It is simple. The one reason you should outsource your bookkeeping is fraud. The news…
One of the issues that SMB’s have is planning for expense payments that are not entered into their financial accounting system until after they’ve been incurred (let’s call them future transactions). Payroll is one of the largest expenses that most companies have and it falls under this category. Loans and mortgages are good examples of future transactions too, but payroll is the one expense you can NEVER pay late. I’ve always found it interesting that such a large and important expense isn’t booked until after it happens. Numerous small business owners have told me that they “constantly worry about having enough cash to cover Payroll”. There are many reasons that small and medium size businesses struggle with cash flow other than mediocre performance. In these situations, there is already plenty of stress and worrying about making payroll only adds to the reasons that SMB owners may not be in love with finance.
There are many ways to handle this, but until recently they were cumbersome. You can book entries into you financial accounting system as a recurring entry, but these usually need adjustments when the payroll is complete. You can also add an estimate to check runs manually as a reminder. You can carry a higher balance in your operating account to always have enough for payroll (although this may result in several bills being paid late).
There are tools that integrate with QuickBooks and other systems designed to project your future cash flow including future transactions. These tools provide you with your banks available balance, bills and receipts that are due, and finally, future transactions. You can also run “what if” scenarios to more accurately see your company’s cash position. When combined you get a very accurate picture of your cash flow, which removes the tress of not knowing where you stand.
Eliminating surprises and knowing where you stand especially with future transactions can relieve a lot of the tress associated with running small and medium size business. Find a tool you really like and use it. It’s a great step towards starting to fall in love with finance!