transactions.

3. Reconcile transactions

Good bookkeepers make sure every transaction is counted. Matching all transactions on your bank statement with what’s in your accounting software helps catch mistakes.

With hundreds or thousands of transactions, it’s easy to count twice or miss one. Start with the beginning balance on your statements. This should match your accounting software. Check each line to make sure every transaction is counted.

QuickBooks reports that businesses that check their accounts monthly are 38% more likely to spot fraud.*

4. Prepare financial statements

Adding, sorting, and matching your transactions provides input for financial statements. There are three main financial statements to prepare.

They are a balance sheet, an income statement, and a cash flow statement.

• Balance Sheet: Shows your company’s assets, liabilities, and equity at a specific time. Assets must equal liabilities plus equity.
• Income Statement: Also called a profit and loss (P&L) statement, it shows your revenue and expenses over time.
• Cash Flow Statement: This tracks money moving in and out of your business. It’s split into operating, financing, and investing activities.

5. Read financial statements

Most businesses succeed or fail based on their financial statements. Looking at, understanding, and using the insights is critical. This is what makes a business more profitable this year than last year.

To read your financial statements, understand how they’re set up. Assets come first, while liabilities and equities come last on a balance sheet. Assets are listed by how quickly they can turn into cash.

Cash is always first under assets. Long-term assets come after current assets.

Liabilities are listed similarly. Current liabilities come before long-term liabilities. Equity comes last on the balance sheet.

It shows ownership in a business. Retained earnings sit under equity. The first part of an income statement is revenue.

The revenue section can be split into specific income types based on products or services sold. Next is the cost of goods sold, which are the direct costs of selling.

The bottom line is net income. A cash flow statement tracks money coming in and out of the business. Cash inflows and outflows fall into three groups.

Cash flow from operations relates to daily business activities. Cash flow from financing relates to raising money. Cash flow from investing relates to gains and losses from business investments.

6. Make decisions based on data

The point of bookkeeping is to help make better and more profitable choices. A balance sheet shows your company’s assets, liabilities and equity, which means it can be used to judge the cash flow and staying power of your business.

For example, a company with a million pounds in net income whose balance sheet shows three months of income in accounts receivable might decide to shorten the collection period to have more cash on hand.

An income statement tells you how well your company is running. It lists revenues and expenses and shows a profit or loss.

The cash flow statement tells you how much cash you have. If your operating cash flow drops, you might rethink some of your operating costs or even your pricing.

In short, outsourced bookkeeping services can be the difference between having a more profitable year than last year simply because you now have accurate data to make smarter decisions with.

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Time savings with efficient bookkeeping practices

Efficient Bookkeeping time management can save lots of time each week. Here’s a breakdown of possible time savings:

Task	Time Savings per Week	Explanation
Automating Transactions	4-6 hours	Using software to automatically import and sort transactions.
Weekly Reconciliation	2-3 hours	Regularly checking accounts to catch errors early.
Digital Record Keeping	1-2 hours	Storing receipts and bills digitally for easy access.
Streamlined Reporting	2-3 hours	Creating financial reports quickly with accounting software.

This table shows the possible hours saved. Automation can greatly reduce manual bookkeeping hours, giving you more time to grow your business.

FAQs

1. How can I streamline bookkeeping tasks for my small business?

Establish consistent procedures, digitise receipts immediately, schedule weekly reconciliations, and use bank feeds to automatically import transactions. Cloud accounting for small businesses offers significant advantages, with most systems reducing data entry by 50-70%. Start by automating your most repetitive processes first.

2. What are the best bookkeeping automation tools available in the UK?

Top solutions include Xero, QuickBooks Online, Sage, FreeAgent and Receipt Bank. These automated accounting systems integrate with banking, payments, and HMRC for Making Tax Digital compliance. Choose one that matches your business complexity and offers mobile functionality for on-the-go expense management.

3. How can I reduce manual bookkeeping efforts while maintaining accuracy?

Implement automated bank reconciliation, use AI-powered receipt scanning, establish recurring transaction templates, and utilise supplier rules to auto-code transactions. Modern bookkeeping solutions save time by applying intelligent pattern recognition to categorise transactions based on previous entries.

4. What bookkeeping efficiency tips would help a growing business?

Separate business and personal finances completely, process transactions weekly rather than monthly, use cloud software to enable real-time collaboration with your accountant, and implement approval workflows for purchases. Efficient accounting practices also include regular backup routines and monthly financial reviews.

5. How can I improve bookkeeping workflow when working with external accountants?

Choose cloud accounting platforms with multi-user access, establish clear responsibilities for data entry tasks, schedule regular check-ins, and use shared digital filing systems. This approach typically reduces year-end accounting fees by 15-25% by making information exchange more efficient.

Conclusion

Good bookkeeping is vital for any small business. By automating tasks, sorting transactions, and using financial statements, you gain valuable insights.

This knowledge helps you make better choices and saves time. Accurate money data improves your company’s performance. Efficient bookkeeping will help you have a more profitable year and you can save hours bookkeeping.

Want to spend less time on numbers and more on growth? Book a free consultation now.