Meryl Johnston | The 4-Step Business Financial Control System

Step 1: Implement a cloud-based accounting system.

• You may consider Xero or QuickBooks Online but there are other useful tools out that you could try.
• Basically, you need something that connects to your bank account, has bank feeds, and can also connect to other systems.
• It will help you in automating your bookkeeping.
• Establish a receipt management process or system using Dropbox or Google Drive if you’ve got a lot of receipts.
  • Use a tool that can connect to your accounting software to reduce data entry.

• Getting the right tools in place is the foundation of this system.

Step 2: Create your business bank accounts.

• Make sure that it is used solely for your business.
  • Avoid using it for your personal use.

• Assign a credit card to your business bank account/s.
  • Again, make sure that your business credit card is used solely for your business transactions only.

• Have your business bank account connected to your cloud-based accounting software.
• Be disciplined when using your business bank account and business credit card.
  • Make sure that debits are coming off the right cards.
  • Make sure that your clients are paying you to the right bank account.

• This may sound simple, but it can save you a lot of pain when tracked with your bookkeeping.
• By doing so, gives accountability and provides you with a clinical approach to your business.

Step 3: Have a look at your chart of accounts.

• Your chart of accounts is basically the sum of your accounts.
• Each piece of accounting software has a default chart of accounts you can utilize.
  • Customize the template as to what makes sense to your business and to your team members.

• Once you have account codes that make sense to you, then you have to be consistent with coding to avoid coding errors.
• It is important to understand factors such as your cost of sales, overhead costs, etc.
• For you to make improvements, make sure that the dashboard and metrics you’re looking at are valid.

Step 4: Establish your bookkeeping timetable.

• Include in your bookkeeping timetable the daily, weekly, fortnightly, and end-of-month tasks.
  • Adjust to your business accordingly.

• The main concept is to breakdown your financial processes into different steps such as:
  • Reconciling transactions.
  • Uploading receipts.
  • Payroll.
  • Checking your accounts received book.

• Work out when those processes are going to happen, who’s involved in those tasks, and get it on your calendar.
• Make sure that the tasks are happening. This will help you and your people create a good habit.
• For the monthly tasks, give each a separate date for the timing.
  • If you don’t have a good process around the timing of these tasks, you might get your month-end reports late.

• Use a project management tool to assign these tasks to the appropriate team members.
  • Set the tasks as reoccurring.
  • Within that task, provide a link to the relevant system documentation.
  • This gives you visibility to check if the tasks are being done.

• Pay urgency to end-of-month tasks and have them done as soon as possible after the month ends.
• Doing the first four steps in place may indicate that you already have a strong financial system.
  • You may now dive into the more advanced part of the reporting.
  • Some of the financial reports you could start establishing are:
    • Balance sheet
    • Profit and loss
    • Cashflow forecast

• • You have to be critical of the numbers you’re seeing on these reports at your first glance.
  • During your second view of the report, you may now use the numbers you’re seeing to make decisions for your business.
  • The first two reports are your historical data while the last report allows you to look into the probabilities in the future.

System Notes

• Focus on the first three steps.
• Spend more time on the bookkeeping timetable and reports.
• Once you’ve established your framework, that’s the time that you can start on establishing your standard operating procedures around different elements such as payroll, accounts payable and accounts receivable.