As humans, it’s pretty tricky to avoid human error entirely. It’s in our nature to make mistakes, especially if we’re busy running a business. But it’s also crucial to try and limit potential errors in your business accounts.
Regular inaccuracies in your bookkeeping can easily lead to cash flow issues, especially if you think you have more cash available than you actually do. It causes trouble with HMRC too, so what accounting mistakes should businesses be looking out for?
Common accounting errors
A typo, missed data, or a lack of knowledge; many bookkeeping mistakes are caused by simple human error, especially where manual data entry is involved.
|Not including transaction data, either by accident or on purpose.|
|Not reconciling bank accounts to make sure they match the bookkeeping data.|
|Recording transactions incorrectly, such as categorising them to the wrong place, or simple data entry issues.|
|Rounding errors, where transactions are recorded but the number of decimal places isn’t captured properly. If this is a common issue, it can lead to pretty large discrepancies over time.|
Human error is unavoidable, especially when the person taking care of the bookkeeping is too busy to dedicate the time necessary. Similarly, a lack of knowledge could mean mistakes are being made without even realising.
Ways to reduce mistakes in your business accounts
Having well-organised business accounts is essential for all sorts of reasons. The more accurate your accounts are, the more well-informed your decision making and financial forecasting will be – and that’s just for starters.
Consider some of these basic steps to help you find your way to bookkeeping simplicity.
Keep your personal and business accounts separate
If you’re operating your business as a limited company then you’ll need to have a separate bank account for your business anyway.
Keeping your business and personal bank accounts is good practice in general, though. Plus, it’s particularly helpful for maintaining a better degree of accuracy.
You’ll be able to spot information far more easily, and won’t confuse personal transactions for business ones (which HMRC really dislikes).
Even just a few minor mistakes can skew the figures within each account, and cause more issues further down the line.
Use bookkeeping software which includes bank feeds
Bank feeds can save a business a lot of time, and are also an excellent way to reduce bookkeeping errors. The feed connects your bookkeeping to your bank account so that transactions happening at the bank are automatically captured in your records.
This cuts down time-consuming data entry, and the subsequent data entry errors that come with it. Some software providers also offer feeds for Stripe and PayPal, incase your business relies on various payment platforms.
If the feeds are automatic, accounts information is more likely to be up-to-date, too. No more chasing invoices when the customer has already paid.
Automate bookkeeping processes where possible
Do you regularly bill a customer (or a group of them) the same amount? Set up a system to send recurring invoices. If your bookkeeping software supports bank feeds, look for features which help you categorise transactions automatically. If you want to follow up on late payments, set up automatic payment reminders for unpaid invoices.
Automating as many accounts processes as possible won’t mean that you lose control or oversight, but you will gain time and cut down on mistakes.
Work with an accountant or bookkeeper
Asking an expert for help gives you an extra level of reassurance, especially when you know that the accounts data you’re providing is accurate!