Let’s Play Catch-up: What is Catch-up Bookkeeping?

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Has it been a while since you cracked open your accounting software? Oops. When your business grows exponentially, or your bookkeeper hits the road, it doesn’t take long for your books to fall behind. And that can lead to catastrophic results. Catch-up bookkeeping helps you right the ship and make sure you can still keep the lights on. In short, it’s the process of getting your books current and catching any mistakes that you may have missed. 

Not only can catch-up bookkeeping give you a clearer picture of your revenue and overall financial health, but it gets your accounts receivable and accounts payable back on track. In addition, managed books make it easier to grow and help you stay compliant when tax time rolls around. Learn more about catch-up bookkeeping and when you might need it. It might be more often than you think.

What is catch-up bookkeeping?

Catch-up bookkeeping is the process of getting your financial records up to date. This necessary part of bookkeeping includes everything from analysing bank statements to reconciling your accounts receivable.

You don’t just require catch-up bookkeeping after a sustained period of neglected books. Rather, anytime you need to reconcile your accounts or migrate your data, you can use a catch-up bookkeeping service to confirm that you’re working with current information. If you have even a short period between a new bookkeeper, you’ll also want to do some catch-up bookkeeping to start your new staff member off on the right foot. 

When does your business need catch-up bookkeeping?

There are lots of times when you might need to catch up on your books. Some are for your own convenience, while others relate to serious government penalties. Under Australian and New Zealand laws, you have a responsibility to maintain accurate business records. You’re also required to track any transactions related to taxes and superannuation. Your organisation should be prepared to substantiate any of the information submitted on your tax return. 

Tax ready strategy aside, here are some of the most common times we recommend catch-up bookkeeping:   

  • When you need to add accounts. Are your records incomplete? If you’ve been using a new business credit card for a while and haven’t added it into your accounting software then you may be missing months of transactions. You can’t have accurate financial reporting if you don’t actually know what’s coming in and what’s going out. 
  • When you have unreconciled transactions. Whether it’s for a month or just a few days, your general ledger should contain all receipts, payments, and invoices listed by transaction. Missing transaction data could throw off your entire financial picture. Bringing the data up to date means your ledger is back in business. 
  • When you’re migrating to a new software system. Moving over to Xero or similar accounting software? You want your data labelled properly, and that means a little catch-up bookkeeping to make sure you’re entering the most recent and accurate figures. It’s much easier to get everything up to date in your existing software than fix it in your new software than to determine what went wrong in six months. 
  • When you need to prepare reports. If you’re seeking additional funding or want to show stakeholders the financial state of your company, playing catch-up on missing data is crucial. You can’t generate an accurate report without up-to-date figures. You could miss out on an investor if you’re using incomplete reports. 
  • When you aren’t being paid correctly. When your business is not being paid correctly, you may not be able to operate. If you suspect your customers owe you money, you need to catch up fast! Not only could your reporting and tax obligations be incorrect, but you could be leaving money on the table which could be put towards extra staff or growing your business. 

After my books are caught up, what is next?

Once you’re confident your books are caught up, you’re ready to sail, right? Not so fast. Bookkeeping is never a “set and forget” process. In fact, it never ends. Therefore, having a good bookkeeping service at your side is essential to ongoing success. 

At Visory, we partner your organisation with a team of bookkeepers who know your industry inside and out. They can complete catch-up bookkeeping on your struggling records and help to keep everything accurate moving forward.  

Catch-up bookkeeping is essential if you know if your books are unreconciled, payroll hasn’t been processed or your tax office is knocking. Catch-up bookkeeping also comes in handy when you’ve simply been short-staffed, and you know some receipts might have slipped through the cracks. Contact Visory to complete your catch-up bookkeeping, get your books ready for new software or to enable accurate reporting and insights. We’re always here for you.

Seeing Double: Why You Need Double-Entry Bookkeeping

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Your business is growing, which is good for your bottom line. It may not be good for your limited accounting staff, however. Especially if they’re not keeping accurate, double-entry books. Thankfully there is a lot of help out there for medium-to-large businesses that need assistance scaling up while keeping their books straight. 

Online bookkeepers can save the day when it comes to the fundamentals of business accounting, such as double-entry bookkeeping. This style of accounting is necessary for any growing company with both accounts payable and accounts receivable. Basically: every transaction is recorded twice. We’ll explain the principles of double-entry bookkeeping, how it differs from single-entry accounting, and why knowing more about double-entry matters for your business. 

What is double-entry bookkeeping?

Double-entry bookkeeping is a system where you are recording transactions in terms of debits and credits. Need a simple double-entry bookkeeping system example? Glad you asked. Imagine a spreadsheet with two columns, one for expenses and one for credits. Each transaction is recorded twice, once in the expenses and once in the credits, hence the name “double-entry.” If the columns don’t balance, you can investigate why the error exists.

Let’s say you have a corporate credit card with a balance of $5,000 that you want to pay off. Your company’s cash account would be reduced by $5,000; this is a debit/expense. At the same time, you would subtract $5,000 from the current debt held by the company, which is considered a credit. The transaction is recorded once in subtraction and once in addition, balancing the line items.

When do accountants use double-entry bookkeeping? Medium to large businesses, and even some small businesses, require this method to keep an accurate balance sheet. This style of bookkeeping also keeps your general ledger clean — this is a book that categorizes your financial transactions by type. You can also use double-entry when you create a trial balance, which is a simple spreadsheet with credit/debit columns that covers a specific time period. This document is meant to detect accounting errors, and double-entry helps you find discrepancies.  

Double-entry operates from the fundamental accounting equation: Assets = Liabilities + Equity. Once you add what you own against what you owe, you can understand whether you are in a surplus or deficit.

Man reviews a balance sheet on his laptop

Untitled by Photo by Austin Distel on Unsplash

How is double-entry bookkeeping different than single-entry bookkeeping?

Single-entry bookkeeping only works for very small, very simple businesses. If you are bringing in cash with few expenses, such as with a sole proprietorship, this type of accounting may cover you. 

Single-entry methods are like keeping a chequing account. You only keep track of deductions or credits, creating a single entry for each transaction. Even if you had a credit/debit double-column spreadsheet, there would not be an entry in both columns for each transaction — with double-entry, there is. 

Should I use double-entry bookkeeping?

There are many advantages of a double-entry bookkeeping system. Here are some of the reasons we recommend switching to this type of accounting as a medium to large company:

  • A more complete view of finances. Creating two entries for each transaction makes it easier to see where exactly the money that is going out as a payable ended up. A simple single-entry cash system isn’t complex enough for most businesses. 
  • Finding errors is faster. Doubling down on entries also makes faster work of locating where a credit came in that was not properly debited, and vice versa. You will thank yourself later if you detect missing money.
  • There is total transparency. By expecting a double-entry system from your accounting staff or partners, you keep everyone clear on where the money is coming and going. 

Conclusion

Bookkeeping can be a complicated business, and even double-entry bookkeeping isn’t foolproof. While double-entry accounting adds transparency and increased accuracy to the process — you may still need some help by way of a bookkeeping service. 

Visory has a team of financial experts that can lend their expertise whenever you need help balancing the books or preparing a trial balance brief. We’re better than an in-house accountant for growing businesses because you get access to a whole team and you can check your records around the clock. If it’s time to upgrade from single-entry to double-entry bookkeeping techniques, it’s definitely time to give us a call or create an account online today.

Harnessing the Cloud: If cash is King, data is its Queen

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A recent study found nearly half of Australian businesses are looking to increase cloud infrastructure spending in 2020, and 59 per cent now have ‘cloud first’ policies when it comes to making new investments[1].

Cloud accounting allows your business, its administration employees and advisers to access its financial information live from online servers, anywhere at any time, which helps your business make better choices as it can use ‘real time’ information to assist its decision making.

The power of data lies in both its timeliness and its ability to be tailored to the individual business. Raw data by itself is difficult, if not impossible to utilise effectively. However, by using integrated systems such as optical recognition, live bank feeds, and industry specific software that is linked to the core application, your business can start to approach the detail and data integrity of larger organisations.

By increasing your business’ level of data accuracy, you’re not only better positioned to meet your day to day compliance needs accurately and efficiently, but you’re also setting up your business to take advantage of the data at its disposal by summarising and presenting the data in ways that are specific and useful to your business.

The key to making the most of the data available to you is to delve into the key drivers of your business and the industry it operates in. The lead indicators of a coffee shop will differ to the lead indicators of a freight business, so it’s critical to narrow in on the data points that really make a difference in your business.

Once decisions have been made about the core drivers of your business’s success, most cloud systems will allow you to tailor reports to focus on selected data points, either from the core platform or from a linked industry-specific application.

Undertaking an analysis of the key trends you have identified across these data points can then be developed into a set of visual management reports that allow you to have a finger on the pulse of your business on a day to day and week to week basis.

Identifying the key business drivers and the underlying data flow that reports on them is a great foundation for building a reporting pack that helps you as a business owner analyse current trends and make solid decisions about future direction, quickly and accurately.

To maximise the return on investment in your cloud data, diarise time each week, and each month to review the reports that your cloud system produces for you to assess your performance against current goals and re-set goals and actions for the next period.

Lastly, never forget the maxim, ‘rubbish in, rubbish out’. Good data quality should not be taken for granted in the world of data integration.

For assistance identifying your key business drivers and implementing cloud solutions, please get in touch with our team.

[1] Australian IAAS Market Soars Beyond $1.3BN