How consistent are you with maintaining your business checkbook? Although balancing your checkbook is one of the foremost essentials for managing one’s budget effectively, millions of individuals don’t do it regularly and that goes for small businesses too. For the sake of saving time, you might engage in some dangerous behaviors like checking the ATM receipt for our current balance, and accepting it as our bottom line without thought to pending checks or other debits; or only balancing the checkbook at tax time. These can be fatal errors that cost you more time than you might have saved by skiping this step.
With the advent of online banking, automated tellers and other advances in technology, it might be easy to believe that one can get away without the monthly task of pulling out the checkbook and verifying their bank balance. However, there are several reasons why doing so can be beneficial – and help them to avoid financial disaster.
Making sure business records match those of the bank – Each month, banks send their account holders a statement of transactions which have taken place on their account. This should include all deposits, transfers, and withdrawals, and the date they posted to their account. Many banks offer their customers the option of going paperless; whether they receive a paper or electronic copy of this information, it is important to review it in a timely fashion.
Time waits on no one – Banks process millions of transactions, and although their failure rate is minimal, mistakes do happen. When an error occurs, you have a limited time to act – sometimes as little as thirty to sixty days. If you aren’t taking the time to review your statements, you may not catch the mistake for months – and then it is too late to do anything about it. Whether the error is on your part or the bank’s you may not catch it unless you are diligent about reconciling your records on a regular basis.
BOING! – It is an easy thing to have happen. You are on the go, and need cash or have to make a purchase. In your hurry, you tuck the receipt away to deal with ‘later.’ One thing leads to another and you never do. A couple weeks later, you are puzzled and dismayed to find returned check and insufficient funds notices in your mailbox! It has happened to even the best of us. Bouncing checks and overdrawing your account can mean fees of $30.00 or more per failed transaction, but more than that, it looks bad (VERY BAD) for your small business. While you can reoup the overdraw fees, you may never recoup your business’s damaged reputation.
Time saved is money saved – Proper accounting is one of the most overlooked aspect of running a small business. Nobody likes to do it, but you really can’t afford not to. Spending the time to balance your checkbook and properly account for all spending, can save you more time in the long-run…especially during tax time. If you find it tough to find the time to serve your customers or clients regularly, try doing it at tax time when you haven’t been keeping good accounting records. Just simply balancing your check book can be a HUGE help. It’s a minimal fail safe for those who didn’t take the time to keep spreadsheets and/or quickbook records for their small business throughout the year.
Checkbook maintenance is a chore, and unfortunately, few schools teach the art of the balance these days. However, whether you are just getting your business off the ground, or you are trying to expand and need to budget your time, balancing your checkbook is a necessity. Unfortunately, many new small business owners fail to see the benefit of doing so until it is too late.